Rural Retailer , s u d a just re www.ruralshops.org.uk
Issue 28 l Winter 2014/15
The Journal of the Rural Shops Alliance
t ’ n o d t . . . Bu o s l a n a c u o y
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Contents... In this issue...
3 ● 5 ● 6 ● 12 ● 13 ●
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24 25 29 30
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In my opinion, By RSA Chief Executive Your Action Checklist / General Election Alert Heath Stores: Fusing a Convenience Store with a Farm Shop Keeping in Touch Online RSA Views: General Election 2015: Potential Quick Wins for Rural Retailers; Labour’s Approach to Rural Issues; The Link between Post Offices and Royal Mail Legal Bits & Bobs: Pensions – Automatic Enrolment of Staff; Personal Alcohol Licence Renewals; Alcohol Licencing Section 182 Guidance; Single Use Carrier Bags; Shared Parental Leave and Pay; Electronic Cigarettes Price Marking and Own-brand How Prices are affecting Customers’ behaviour Calling All Small Shops! - Best Small Shop Competition For Urgent Action: Tobacco Display Ban
RuralRetailer ● Published by The Rural Shops Alliance. ● Printed by: Russell Press, Nottingham. ● Design: Kavita Graphics. dennis@kavitagraphics.co.uk
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In my Opinion... History in the time of Price Wars It is very difficult to spot turning points in history. Back in 1977, none of the Tesco managers stopping the issue of Green Shield Stamps in their store would have had any inkling where it would lead, for it started a chain that led to Tesco’s dominance of the UK retail scene. In four decades, the vibrant Tesco of the 1970s came to dominate the UK retail scene, to become the status quo of the 2010s. They became the one to fear but also the one to beat. Today it is easy to see Aldi and Lidl as the modern day equivalents of Jack Cohen’s thrusting gamechanging company. Tesco’s management team is apparently working flat out to relaunch their business in 2015, with suppliers expecting that the current complex system of discounts, over riders, listing fees and the like is to be swept away in favour of a simple “screw the supplier into the ground and then twist a little more” approach. The company’s recent much-publicised difficulties might be a temporary glitch, but they might also herald the start of a new era in UK retailing. My bet is that things are changing for good, with no going back. Customers are rapidly altering their demands. Suddenly convenience and price are trumping one-stop shopping and huge car parks. At the moment, rural convenience stores are benefiting from customers shopping “little and often”. It is inevitable that prices in such stores will typically be higher than the dedicated discounters but this gap cannot be allowed to grow too large. And with all the big supermarket chains trying to emulate the discounters, small rural shops will get caught in the crossfire. This means that these businesses will have to rely on the buying teams at their wholesalers to make
sure that they drive a hard bargain with suppliers, so that good prices can be passed on. There is a very real danger that suppliers, faced with massive pressures to give supermarkets very keen prices, will meet their own overall margin targets by taking more profit from their smaller accounts. One bit of the market is pushed down; another part rises in response – the “waterbed” effect. That’s life, that’s how markets work, unless governments intervene. Expressed this way, part of the problem is actually the large number of symbol groups, cash-and-carry’s and wholesalers, all with a limited market share and hence restricted buying power. There are quite simply too many fascias and too many wholesalers serving the sector. The last time the market exploded, it was retail fascias that disappeared. Companies such as Safeway, International Stores, Home & Colonial, Keymarkets, MacFisheries and KwikSave, all were swallowed up by bigger competitors. My bet is that this round of price competition will see a marked reduction in the number of wholesalers, in a similar manner. However, it may take a few years for history to give its verdict as to whether I’m right or wrong! Kenneth Parsons
Issue 28 ● Winter 2014/15 ● RuralRetailer 3
Our Partners and sponsors...
To obtain further information on any of these companies, please contact the RSA at info@ruralshops.org.uk or phone 01305 752044 4 RuralRetailer â—? Winter 2014/15 â—? Issue 28
Your Action Checklist for this issue... 1. INVITE YOUR LOCAL MP TO VISIT BEFORE GENERAL ELECTION 2. LIKE RSA ON FACEBOOK, JOIN GROUP, FOLLOW ON TWITTER 3. VISIT RSA WEBSITE 4. RENEW PERSONAL ALCOHOL LICENCE AT PROPER TIME 5. ENTER BEST SMALL SHOPS COMPETITION 6. PLAN TO MEET TOBACCO DISPLAY BAN – APRIL 2015
p p p p p p
SEE PAGE 5 SEE PAGE 12 SEE PAGE 12 SEE PAGE 22 SEE PAGE 29 SEE PAGE 30
GENERAL ELECTION ALERT... The next general election is not that far away. It promises to be impossible to call, with the traditional Westminster three parties joined by the SNP, UKIP and the Greens, all muscling into a first past the post electoral system and faced with an electorate that is unused to the horse-trading that goes to form and sustain coalition governments. We would urge rural retailers to take advantage of this situation by inviting current MPs and strong prospective candidates to visit their store to see at first hand the issues facing small retail businesses. Alert the local press - even if they do not send anybody along, do make sure you have a good photograph and write a short press release about the visit. We hope that readers of Rural Retailer will be up to speed on the issues that we think important but we are happy to provide further information and advice. We can also provide advice on press releases and dealing with the press. Do please send us a photograph of any visit you
organise – we hope to run a feature on them in the spring edition of Rural Retailer. If you would like a member of the RSA team to come along and join you in meeting your local MP or candidate, do get in touch – with limited resources, we cannot promise to come to every one but we will do our best. This is a once in 5 year’s opportunity – don’t miss it. ■ info@ruralshops.org.uk
Issue 28 ● Winter 2014/15 ● RuralRetailer 5
Heath Stores...
Fusing a Convenience Store Two life-long scientists might not be top of the list of contenders for ‘successful rural shop keeper’. But in just three years, Andrew and Kate Mills have not only quadrupled the turnover at Heath Stores in Horsmonden in rural Kent but also won Kent Community Retailer of the Year 2014. It was a gamble, Andrew admits. “I knew the shop and the village from my childhood – and a complete change in lifestyle was appealing”. It was a tired shop in a Grade 2 listed building in a conservation area. Its décor was stuck in the
The refit retained the traditional look
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70s, there had been no investment in more than 20 years, it had odd opening hours, a handful of loyal customers and some passing trade for ‘emergency’ shopping. Turnover was around £6,000 a week. The couple wanted to create both a successful business but also one at the heart of the village community. They knew there was potential – the village has more than 2,000 people, with households ranging from farm tied cottages and social housing to modern executive developments and large country houses. Horsmonden is not a dormitory village; many of its residents are out and about locally during the day.
By Beth Whittaker
with a Farm Shop Andy and Kate with some of their staff dressed for a 1950s themed event
to re-fit the shop as soon as we took over, but we felt that we really needed to live and breathe and work in the shop for a while,” says Andrew. “This delay helped us understand the logistics, ergonomics and efficiency of the place, and what specialist equipment might be needed. After 13 months, we were far more confident on the brief for the re-fit designer.” One result from this experience was a key decision, to move the stockroom into the cellar and to give delivered caged stock its own, separate, holding area, improving the efficiency of the whole operation.
The Mills’ background as scientists, plus an acknowledgement of their lack of experience, led them to put in hours researching and learning from others to develop their business plan. This encompassed: ■ Gaining experience from other successful retailers ■ Optimising the product range to appeal to more customers ■ Re-fitting the store to create a more welcoming and profitable space – but with room for locals to sit and chat over coffee ■ Marketing using a range of tools ■ Events to attract more people, more often and to become a real part of the village ■ Invest in people and time by offering parttime work to local youngsters, and training and supporting staff The Mills had strong feelings on how to realise their vision. “For example, we were encouraged
While they got to know the shop – and their customers – they were visiting a range of successful local food enterprises, prestige London stores and speciality/fine food shows. “We were told by the experts that if you are going to do a deli, you need to do it well or not at all. We decided it was all about the customer service, the welcoming atmosphere, high quality presentation and choice of food – especially the deli format – that we felt needed replicating. We decided to focus on a fusion of typical convenience store/village store with a farm
The serve over deli. is a key part of the offer
Issue 28 ● Winter 2014/15 ● RuralRetailer 7
Heath Stores...continued
The old shop looked very tired
Their vehicle acts as a promotional tool
shop. We felt too many village shops only stock the basics for “emergency shoppers”, and too many farm shops only stock luxury or artisan products and no daily basics. Londis Musgrave really helped us with merchandising, EPOS, etc. ., invaluable with our lack of experience”, says Andrew. “Part of the process of optimising the range of products was listening to advice from Londis, but at the same time realising that most of their experience is in an urban setting.” The couple chose to spend money on branding, working with a marketing company to help design a logo and even a Heath Stores colour. “Professional branding and marketing is particularly important if you want to reach out
Clean modern fittings and flooring give a classy ambiance
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beyond your immediate local community. I’d recommend it – we use a local firm and it has made a real difference,” comments Andrew. However, the big challenge was refreshing the look and feel of the store, with generous aisles, good lighting and a flexible space for tasting events and special promotions. They had great support from Sharon Davis, Kent County Council Rural Retail Adviser who suggested layout ideas, local products, and retailers to visit. She also put them in touch with shop fitters who understood the Mills’ vision of not ‘just another mini-supermarket’. The re-fit was financed through a bank loan draw down facility, a five-year leasing agreement for all the refrigeration which represented half of the total cost, and a small grant from Government/EU funding through DEFRA. “During the refit, we kept the shop open through the two weeks with a ‘pop up’ shop in the front garden – this was really appreciated by the villagers who even helped us take it all down at the end of the fortnight, and joined in the opening celebrations!” They decided to open up the shop’s lovely windows which were previously covered up, and install expensive track lighting. “It’s astonishing
the difference opening up the front windows has made - many new customers commented they had passed the building for years and not realised it was a shop! Track lighting has created the right atmosphere in the new store and its versatility in focussing light on certain products or product ranges has been very effective,” says Andrew. “Where we can compete on price with the supermarkets, we do – with alcohol, dairy and sliced bread for example. Where we can’t, we stock local fruit and veg, or speciality flour, local chutney and preserves, ice cream and Kent’s famous apple juice and luxury local ready meals,” says Andrew. He also rates the Londis offers and uses them regularly. Country Choice products satisfy local workmen wanting pastries and pies and the shop bakes off its own baguettes and takeaway pizzas. Alongside the local stock is a good range of fine foods, using speciality suppliers. To build and maintain interest in the higher-end products, the couple have worked with suppliers and producers to put on a range of successful tasting events, repeated throughout the year. The highly
Horsmonden – A picture postcard village
Apple Day is a great opportunity to celebrate local produce in Kent
popular deli is housed in a large and expensive serve over, the focal point of the store, offering a wide range of fresh meats, local cheeses, olives and cutting meats including home-cooked hams alongside high quality food to go, tartlets, hand raised pork pies and filled rolls. “The deli represents up to 10 per cent of all sales, with a high profit on return, so the expense of the serve over unit was well worth it.” Andrew and Kate have also introduced a significant fair-trade range, including a Traidcraft range. So alongside Londis Supervalu rice sits fair-trade rice, for example, while Traidcraft greeting and Christmas cards and crafts add a point of difference. “The fair-trade range was very firmly driven by us, whereas our glutenfree products have been driven by our customers,” adds Andrew. “This illustrates that while it is essential to have a vision, you need to be flexible and respond to customers’ needs.
Issue 28 ● Winter 2014/15 ● RuralRetailer 9
Heath Stores...continued
The popup shop that kept basic services going during the refit
After all it’s their shop - you are just the current custodians! It’s not just our business, but it’s our community too and we want to be part of what makes the village tick. We offer lots of local youngsters part-time jobs - starting them off with leaflet and newsletter delivery, moving on to re-stocking and so on.”
Community events organised by Heath Stores are becoming increasingly popular and include tasting events such Burns Night, charity fundraising activities, occasions such as the Queen’s Jubilee and the World Cup, and seasonal events including International Talk like a Pirate Day (sic) and an Apple and Cider Festival. These activities impact directly on sales – Andrew and Kate firmly believe the events have played a significant role in the store’s success story. “It is these events, more than anything else we have done, that differentiates us from our competitors. ■ For more information, see: Twitter: @heath_stores Facebook page: The Heath Stores http://www.heathstores.co.uk/about-us.php
A non-profit making community space has been created for people to meet and chat over coffee, and also houses the Outreach Post Office three times a week. “This area is used every day by older residents for tea, coffee and gossip, local producers showcase their goods, local councillors use it for surgeries and residents for charity events such as selling raffle tickets. Although it is difficult to quantify whether the space encourages extra spend, it really helps create a pleasant atmosphere in the shop and generates a huge amount of good will.” There’s a monthly newsletter delivered to over 600 homes highlighting local suppliers, offers, events and tasting opportunities, while social media keeps customers informed in bad weather, or the latest food or charity event in the store. “We always see uplift immediately after the newsletter has gone out; people are asking for the next month’s edition before we have written it! They say they really look forward to receiving it; it makes them feel more involved and helps them get to know us and our staff.”
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The shop provides a price proposition alongside the more upmarket ranges
Keeping in Touch Online...
Connecting with the Rural Shops Alliance Our Website Visit our website at www.ruralshops.org.uk
Our Email Newsletter signup box on the right hand side of our website homepage
Copies of Rural Retailer You can see the latest versions (and back issues) of our journal “Rural Retailer” at www.ruralshops.org.uk/what-we-do/magazine
On Twitter Follow us on Twitter at www.twitter.com/rural_shops_uk
On Facebook Like our Facebook page at www.facebook.com/ruralshopsalliance Join our Facebook group at www.facebook.com/groups/ruralshops
Get the latest news and information relevant to your business. Share your ideas and views, hear what other retailers are thinking.
Connect with us on-line Share our details with other retailers or supporters. The Rural Shops Alliance is expanding its use of these channels to get information out fast. We hope you find this useful. ■ If you have any questions or suggestions about our digital media, please email gary.hepburn@ruralshops.org.uk
12 RuralRetailer ● Winter 2014/15 ● Issue 28
RSAViews Winter 2014/15
GENERAL ELECTION 2015: POTENTIAL QUICK WINS FOR RURAL RETAILERS With the 2015 general election looming, it is a good time to highlight some of the issues that aect rural retailers. Here are four topics which are relatively uncontroversial and which we would ask all political parties to support.
Business rates This is clearly an area that needs wholesale reform, but given the size of the task, it is not going to be addressed quickly. However, one aspect could be. Some rural retailers are caught in an unintended trap, where two separate business rates relief schemes come into conflict. Small rural retailers have to apply for the rural business rates relief scheme rather than seek small business relief. Under some circumstances, this can mean they have to pay more business rates than intended. To eliminate this anomaly would be a small but welcome improvement to the business rates scheme.
seems impossible for the best forensic accountants in the country to provide a definitive answer shows one of the shortcomings of the Horizon system. Basically, it was introduced decades ago and needs to be replaced. There comes a point where further updating of an existing system quite simply does not make sense. This would require government funding.
Support for rural shops
Post Office computer system
In the past, there was funding to provide direct support for rural shops and post offices, reflecting their importance to local communities and wider society. In the last 20 years or so, responsibility for this has rested in turn with the Rural Development Commission, the Countryside Agency, the Regional Development Agencies and now Local Enterprise Partnerships. Each time, rural shops have fallen in priority. Responsibility at national level falls between DEFRA (because they are rural), the Department for Business, Innovation & Skills (because most are commercial businesses) and the Department for Communities and Local Government (because they have significant community value). Devolved assemblies in Wales and Scotland have helped. Give one department clear responsibility and a modest ringfenced budget to provide advice and some grant funding for rural shops in England.
The controversy over sub postmasters accused of stealing money from the Post Office, who continue to protest their innocence and blame the Horizon computer system, continues to rumble on. The very fact that it
â– More information on these and other issues will feature on our website. Keep visiting www.ruralshops.org.uk for more details.
Compensation for roadworks Each year, some rural retailers are adversely affected when a road is dug up, often for weeks at a time. This can result in a massive fall in turnover and in extreme cases can lead to the shop closing for good. Entitlement to compensation depends on who is digging up the road and in many cases is not payable at all. There is an urgent need for new legislation to give small shopkeepers more rights for defined levels of compensation, irrespective of which utility or highway authority is causing the problem.
RSAViews RSA NATIONAL MEETING RSA NATIONAL MEETING WITH TOBY PERKINS MP
Labour’s Approach to Rural Issues Historically, the Labour Party has been seen as less concerned with rural issues than the Conservatives, reflecting in part the fact that historically most Labour MPs have represented urban seats. For the last RSA National Meeting, we invited Toby Perkins MP, the Labour Shadow Minister for Small Business, to discuss current Labour Party thinking. Mr Perkins is the MP for Chesterfield and has a business background – a real recommendation min this era of professional politicians. The Labour Party has established a rural front bench group to bring together representatives of every shadow ministerial team to devise policies that work for the countryside right across government. The intention of this is to ensure that every department pays heed to the impact on rural areas in everything they do. Huw Irranca-Davies, Labour’s shadow DEFRA minister, has based Labour’s policy around “three P’s” – People, Process and Policy. Mr Perkins expressed strong support for the rural Post Office network. His words made a lot of sense, combining an acknowledgement of the need to sustain the link between Post Office Limited and Royal Mail but at the same time, tempering the need to sustain the Universal Service Obligation with ensuring that other postal service operators are subject to equivalent performance and service standards, enforced by the
regulator. Of particular interest were his thoughts on lending for small businesses, where he was able to talk of his visits to Sparkassen in Germany. These are commercial banks, established with state backing, which are confined to lend within a specified region and with a legal responsibility to promote local economic growth. Germans talk about these banks in the same terms as a Briton might talk about the NHS or the BBC. Local bank managers are intimately attuned to their local economies and have the autonomy to lend to local businesses that they believe are worth backing. Mr Perkins believes that the key principles – permanency through state backing, the core duty to support growth in a particular area and professional bankers who know their locality well – could transfer well to the British market. Other issues Mr Perkins raised included a desire to address the issue of late payments to small businesses. Certainly the proposal to make late payers pay interest to their suppliers at 8% above base rate would concentrate the minds of large companies. This is a Labour Party commitment if they get elected in May. Recent Labour support for the ending of onerous arrangements for tied pubs does suggest that their interest in small businesses is not just lip service. We believe that a potential Labour government could introduce policies that would help support the future of rural shops and post offices.
4 October
3 May
4th May Bank Holiday
27 September
20 September
19 April
26 April
13 September
12 April
23rd St George’s Day
3rd Easter Sunday, 11th Grand National and Boat Race
5 April
6 September
30 August
16 August
29th British Summer Time starts
15th Mothering Sunday, 17th St Patricks Day
15 March
9 August
29 March
13th Red Nose Day
08 March
2 August
23 August
1st March St. Davids Day, British Pie Week
01 March
Week
22 March
Events
Week
2015
British Food Fortnight
31st August Bank Holiday, BACK TO SCHOOL
Events
Promotional Calendar
22 November
21st Father’s Day
Wimbledon fortnight
21 June
28 June
20 December 27 December
26 July
13 December
12 July
19 July
6 December
5 July
British Golf Open
15 November
14 June
29 November
8 November
25 October
7 June
25th Spring Bank Holiday, 30th FA Cup Final
24 May
18 October
1 November
23rd British Wine Week
17 May
11 October
31 May
11th British Sandwich Week
10 May
www.ruralshops.co.uk
31st New Years Eve
25th Christmas
30th St Andrews Day
11th Diwali
5th Bonfire Night
25th BST ends, 31st Halloween
National Curry Week
RSAViews
THE LINK BETWEEN POST OFFICE & ROYAL MAIL The long-term survival of rural Post Offices depends on the success of Post Office Ltd. (POL). The success of POL depends on Royal Mail (RM). Although they are two totally separate companies, the health of Post Office Limited (a company wholly owned by the government) is inexorably entwined with that of Royal Mail (now fully commercial). The Rural Shops Alliance is primarily concerned about the long-term survival of rural Post Offices. The massive decline in government business passing through them (pension payments and the like) means that in 2015 a very high proportion of their transactions is post work. Indeed, it is probably no exaggeration to suggest that unless there is a game changer, maintaining income from postal services is crucial to the survival of the Post Office branch network in its current form, with its large number of loss-making but crosssubsidised rural branches. Under the current ten-year agreement between the two organisations (eight years left to run), Post Office Limited branches are only allowed to deal with Royal Mail post and are prevented from working with any other postal or courier companies. Conversely, Royal Mail cannot sell its services through other new retail outlets. Royal Mail is in a very competitive market. The collapse of parcel delivery company City Link over Christmas showed just how difficult it is to cover costs, let alone make a profit. Other parcel carriers are striving to gain market share at RM’s expense, whilst it is also being attacked in the letter delivery service. The universal postal service obliges it to deliver post to all addresses across the UK on six days a week for one standard price. However, since 2012 Whistl (formerly
TNT Post) has been delivering post to addresses in central London and Manchester, city centres where delivery is the easiest to manage and costs per letter are lowest. This leaves RM to deliver post for a fixed cost in the more challenging areas. This is blatant “cherry picking”, although the postal regulator, Ofcom, is allowing it to continue. It is obvious that Royal Mail’s business model depends on cross subsidising expensive collections and deliveries in
RSAViews sparsely populated rural areas from the income derived from serving densely populated towns and cities.
postage labels from home or office, printing them on a computer and paying for them electronically.
Royal Mail itself is acting to deal directly with more customers, cutting out Post Office branches and thus not having to pay commissions to POL.
It is particularly targeted at eBay sellers. The parcels are then dropped off, prepaid, at the local Post Office. The PO operator receives no payment for providing this service, a fact bitterly resented by many of them!
Up and down the country, rural Post Offices report that their bigger customers are being encouraged to have their mail collected directly by Royal Mail, rather than dropping it off at their local Post Office. In many cases, this reduces their income and the long-term viability of the branch. RM does deny that there is a central policy to do this. In addition, Royal Mail has launched Click & Drop. This is an online postage and label printing package, extending the existing Online Postage (OLP) service. Click & Drop encourages customers to buy and print UK
The Department for Business, Innovation and Skills is providing a massive amount of money to revamp and improve Post Office branches. This is excellent, very necessary and very welcome. However, there is little point in having magnificent branches if the business to sustain them is allowed to slide away. When the RSA identifies a problem, we usually like to suggest a solution. For this one, there is no easy answer. In this world of privatised postal services, Royal Mail, as the incumbent, is being attacked on several fronts. It is inevitable that the company itself must try to extract the maximum income from the services it provides and that includes squeezing intermediaries such as the Post Office. We would hope there would be room for Ofcom to provide Royal Mail with some protection from unfair competition on the one hand, perhaps in return for being less aggressive when it comes to bypassing Post Office branches on the other. We are not holding our breath that this common sense approach can be achieved.
Legal Bits & Bobs...
Legal Bits & Bobs... PENSIONS – AUTOMATIC ENROLMENT OF STAFF The law on workplace pensions has changed. Every employer with at least one member of staff now has new duties, including putting those who meet certain criteria into a workplace pension scheme and paying contributions towards it. The process is automatic as far as members of staff are concerned but the employer needs to take steps to ensure that they are enrolled. This is a classic case of new administration burdens falling disproportionately on small employers. For large companies it is another cost of doing business, for small employers it is another system to get their head round, another call on their valuable time. Each employer has a date by which they need to comply with the law. This is called your staging date. You can discover your date by using the official staging date tool at: ■ http://www.thepensionsregulator.gov.uk/ employers/tools/staging-date.aspx There are a number of tasks that will need to be completed by your staging date, including assessing your workforce to see who’s eligible, choosing a pension scheme, and communicating it to staff. The same government site has an action planner to help you with these tasks.
■ http://www.thepensionsregulator.gov.uk/ employers/planning-for-automatic-enrolment.aspx You need to tell the Pensions Regulator who is going to be responsible for managing the automatic enrolment process. This nominated contact will be sent information over the coming months. See: ■ https://forms.thepensionsregulator.gov.uk/ workplacepensionsreform/nominate.aspx? Campaign=019ecr-18-12-6-3-Letters
PERSONAL ALCOHOL LICENCE RENEWALS The Home Office has created a simplified personal licence renewals process – this is excellent news. If your licence runs out from early 2015, you will only have to fill in a very simple application form and submit it to your local authority. This application form can be accessed from your local licensing authority website. There is no charge for this process provided your details have not changed. You need to apply to renew your personal licence between one and three months before it expires.
ALCOHOL LICENCING – SECTION 182 GUIDANCE The Home Office has published updated Section 182 guidance for local authorities to use when enforcing the Licensing Act. This is not the law but local authorities have to have regard to it to inform their own policy and relevant decisions. Hence over time this guidance may well have implications for retailers. It may be used by Councils, police and other local stakeholders that are motivated to limit or restrict members’ trade. It may particularly affect prospective licensees applying for a new licence or an amendment to an existing one. Two aspects are of concern: The Portman Group and its code of practice on the naming, packaging and promotion of alcoholic drinks
22 RuralRetailer ● Winter 2014/15 ● Issue 28
has been included in the section 182 guidance. This means that your local authorities could make adherence to this Code a condition of a licence. Then a retailer could be unable to stock certain alcohol products, such as high strength lagers or ciders. ‘Health bodies acting as responsible authorities’ can now use the data they hold on alcohol related harm to make licensing interventions, e.g. figures on under aged alcohol-related emergency department attendance. Some local authorities may use this as a reason to impose further restrictions on licensees, even when it is usually impossible to link health data to one particular outlet.
SINGLE USE CARRIER BAGS The Department for Environment, Food and Rural Affairs (DEFRA) has laid the Single Use Carrier Bags Charges (England) Order 2015 before Parliament. This says that retailers who employ 250 FTE staff or more must charge a minimum of 5 pence (including VAT) for each single use carrier bag in England and to report the number of bags they sell each year. Assuming parliament approves this measure, the charge will start from 5th October 2015. A single use carrier bag is defined as “an unused bag made of lightweight plastic material with handles.” This means that the vast majority of rural retailers in England are exempt from this order, although in Wales and Eire they have been included in their equivalent schemes and they have worked very well indeed – a perverse example of England refusing to heed evidence from other countries. Based on this evidence, the RSA would recommend that rural shops do start charging for new bags (as opposed to reused ones) on this date, although of course there is no compulsion to do so. It will dramatically reduce use of such bags by your customers and provide a modest income for the business or charity. It is also an opportunity to encourage sales of re-usable bags.
SHARED PARENTAL LEAVE AND PAY New regulations are now in force. The option to use the new Shared Parental Leave rights will apply for parents
who meet the eligibility criteria, where a baby is due to be born on or after 5th April 2015, or for children who are placed for adoption on or after that date. Employers could start to receive notices of eligibility and the intention to take Shared Parental Leave from qualifying employees from January 2015. Employed mothers will continue to be entitled to 52 weeks of Maternity Leave and 39 weeks of statutory maternity pay or maternity allowance. If they choose to do so, an eligible mother can end her maternity leave early and, with her partner or the child’s father, opt for Shared Parental Leave instead of Maternity Leave. If they both meet the qualifying requirements, they will need to decide how they want to divide their Shared Parental Leave and Pay entitlement. Paid Paternity Leave of two weeks will continue to be available to fathers and a mother’s or adopter’s partner, however Additional Paternity Leave will be removed (Shared Parental Leave will replace it). This measure is designed to give parents more flexibility in how to share the care of their child in the first year following birth or adoption. Parents will be able to share a pot of leave, and can decide to be off work at the same time and/or take it in turns to have periods of leave to look after the child. ■ For more information, see: https://www.gov.uk/ shared-parental-leave-and-pay/overview
ELECTRONIC CIGARETTES The Department of Health has published a consultation on the sale of these products. They propose to introduce an age restriction of 18 years for the sale of “nicotine inhaling products” and to ban proxy purchasing of ecigarettes. This seems a sensible measure to bring the law in line with the availability of new product types. If you want to respond to the consultation, it can be found at: ■ https://www.gov.uk/government/consultations/ nicotine-inhaling-products-introducing-a-minimum -age-of-sale Issue 28 ● Winter 2014/15 ● RuralRetailer 23
Price Marking and Own-brand By Steve Fox How important are Booker’s own-label products in a rural shop context? Whether you are in a city location or a rural location own label is important. Consumers will always want quality and value for money no matter where their location. It isn’t about having either branded or own label but a combination of both. Is it important to provide a value range to compete with the big brands or do shoppers see Euro/Happy Shopper as a credible quality alternative? Shoppers see Euro Shopper and Happy Shopper as both a value range but also offer a credible quality alternative. Shoppers have come to realise that a cheaper price doesn’t necessarily mean an inferior product How effective is your marketing campaign to offer c-stores big brands at competitive prices ie. the current ‘Amazing Christmas Deals’? Does it help drive footfall/sales?
Every Premier retailer receives a full POS kit, including leaflets with which to market their stores, shoppers are more demanding than ever and it is vital c-stores to have a strong promotional offer, enabling them to face up to both the competition and the multiples. How much do price marked packs help small stores compete with supermarkets and attract shoppers? Retailers should use them strategically on lines where they will have the most impact. Independent stores should go around the multiples by having a USP such as PMP’s and own-brands How do you convince retailers that selling price marked packs makes business sense – despite the lower margins? All Happy Shopper and Euro Shopper deliver 30% POR for retailers so this is not a lower margin. PMP give consumers confidence that they aren’t paying over the odds and this means that they are more likely to shop in their store. The key thing as above is to have the right mix and concentrate on the lines that require a PMP. Do price marked packs increase sales or just cannibalise from the standard fixture? On the right products PMP’s definitely help increase sales. Also, on pack offers such as a “2 for 1” help drive more cash through tills. Do you think shoppers want promotions (ie. 3 for £1 or 25% free) or simply lower prices at c-stores? Shoppers definitely want promotions but as with all things it is about having a balance between promotions and straight price products. Too many promotions can overwhelm shoppers. Lower prices are key to complementing the value message which is why own label products can be ideal.
Steve Fox
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By Helen Gregory
How Prices are affecting Customers’ Behaviour “If someone wants baked beans they will buy a price marked tin of Heinz rather than a cheaper own brand alternative,” reports Steve Ansell, of Ansell Village Stores in Bedfordshire. “People don’t always want lower prices,” agrees Colin Woods, who owns Amberley Village Stores in Sussex. “They often prefer to buy a brand like Heinz rather than a cheaper variety – but they like getting two tins at a lower price.”
It’s an interesting take on price perception; brands are popular, according to these rural retailers, who believe some of the symbol groups’ own label ranges don’t always work in their locations. A budget wholesaler range just wouldn’t sell at Radley Village Shop in Abingdon, Oxfordshire, adds manager John Goodenough. “People aren’t looking for cut-price bargains.” Despite this, symbol groups insist their own label ranges offer a real alternative to branded products. Costcutter Supermarkets Group’s new own brand – Independent – has three tiers,
from basic to premium. The group says own brands offer retailers increased margins so it’s vital that they are a credible alternative and not simply a cheap substitute. “A strong own brand, alongside branded goods, is essential to give convenience retailers the ability to offer a broad choice to their customers, across several price points,” says Lucinda Stephenson, Marketing Manager for Independents. Londis’s own label products also offer good value alternatives to shoppers who use a Londis store as their main shopping destination, according to their Marketing Director Anna Burleigh. “It’s even more important to offer
BOGOFs grab customers’ attention
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How Prices affect Customers...continued A striking pound section
quality and value in a rural shop, providing a wide range for customers to choose from.” All the symbol groups also regularly offer competitively priced brands at their depots; Londis, for example, gives retailers access to six products at ‘industry leading’ prices each week as part of its Super Six campaign, to help small stores compete with the big boys. But like customers themselves, rural retailers aren’t afraid to seek out cheaper deals – even if it means severing ties with long-standing suppliers. Says Goodenough: “We’re looking to change wholesalers to get a better deal and recently changed our milk supplier when the price went up too much and sales dipped.”
customers perceive his prices to be comparable with supermarkets. Retailers are seeing the benefit, agrees Adrian Troy, Head of Marketing for soft drinks producer AG Barr, who says 65% have reported increased sales of price-marked packs in the last 12 months. This manufacturer also flags up a multi-buy offer on its price mark packs, such as on Rubicon 1litre cartons sold with a £1.29/2 for £2 flash on pack. This has proved so successful that it’s using the promotion on other products such as Irn-Bru. “Price-marking drives footfall and rate of sale, builds shopper loyalty and when managed correctly, is a proven way to drive incremental category growth,” Troy adds. Imperial Tobacco reports price marked packs now account for about 60% of total volume sold at independent stores (Nielson Market Track 2013) and that 47% of adult smokers will always buy these packs if available.
Shoppers can trust suppliers over retailers when it comes to price, which means price marking is a great way to assure them they aren’t being ripped off. Research group Him! reports that 61% of convenience shoppers think these packs help independent retailers to have better prices than the supermarkets. As a result, wholesalers have seen a huge sales increase, according to Him!; last year, 93% of retailers bought soft drink price marked packs – up from 47% in 2010. Woods, of Amberley Village Stores, has sold a lot more price marked packs in the last couple of years – particularly on coffee, biscuits, and chocolate - and agrees that as a result,
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Well-sited dump bins can add to the price message
manager at Cadbury owner, Mondelez International, “so retailers should be advised to consider how much of their stock they want to be perceived as ‘on promotion’. If they are offering nearly all their stock as PMP, is this giving shoppers an expectation of a store that can’t be continued long term?”
PMPs can re-assure customers that they are paying a fair price OR act promotionally - two distinct roles
Says Anna Burleigh, marketing director at Londis & Budgens: “Price mark packs don’t necessarily increase sales but they do increase choice and any increase in choice is always a positive for the customer.” However, IGD research earlier this year found that while price is the biggest factor considered by shoppers, they only ranked promotions at number eight. “Price mark packs are a type of promotion,” explains Susan Nash, trade communications
Wine as a range has clearly defined price points
There’s obviously a balance to be struck, but small retailers are increasingly happy to stock price marked packs, as while their margins have been historically tight, that’s now changing according to village retailers. Says Goodenough: “Price mark packs can still offer margins of up to 40% on some products such as confectionery and drinks – so it’s really no hardship stocking them.” While shoppers will pay a bit more on groceries in a village shop, - no-one likes to feel ripped off. However, the mindset seems to change when it comes to stocking local produce. Goodenough says his customers want to support the local shop and don’t balk at spending £5 on a home-made cake. And Woods at Amberley Village Stores sells dozens of bags of locally made premium muesli each week and stocks 60, mainly local, cheeses. “I don’t try to compete with the supermarkets,” he says, “my customers are largely elderly and appreciate being able to buy products they can’t get in the major stores.”
Posters can drive home a price message
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Calling all Small Shops!
Best Small Shop Competition The search for the best small shop in the UK has been launched as part of a competition organised by the All Party Small Shops Group. Speaking at the launch, Chairman Simon Danczuk MP said: “We are looking for the best small shops in the UK to come forward and tell us the great work they do to serve their communities and create jobs in the economy. Grocers, Delis, Booksellers, Music Shops all have the chance to tell us why they are the best small retailer.” Andrew Goddard, PayPoint Retail Director and competition sponsor said: “We are pleased to be supporting the Best Small Shops Competition again. It is a great chance to showcase the work that small shops do across the country and how important they are to their local communities.” Applicants need to explain why they are the best small shop, covering the key criteria areas; innovation in your business, community engagement and entrepreneurial activity. Deadline for applications is Friday, 30th January. Full details of the application process for the Competition are available at: www.bestsmallshops.uk.
A reception will be held at the Houses of Parliament on the 25th February 2015 for the retailers that have been shortlisted, where the overall winner will be announced. The RSA is an active member of the Independent Retailers Confederation, an umbrella organisation for a range of trade associations and which sponsors this parliamentary group. Our Chief Executive, Ken Parsons, will be chairing the judging panel for this competition. We know there are some really excellent rural shops out there and we hope there will be a good showing of them in the shortlist. Don’t be modest!
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D-DAY APRIL 6th... ACTION NEEDED...
Tobacco Display The regulations that already cover the display of tobacco products in larger stores will be extended to all sizes of store from 6th April 2015. After that date it will be a criminal offence to display tobacco products or prices except in accord with the regulations. We repeat – non compliance is a criminal offence, that could attract a fine of up to £5000 or up to six months imprisonment, or both.
In England, from April all tobacco products must be stored out of sight of the public. You can reveal only up to 1.5 m² of display when retrieving products, showing stock to an over 18 at their request (age check must be carried out if relevant before revealing stock), counting stock, restocking the fixture, maintenance, cleaning or for staff training. In every case, the products must be displayed for the minimum length of time. It is not an offence for other customers, including children, to incidentally see tobacco products whilst the door is open for a legitimate purpose. Many retailers will already have their solutions in place or at least planned. If you have not fully done so, we listed various options in the last edition of rural retailer. This information is still available on our website www.ruralshops.org.uk. We very definitely do not recommend using a curtain to cover the display except as a very temporary measure. This is not the right image to display to customers.
The display ban will provide a real opportunity to review your tobacco range. Rationalise it by cutting out slow sellers (if they are not on display, sales are not going to increase…) and maybe even re-organise products on the shelf. Once the need to mount a display for customers has gone, the need for multiple facings of best sellers may decrease. You might even consider re-arranging products into alphabetical order on shelf, to make it easier for staff to find them.
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We expect most retailers funding the installation themselves to opt for adding sliding doors to the existing gantry. If you do this, do make sure that when they are open it is impossible to display more than 1.5 m². Hinged doors are likely to get in the way when open. For any new fixtures, do remember that they should have a life of several years but will be subject to quite hard wear and tear – poor quality fittings could be a false economy. ■ You must continue to display a sign stating that it is illegal to make tobacco sales to people under the age of 18, as currently. This legal requirement has not changed.
Ban
■ You are allowed to install unbranded generic signs, such as, “We sell tobacco”, in any format and any size. We strongly recommend that you deploy such signage to make sure your customers know you are continuing to sell tobacco, once it is hidden away out of their view. All other types of price list or label must use black Helvetica plain font ■ You can display one A3-sized poster, entitled tobacco products price list. This can only be in characters no higher than 7 mm (30 point font) and can only list the brand name of the product, its price, the number of units in the pack or the net weight (for cigars, country of origin and dimensions, for pipe tobacco, the cuts and type of tobacco, are also permitted). ■ You can have a list including pictures of products, which must not be left on permanent show but which can be shown to any customer aged 18 or over who asks for information about the tobacco products sold. This must have wording no higher than 4 mm
(14 point) and pictures of the actual product must not exceed 50 cm² (about the size of a normal cigarette packet). ■ Price labels on the fixture must not be larger than 9 cm² and must use characters no higher than 4mm. We suggest that you plan in staff training on the new requirements for the week before they come into force. Make sure all staff, including part timers, are confident in the new requirements.
These regulations do seem positively bizarre in places, worthy of a novel by George Orwell or Kafka. We have this mental picture of young people frantic to start smoking, all because the pricelist in their local store was in Times Roman rather than Helvetica typeface, or with letters printed in 16 point rather than 14 point. You really could not make it up!
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