RURAL RETAILER Spring 2015

Rural Retailer www.ruralshops.org.uk

Issue 29 l Spring 2015

The Journal of the Rural Shops Alliance

EXCLUSIVE: The Truth Behind Showpiece Shop ELECTION: What the Next Government should do for Rural Shops New Source of Grants for Rural Shops

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● Rural Shops Alliance 20 Garland, Rothley Leics. LE7 7RF ● Tel: 01305 752044 ● E-mail: info@ruralshops.org.uk ● Website: www.ruralshops.org.uk

Contents...

In this issue...

3 5 6 13

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22 ● 23 ● Cover image: Chris Grimes in the brand new shop at Blockley

24 ● 28 ●

30 ● 31 ●

In my opinion, By RSA Chief Executive Your Action Checklist / RSA Weekly Newsletter Blockley Shop: Be careful what you wish for RSA Views: Why Rural Shops matter and what Government can do to help them: Village Shops off the Radar, Business Rates, Post Office, Cost of Staff, Compensation for Roadworks The View from behind the counter Leader Funding: Possible Financial Support for Rural Businesses Whitstone Stores: A good time to be in convenience and an even better time to be in a symbol group?

Legal Bits & Bobs: Shared Parental Leave; “Fit for Work” Service; Carrier Bag Charges; Tobacco Going Dark; Regulations on sales of E-Cigarettes to Under-18s; Automatic Pension Enrolment The Values behind a Brand / Bus Routes in Rural Areas Bishampton does the Double / “May you live in interesting times”

RuralRetailer ● Published by The Rural Shops Alliance. ● Printed by: Russell Press, Nottingham. ● Design: Kavita Graphics. dennis@kavitagraphics.co.uk

2 RuralRetailer ● Spring 2015 ● Issue 29

In my Opinion...

Another hidden advantage for the big boys?

Smaller shops are caught in the crossfire of the ferocious price wars between the big supermarkets. This is a situation where being big makes life easier.

If you are ordering product by the lorry load you are in a far better bargaining position than if you are buying one case at your local cash-and-carry.

In the UK we have the Competition and Markets Authority (CMA) with a remit to prevent unfair competition and limit this effect.

However, when it comes to bureaucracy, the government too often seems on the side of the big boys. David Cameron launched the Red Tape Challenge with much fanfare. Many old regulations were swept away, but any benefits to small businesses have been dwarfed by new measures.

There has been a raft of new ways to make small business owners spend their evenings sweating and swearing in front of their computers, trying to understand the latest edict. Many of these new measures are a nuisance for a large company with a specialist IT department and dedicated HR professionals. They are a more serious proposition for a small business, where the owner is pretty well doing everything, from managing IT to cleaning the toilet..

schemes that may in the event have nobody contributing into them. It can be a real problem for the small employer.

There are some fields where economies of scale are massive and pension provision is one of them. This was true back in 1946, when the current state pension scheme was established.

It is still true now. It is a total nonsense that millions of small employers will spend many hours of their valuable time and pay out good money to financial advisers, all for something that is far better provided by the state through National Insurance contributions. This is a hidden way that government policy is giving a further competitive advantage to large companies.

I am sure this was totally unintended, just a consequence of an ill-thought-out policy. But it would be good if one day one of these unintended outcomes worked in favour of the small guy, the small retailer just buying the one case at the cash and carry. I am not holding my breath.

In the coming months, millions of tiny companies will be forced to set up an automatic pension enrolment scheme. The Pensions Regulator helpfully reminds us, “if you fail to comply with your duties, you may be fined and/or prosecuted”. This has already happened to some companies – it is not an idle threat.

Setting up a scheme can be a bureaucratic nightmare. The pension industry is not exactly rushing forward to help small employers set up

Issue 29 ● Spring 2015 ● RuralRetailer 3

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Issue 29 ● Spring 2015 ● RuralRetailer 5

Blockley Shop...

Be careful what you wish One of the best-known, most successful community-owned shops in the country is suffering a severe crisis of confidence.

And this is despite the November opening of a brand new, purpose-built 900 sq. ft. store costing a staggering £800,000.

Blockley Village Shop in Gloucestershire, like many community-owned retail businesses, was born out of calamity when the village’s commercial shop and Post Office closed in

it is an attractive building

6 RuralRetailer ● Spring 2015 ● Issue 29

2005. But, unlike most such initiatives, the hugely supportive local residents were prepared to employ an experienced manager (a talented and well-liked former hotelier who was already running a successful café and deli in the village), and to pay all the shop and café staff. So there was no reliance on unpaid volunteers.

Right from the start, it was recognised that the shop was for all the residents of the local community. Although much of the most intense fund raising was done by those who would not necessarily rely on the shop on a daily basis, it was happily understood that their hard work would benefit those residents – such as elderly

By Beth Whittaker

for...

Assistant Manager Yvonne Smith serving in the modern counter area

their weekly shop, meant it was soon turning over £500,000 annually.

people and young mums - in real need of what was on offer.

The shop with its small café was comfortably housed for several years in a dilapidated but welcoming former Coach House in the main street. Despite the fact that many things were held together with sticky tape and BluTak and tasks undertaken by a series of ‘I know a bloke in the village who will do that’, the shop was soon heralded as the ultimate in communityowned projects.

Representatives from around 30 ‘wannabe’ villages beat a path to manager Chris Grimes’s door to learn just how it should be done.

National media trumpeted its award-winning successes. Turnover was exemplary – the combination of an experienced manager and well-trained paid staff, a broad offer of affordable everyday fare alongside treats and local produce, a small but welcoming café and, above all, support from across the village from social housing to mansions and across the ages, from pocket money children to pensioners and

That helped generate £5,000 a year profit that was ploughed back into local projects alongside a myriad of true community ‘hub’ facilities – IT drop-ins, lunch club for elderly residents, mother and baby groups, talks from the doctor, police and social housing support and an outreach PO service three days a week. The shop even sponsored the village’s May Fair and hosted a Christmas party for the village. It was a true co-operative venture. The volunteer committee was supportive of the manager, the community kept fund-raising, customers flocked through the door, and all was well with the world.

But then the lease ran out for the old Coach House premises; exciting, grandiose, plans for a purpose-built replacement building took over the lives of the shop’s committee.

Fund raising started. Placard-waving locals were bussed into Cirencester to successfully persuade

A steel beam – a “feature” - across the sales area is slightly incongruous

Issue 29 ● Spring 2015 ● RuralRetailer 7

Blockley Shop...continued completed. Expensive but vital bat and tree surveys were undertaken, and the almost inevitable clashes between builders and architects took their toll on timescales.

The café provides modern seating

There is underfloor heating in the new public loos, state of the art chillers which recycle heat, a £30,000 catering-quality kitchen serving the elegant new café, and even a £37,000 disabled lift to allow the shop to employ disabled people who might need to reach the two floors above the shop.

local planners that the new building had merit and was vital to the next stage of the shop’s hopefully long life.

And the money? No less than £500,000 from the Big Lottery Fund, £120,000 from villagers, and a £250,000 Social Investment Business loan and grant.

The building was constructed on a really challenging site, using beautiful Cotswold stone, slate roof and seasoned timbers. It was to sit next door to the old shop, abutting the churchyard. It would have a cellar store room, digging deep into the Cotswold soil and necessitating the diversion of a stream. The fish in the neighbouring mill pond had to go on holiday for six months while building work was

Chris Grimes

So the money was quickly spent and, altogether, the new shop was to be a very, very grand place indeed – with the annual contribution to the community anticipated to rise to £15,000 a year.

Next, it was time to bring on a new supplier – Nisa (itself a member-owned organisation). This was much to the relief of manager Chris. This change allowed prices to become far more competitive and provided a ‘brilliant’ two-lane The welcome is spoilt somewhat by the temporary sign still there four months after opening

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Café fitting is a “feature” but very impractical

Extensive refrigeration lines 3 walls of the shop

check out and EPOS systems, trade knowledge, back up and IT support for Chris and his team.

It’s believed the store has become the first community shop in the country to become a full member of a national buying group. Most community shops are too small to meet their usual minimum order requirements, (in the case of Nisa, 400 cases minimum order).

However, Nisa also recommended a £1,000 sociodemographic survey to forecast future footfall in the new retail palace. And it turns out that the consultant’s results were wildly – laughably optimistic. Problems with the build multiplied. The opening date slipped from July to November - and even by then, the spanking new fridges weren’t working and the kitchen wasn’t finished. As a result, the hoped-for grand opening was a bit of a damp squib. The predicted turnover had persuaded Chris to take on far too many staff.

Total numbers reached 28 – doubling the original shop’s number - just before Christmas.

Trade didn’t pick up in the New Year. Local people had tried out the fantastic new shop –

The shop highlights the Nisa offer progamme

The modern sales area. The high gondolas make it too much like a supermarket for this location. The cut flowers are a big seller

Issue 29 ● Spring 2015 ● RuralRetailer 9

Blockley Shop...continued “Since Christmas, some of my staff have moved to other jobs so I’ve lost a lot of fantastic, knowledgeable local folk, and I am going to take only minimum wage myself for the time being, while it all sorts itself out. It is such a depressing time at the moment, but I am totally confident we will turn the corner. We have learned our lessons and will make it work. So, it’s a bit of a warning to other community initiatives – be careful what you wish for.”

The community lobbied the Council hard to get planning permission for the shop

and, sadly, found it lacking. In Chris’s words, it was all ‘too poncified’ for its own good. “The old shop was terrible, it was scruffy and “a bit smelly, like an old dog blanket”, but people loved it,” he says. “They loved beans on toast on the wonky tables in the old café. They weren’t impressed by Eggs Benedict in the new place.

“I think some of the committee got completely carried away with their ideas,” he says. “And while we are still very successful, with turnover way up on the last year in the old shop, we’re currently facing huge cash flow problems because we just aren’t getting enough business in through the doors. Because of the bonkers forecasts, which we all took at face value, I took on far too many staff. Due to the huge amounts of money involved in the new build, the committee felt it wanted more involvement in detailed decisionmaking, something they had not done during our hugely successful time in the old place.

Unfortunately, I believe those decisions ended up pushing away our core customers – they didn’t feel at home in the new shop or café. Although our high-end ranges expanded, we took our eyes off the day to day shoppers – the young mums, the older residents and passing trade - and despite our lower prices through Nisa, the environment of the new shop doesn’t really appeal.

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Chris is now dedicating his time to re-building the reputation of the shop; to welcome back the ‘white van man’ wanting a bacon roll, and hold off a little on the gourmet evening meals and the late-night openings. He needs to promote the reduced prices but reassure customers they are matched by high quality, and to continue to support local suppliers. The committee has recently had a really positive meeting with Social Investment Business and the Big Lottery Fund and they have both been very understanding and prepared to help the shop through this stickly patch.

And, with the support of an almost totally new shop committee, Chris needs to make some quite radical changes to ‘unponcify’ the place and make Blockley Village Shop once more the envy of the shires – and bring back the staff he never wanted to lose.

The very costly and rather impractical lift

The RSA view For years we have admired the strong performance of Blockley shop as it achieved turnover figures that most community–run shops can only dream of, despite operating from less than ideal premises.

When we commissioned this article, we were expecting to find a project to hold up as an example to others.

This is certainly what we have found but not necessarily in the way we expected!

The turnover figures are still remarkable for a village the size of Blockley. This is a massive achievement. There are dozens of other community shops who would give their grandmothers for the premises and business achieved at Blockley.

We know that provided this business can overcome its management and cash flow crises, then the village will have a shop to be proud of far into the future.

However, there are some very important lessons to be learnt from this case study. Many are the same as we have seen in other projects, although in this case perhaps magnified.

■ Do not get carried away by the availability of free or easy money. The total budget of over £800,000 for the shop of 900 ft.² is of course totally ridiculous. It is very easy to spend money when it is available and there are numerous examples of “gold plating” in this project. (We cannot even hope to understand why the Big Lottery Fund thought that supporting most of a cost of £900 per square foot for retail space in a rural village was a sensible use of their funds).

■ Do give architects or other professionals a very tight and clear brief from Day 1. Do not allow them to give their creativity too much rein. First and foremost, a shop or cafe are spaces in which certain activities have to take place efficiently. This comes first – an

exciting appearance is a bonus. Do not assume these professionals understand the needs of retail.

■ Involve shop floor staff every step of the way. There are aspects of the Blockley shop and cafe that those actually working in it could immediately have told project management how to get right.

■ The interface between committee and shop managers is always important; it is crucial that this link functions really well when a project of this magnitude is being undertaken.

■ Estimating takings for a new shop is part science, part gut feeling. For a village shop, so much depends on local circumstances. All takings estimates can be wrong. Keep as much room to respond to changes in the system as possible – employ staff on flexible contracts and do not overstock at day one even if it means an emergency trip to cash-and-carry or embarrassingly bare shelves.

■ It takes a really big set of mistakes to give a retail business a cash flow crisis but always have contingency finance for “just in case”.

■ Make sure that whoever is project managing the scheme has the experience and competence to do so. If it involves employing a professional to do this, then it is often money well spent.

Any other prospective community shops visiting Blockley at present are likely to be chastened by hearing their story and will hopefully take it to heart when managing their own projects.

We very much hope that in a couple of years’ time, other community shops will be going to Blockley to hear about a brilliantly successful community shop.

Issue 29 ● Spring 2015 ● RuralRetailer 11

RSAViews General Election 2015

Why Rural Shops matter and what Government can do to help them

www.ruralshops.org.uk

RSAViews

Why Rural Shops are We all know that village shops are important but sometimes it is useful to actually think just why this is true. This is our list as to why village shops are so vital: Combat social exclusion

Convenience store

For some rural residents, a visit to their local shop is their only social contact of the day.

Often, these socially excluded people are elderly or unemployed. The village shop is an important, albeit informal and unpaid, part of their support network.

People in every community value enormously the ability to buy short shelf life items and those forgotten during a major supermarket shop.

Newspapers, milk, bread, fresh fruit and vegetables can be bought on a frequent basis.

When your child tells you at 6.55pm that they need this list of ingredients for a food technology lesson tomorrow, you are very grateful that the village shop is still open until 7pm!

Enable continued residence Particularly for non-car drivers, a shop in a village can be the difference between remaining living independently rather than having to move into sheltered accommodation elsewhere.

Having a village shop, enabling the local purchase of groceries and access to financial services, is crucial for a significant number of rural residents. Postponing the move by elderly individuals into a care home or sheltered accommodation by a few years saves the public sector very considerable sums of money.

Insurance When the village is cut off by snow or floods, customer numbers in the shop rocket. That is when the local store is needed most. However, to provide that vital service for one week a year, the shop needs to be viable for the other 51 weeks of the year.

Main grocery shop Centre of the community The village shop is actually the only facility in most communities which is welcoming to all of its members. Churches, pubs, village halls and clubs have very important roles, but only the shop is a place where everybody goes. Most village shops are the centre of village life, the place where local news is exchanged; raffle tickets sold and people see each other.

Although the number of people carrying out a full weekly shop in their local store has diminished over the years, it is still an important facility for an important minority of non-drivers.

This becomes more important as rural bus services continue to disappear.

Important Post office and financial services

Source of local employment

In most rural locations it is now only possible to provide these services in tandem with a village shop. Research shows time and time again how much these services are valued but today they depend on cross subsidy from a viable shop.

Village shops often employ a surprising number of people. Retail employs a lot of staff hours in relation to turnover. Young people often find their first paid employment in their local village shop and for many the experience is very positive, even life-changing, whilst local shops are also a key way back into the labour market for many parents returning to work after children.

Business Customers Small businesses often depend on their local shop for postal and banking services, as well as stationery and other requisites.

Green issues If residents can walk to a local shop, then this reduces the number of car miles they drive to shop elsewhere, with obvious environmental benefits. Shopping locally reduces the overall carbon footprint, whilst sales of local produce can dramatically reduce food miles.

Support for local suppliers Most new food businesses start off by supplying local shops in relatively small quantities, with some building up from this base to become large enterprises. The presence of village shops is a vital in helping their customers access local products and thus supporting small producers.

Most village shops have their local supplier of eggs, honey, cheese, even beer, depending on what is produced locally.

Local circulation of money The fact that village shops employ local people, use local tradesmen and buy from local producers means that a significant proportion of the money spent in a village shop circulates in that local economy.

The unknown future Many village shops have changed out of all recognition over the last few decades. Change will continue. Once a shop has closed, it is very difficult indeed to bring it back. Maintaining a retail presence in rural villages retains the social capital and capability to bring in new services in the future.

RURAL SHOPS MATTER!

RSAViews

VILLAGE SHOPS OFF THE RADAR The current situation Over recent decades, the number of retail services in rural England has declined markedly. Very few rural petrol stations remain, except those on main roads serving passing traffic. Hundreds of rural pubs have closed and many more are under threat. Village shops have also been declining in numbers. We estimate that about half of them have closed in the last 20 years. Although all political parties recognise the crucial importance of village shops, there is no joined up plan in England to support them.

The problem Predictably the shops that are doing well are those in larger settlements or with a lot of passing trade, occupying suitable premises and well managed. In smaller settlements, retailers are struggling. The reasons for this are many and complex. Intense supermarket competition has made it more difficult to compete in terms of range, price and store ambience. In recent years, the spectacular rise of home deliveries of groceries has upped the pressure. Demographic changes have affected their business; people often commute out of their village each day and there has been a significant increase in the number of households where all adults go out to work. Many potential customers are away when the shop is open.

■ We have already highlighted that the quality of management in the sector is variable. A large number of proprietors come into the industry relatively late in life without any experience. Some do brilliantly but for others a basic level of specialist training, support and advice can make a huge difference to their effectiveness and long term success.

■ Many businesses are undercapitalised. When profits are under pressure, a natural reaction is to postpone or cancel investment in the business. Comparing a modern convenience store with one from even 20 years ago highlights just how much has changed over the intervening period. It is vital that shopkeepers do invest in their businesses in order to maintain the level of standards that multiples have conditioned their customers to (rightly) expect.

Historically government agencies, the Rural Development Commission and then the Countryside Agency, understood and were able to address both these issues on a very limited budget. The subsequent replacement of these bodies by the Regional Development Agencies and then the Local Enterprise Partnerships (all within the space of less than 20 years!) has led to these issues not being addressed.

Such support is not charity. It is best seen as a small contribution for the community services that these businesses provide on an unpaid basis.

The solution Rural shops need to be back on the radar, to be recognised for the community services they provide and supported accordingly.

■ One government department, either the Department for Business Innovation and Skills or the Department for the Environment, Food and Rural Affairs, should have a clear responsibility for the rural retail sector.

■ We then need to restore what worked very well indeed up to about a decade ago when the support was lost. A very limited budget is all it would take to restore the situation of providing modest grant funding on a matched basis to encourage rural retailers to invest in their businesses. A small team of specialist consultants could support them with training and advice.

■ More information: http://www.storeisthecore.org.uk/ images/Store_is_the_Core_EVALUATION.pdf

BUSINESS RATES The current situation HM Treasury has just published a very useful discussion paper on the future of this tax. The current system is that a government agency, the Valuation Office Agency, calculates a rateable value for each commercial property, based on its calculated rental value, which is then used each year to calculate its rates bill. For decades, business rates applied to retail premises worked fairly well, as the retail industry itself was fairly stable.

The Problems In recent years, the government has supported very small businesses by doubling the Small Business Rate Relief Scheme, meaning that the smallest businesses have not paid any business rates at all. This has run in parallel with the Rural Rate Relief Scheme, which provides 50% mandatory relief for qualifying businesses, with a further 50% dependent on discretionary support from the rating authority, although many local authorities are not nearly so generous in providing this support as their own budgets have been squeezed, and demand significant red tape to get it.

Some shops are being penalised by being forced to apply to the rural scheme rather than the small business relief scheme.

The development of out-of-town shopping centres, online shopping services based on warehouses, plus the rise of high street premises for coffee shops, bookmakers, charity shops and the like make the situation far more complicated. Business rates hit business types that depend on occupying a lot of space.

Business rates are excellent tax or the government, being very hard to avoid and provide predictable income. However, this very stability can be a downside for a retailer. The tax is fixed, so it tends to particularly affect companies during their start-up phase when cash flow is particularly tight. It also means that businesses facing hard times cannot reduce this cost at all.

Figures from the Valuation Office Agency show that the 80% of properties with the lowest rateable values contribute just 18% of the total rateable value.

Conversely, just 61,000 properties (3.4% of the total) make up 53% of the total rateable value.

The Solution This is a very big topic that extends far beyond the needs of rural retailers. It is a debate that will continue way beyond the election. However, there are a few key points that should be taken into account however the debate pans out.

■ The current conflict between The Small Business Rate Relief Scheme and the Rural Rates Relief Scheme needs to be resolved. This could be done by allowing retailers the choice of schemes (at present the rural scheme takes precedence) or even better, to have just one scheme that meets their needs.

■ If businesses deserve a rates relief, then this should be by right rather than through the discretion of their rating authority, a recipe for a postcode lottery. The contribution rural shops make to the fabric of society deserves to be recognised by giving them full business rates relief as of right.

■ All small retail premises should be permanently excluded entirely from paying business rates.

■ More information: https://www.gov.uk/government/ uploads/system/uploads/attachment_data/file/ 413070/business_rates_review_final.pdf

RSAViews

POST OFFICE The current situation Post Offices are one of the most valued assets within local communities. They have been in a considerable state of flux, as the network adapts to the realities of the 21st-century. The government has provided a massive investment in the branch network to help this transition.

Some 3300 branches are designated as Community Offices, recognising their local importance locally, and their owners are receiving a fixed core tier payment to make keeping these offices open financially worthwhile. This is excellent news.

The problem The proportion of Post Office Ltd. business originating from the government has declined markedly over the last decade or so, meaning that postal services and banking are increasingly important in the sales mix.

We would highlight two issues.

For many operators, particularly those of smaller Local offices, the income they receive from the Post Office is linked totally to the number of transactions effected and as a result is not providing much profit. It is often quite difficult to sell these offices on to new owners and it remains to be seen how viable they will be in the longer term. It is vital that everything is done to maintain the income for those running Post Offices – their future support cannot just be taken for granted.

The increased dependency on postal services means that the fortunes of state owned Post Office Limited is very closely linked to that of privatised Royal Mail. Post office branches are only allowed to deal with Royal Mail post and cannot work with any other competing company. Royal Mail, however, is in a very competitive market. The collapse of parcel delivery company

CityLink over Christmas showed just how cutthroat this business really is. Royal Mail is under threat, as other companies cherry pick the easiest and most profitable postal services This leaves Royal Mail with the Universal Postal Service that obliges it to deliver post to all addresses across the UK on six days a week for one standard price. Whistl (formerly TNT Post) have, for example, been delivering post just to central London and central Manchester.

Secondly, the current Post Office Horizon computer system is now getting very long in the tooth and although it has been updated over the years, it compares unfavourably with the systems being operated by major competitors. We make this point knowing full well the history of large government computer projects!

In practice, the cost of this investment will, we imagine, have to come from central government sources. A modern computer system would enable the Post Office to compete far more effectively for contracts from outside of government, as well as allowing it to be more flexible in offering government services in a more costeffective way.

The Solution There needs to be complete clarity as to how competition in the postal market is going to be allowed to work. If competitors are allowed to cherry pick, then Royal Mail should be relieved of its Universal Postal Service obligation – it really is that simple.

Although the cost would be unwelcome to government, nevertheless at some point they will have to bite the bullet and commission a new computer system for Post Office Ltd.

COST OF STAFF The current situation Retailing is one of several industries where low wages are common. It employs large numbers of relatively unskilled, often part-time staff and operates in very competitive markets. In the convenience store sector, the cost of employing staff can be 10% or more of turnover and is a crucial business cost.

The National Minimum Wage (NMW) is set to rise by 3% in October at a time when retail price inflation is likely to be zero or negative – a real challenge for employers.

However, all parties rightly sees low wages in the economy as a problem to address and want wages to rise still further in real terms – the Labour Party for example is promising an NMW of £8 per hour by 2020.

The problem The NMW does what it says. It is a national figure that covers remote rural areas right through to urban centres and it is a baseline minimum. What is a reasonable wage working near to home in rural Northumberland is clearly not acceptable for somebody commuting a long distance to work in central London. The one-size-fits-all of the NMW has left millions of small business owners only able to pay themselves a rate per hour that is actually less than their staff earn.

Over the past few years, the government has increased the non-wage costs of employing staff, such as holiday pay, maternity rights, statutory sick pay and new pension rights. These all add considerably to the cost per staff hour. That might not matter if it was possible to increase staff productivity in small shops. It is very difficult to increase staff productivity or to raise prices to cover this. Proprietors end up working even longer hours themselves, cutting back on investment in the business, reducing customer service or reducing wage differentials – supervisors end up getting paid very little more than the staff working for them. All harm the business in the long term.

The solution ■ A one size fits all National Minimum Wage no longer works well. One alternative possibility is a return to industry wage councils, bodies that used to set wage rates in specific sectors. This would ensure that high earners in central London paid their cleaners a fair rate whilst not forcing a small shop in rural Northumberland to pay an unrealistic rate.

■ A key way to improve staff productivity and hence wages, is through investment in new technology.

Many small shops are undercapitalised and hence there is an urgent need for government to provide grants or soft loans to allow this to happen.

■ Rural shop owners are often not retail professionals by background. There is often an urgent need to train them to operate their stores efficiently, including managing staff hours better. This would enable them to raise staff productivity and hence to be able to pay higher wages.

■ The level of the NMW should remain a task for the independent Low Pay Commission in order to keep it as objective and non-political as possible.

■ More information: https://www.gov.uk/government/publications/ national-minimum-wage-low-pay-commission -report-2015

RSAViews

COMPENSATION FOR ROADWORKS The current situation There is nothing more frustrating for a shopkeeper than roadworks aecting their premises, a nightmare over which they have no control. Entitlement to compensation depends on who is digging up the road. The default rule is that businesses do not have the right in law to any particular level of passing trade and that shopkeepers must treat disruptions as just another business risk.

When the road is being dug up by the highway authority, (central government, county council or unitary authority), then unless they are negligent, no compensation is available. For roadworks by utility companies, the situation is more complex. For water companies, compensation can be payable, with each company having its own procedures. Gas companies should pay compensation to a small business for significant disruption for more than 28 days. Under all other circumstances, the general rule is that no compensation is payable, although it has been known for ex gratia payments to be made and in some cases local authorities may reflect the loss of trade in the business rates Bill.

The problem Small businesses do not usually have massive financial reserves. Each year many rural retailers are badly affected when roadworks disrupt their business. This usually means a massive fall in turnover and the result can be permanent closure. This is crazy; a valuable community asset is lost through collateral damage from roadworks.

The different situations between different utilities stems back to the legislation that privatised them and so is historic, with no obvious logic in 2015. Rightly, governments have recognised the difficulty of calculating compensation and this may be a reason for their reluctance to address this problem.

The solution It is clearly unfair that businesses can be driven to bankruptcy through absolutely no fault of their owner and the community can lose its village shop permanently. Small retailers should be entitled to fair compensation irrespective of who is responsible for the damage to the business.

Compensation should be calculated according to an agreed formula irrespective of who is digging up the road. This would have the additional benefit that it could persuade contractors to speed up the work knowing that each additional day will attract a compensation bill. A simple arbitration service should be provided to deal with disagreements on the level of compensation due, but if this is laid down in a simple and objective way, then such problems should be few and far between. â– More information: www.parliament.uk/briefing -papers/SN00200.pdf

By Marcus Williams, Canon Pyon Stores

The View from behind the counter Well, Ken Parsons asked me to write something for the RSA. He said he might live to regret it, I cannot imagine why. I thanked him for asking me to do something for nothing, a concept with which all rural retailers will be familiar.

This brings me to Pyon Players’ ticket sales. Our village amateur dramatic society (we are members) performs four shows every year.

Ticket sales over the years have been an “issue.”

There have been all sorts of schemes in which cast and crew members were given first refusal, tickets have been allocated to the favoured and so on. This came to an end when one of the big characters in the village couldn’t get two tickets for Saturday night and gave the society president her opinion on the matter. Now they go on sale in our village hall for two designated hours, then our shop becomes the box office for the left-overs. Naturally we do this for free. After all, surely that’s what we are here for, isn’t it?

Marcus Williams

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There is so much fun to be had from these sorts of jobs, which we often find out about for the first time by reading the Pyonear, our parish magazine. (To be truthful Pyon Players are not like this - they always ask first). The instructions we are given are often poor, so we have been falsely accused of such dark deeds as selling too many tickets, selling them at the wrong price, or not counting them properly. Of course the obvious answer to being told that we have messed up is “Do it yourself then.” But the village shopkeeper doesn’t have this option. So now we only sell tickets to fit these rules: One ticket per seat, tickets are sold at the price stated on the tickets and first come, first served. But we still get people telephoning from all corners: “Can you put some tickets to one side as I won’t be able to get there for a week?” Answer: “No but if you send me a stamped, addressed envelope with a cheque we will send you some” “Can I pay with a credit card?” “No, cash or cheque only, we do this out of the goodness of our hearts and we aren’t prepared to sub your ticket purchase and the ticket sales don’t go through our books” There’s a surprise, it turns out that they have got some cash after all!

Best of all “I want some tickets but I haven’t got any money.” To which the reply is “So come tomorrow”.

I can’t be critical of Pyon Players. As well as telling us they are grateful, they help to support the strapped-for-cash Playing Fields Association, of which I am local chair. Some of the other organisations don’t even say thank you. I bet all village shopkeepers could tell the same tale, but it’s so nice to have a moan, isn’t it?

Leader Funding...

Possible Financial Support for Rural Businesses What is LEADER? LEADER is part of the Rural Development Programme for England (RDPE), a much larger European-wide development scheme. LEADER is a French acronym which roughly translates as ‘Liaison among Actors in Rural Economic Development’.

LEADER funding is available to businesses, communities, farmers, foresters and land managers. LEADER funding is intended for projects that create jobs, help your business to grow and benefit the rural economy.

LEADER funds are distributed through Local Action Groups (LAGs).

Local Action Groups LAGs cover most of the country, although there are some gaps. Each one is made up of people from the local community and the local public and private sector. LAGs decide which projects they will fund in their area. This depends on their priorities but all projects must support one or more of the 6 LEADER priorities. These are to:

round of LEADER funding, it was very difficult for rural retailers to meet the criteria laid down.

This round looks a lot more positive – retailers should be able to tick one or more of these criteria. We would encourage rural retailers to contact their local LAG to get details of how the scheme will work in your local area, what sort of projects will be looked upon favourably and how to apply.

More information ■ For general information, see: https://www.gov.uk/rural-development -programme-for-england-leader-funding

■ support micro and small businesses and farm diversification ■ boost rural tourism ■ increase farm productivity ■ increase forestry productivity ■ provide rural services ■ provide cultural and heritage activities

■ For a map to see which one is covering your location, see: https://www.gov.uk/govern ment/uploads/system/uploads/attachment _data/file/411012/Map_approved_LEADER _2014-2020.pdf ■ For a list of LAG contact details, see: https://www.gov.uk/government/uploads/ system/uploads/attachment_data/file/410 658/GOV_UK_NEW_LEADER_PAGE_v2.pdf

They will be in a position to consider application from summer 2015 onwards. In the previous

These are also available as links from our website www.ruralshops.org.uk

Issue 29 ● Spring 2015 ● RuralRetailer 23

Whitstone Stores...

A good time to be in conve better time to be in a “I used to worry that being in a symbol group might make people think less of you, if they’d had a bad experience in another store in the same group,” admits Dan Cock, “but that’s not really a problem as most are of a good standard these days.”

Indeed, the owner of Whitstone Stores in rural Devon credits his success to being a symbol group member – a proud Premier retailer since 2009. With only 250 houses in Whitstone village, Cock has achieved the tricky feat of successfully catering to three distinct and different customer groups - locals, passing trade and tourists – and in the process has become one of Booker’s shining stars.

“It’s a 1,000sq ft store so we can cater for different markets,” he explains. “We can have a good range of groceries for locals, chilled foodto-go for the passing trade and local food such

as pasties which appeal to holidaymakers. We get a 30% uplift when they’re around, while we also bring in more gift ranges in the summer.”

It’s a far cry from the loss-making independent store with limited opening hours that locals were used to back in 2007. It had been badly stocked and run, so new owner Cock quickly set about building up the business and restoring villagers’ faith in their local shop. Its growing success meant symbol groups were soon beating at the door and, after a £20,000 refit, which included new refrigeration units and an upgraded EPOS system; he was ready to take the plunge.

Cock reckoned that with such a small frontage, people needed the reassurance of a recognised brand. “We picked Booker Premier as they allowed us to retain our independence. We were encouraged to stock a lot of local products while the brand helped us to smarten up our general offering by providing good weekly promotions.”

He quickly took on more staff and used Premier support and materials to become more professional, such as by implementing training policies.

Premier provided the fascia and advised on what lines were selling and which should be ditched. The symbol group also made useful suggestions, such as encouraging a larger chilled off licence offering, and provided good marketing support, says Cock: “It turned us from a traditional village shop into a proper convenience store. We started to concentrate on promoting value.”

Dan with wife Viki

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By Helen Gregory

nience and an even symbol group?

Local products and deals are very important

A Premier Business Development Manager visits every six to eight weeks to talk through sales in each category. “Promotions are comparable, if not better than, the supermarkets”, he says.

“Our Easter Eggs, for example, are cheaper than Morrisons, which really helps our profile with consumers. And while you need to commit to promotions, the allocation isn’t unreasonable; you’re able to negotiate on the stock you take and Booker is flexible”.

The muted décor helps to make the store a pleasant place to be despite the low ceiling

made up of local products such as Cornish pasties, sourced from 60 suppliers. The shop is also a veritable community hub; there’s a free computer with internet access, post office, DVD rental, and parcel collection service. And while they’re doing their chores, customers can pick up hot food – there’s even a hot dog machine – and coffee.

Cock acknowledges that he just wouldn’t have had the same success as an independent. “You get good support in a symbol group, suppliers also take you more seriously and it opens the door to much more favourable deals – reps want to come in and tell you about their products.”

But obviously it takes more than a shiny fascia and good promotions to elevate an average shop to something special. One of Whitstone Store’s USPs is that at least 30% of the total range is Premier recommended extending the chilled alcohol display

Issue 29 ● Spring 2015 ● RuralRetailer 25

Whitstone Stores...continued Cock makes sure he’s keeping the customers satisfied by encouraging staff to chat at the tills (retention is good as staff get above minimum wage with an annual bonus) but there are also novel customer listening groups down the local pub.

The store keeps a high profile through its website and a very active Facebook page which has an impressive 1,800 likes. Here, shoppers can print off regularly updated offers.

It all adds up to double-digit growth year-on-year for the last eight years, which shows no sign of waning. Weekly turnover is a healthy £15,000 with an average basket spend of at least £6.

“We’ve sometimes had bigger sales in one day than the old store had in one week,” says Cock proudly. “It’s a good time to be in convenience and an even better time to be in a symbol group.”

Easter eggs “cheaper than Morrisons”

Premier offers and PMPs provide good value

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■ For more details of Booker Premier, see: http://www.premier-stores.co.uk/join-us/ our-success.html ■ For more details of Whitstone Stores, see: http://www.whitstonestores.co.uk

The shop goes back a long way and is far larger than the frontage suggests

Legal Bits & Bobs...

Legal Bits & Bobs...

SHARED PARENTAL LEAVE

“FIT FOR WORK” SERVICE

Shared parental leave (SPL) is a new legal entitlement for eligible parents of babies due or children placed in adoption on or after April 5th. It provides both parents with the right to take SPL and places a duty on employers to ensure that their employees are not penalised for using their entitlement.

Roll-out of the referral service has commenced in two trial areas, which means that GPs in these areas can now refer employed patients who are off sick from work to this new service.

The amount of leave available is calculated using the mother’s entitlement to maternity/adoption leave, which allows them to take up to 52 weeks. If they reduce their maternity/adoption leave entitlement then they and/or their partner may opt in to the SPL system and take any remaining weeks as SPL. This means their partner can begin to take SPL whilst the mother is still on maternity leave. Eligible employees can stop and start the SPL and return to work between periods of leave, with each eligible parent able to submit three notices for periods of leave A birth mother must take at least two weeks maternity leave immediately following the birth of a child (four weeks for manual work in a factory) but otherwise may choose to end her maternity leave at any stage.

■ For details can be found in the ACAS document (link available from the RSA website): http://goo.gl/Tb30xw

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With their consent, employees are referred to an occupational health professional who will identify obstacles preventing them from returning to work. A Return to Work Plan will be agreed, providing recommendations tailored to the employee’s needs, which can replace the need for a fit note. GP referrals will roll out nationwide by autumn 2015, when employers can start to refer too.

■ For more information, see: http://fitforwork.org

CARRIER BAG CHARGES The House of Commons has voted in favour of a 5p charge for disposable carrier bags in England, to be implemented on 5 October 2015. Businesses with fewer than 250 employees are exempt, meaning that the vast majority of retailers will not have to make this charge.

However, evidence from other countries is overwhelming that this measure is very effective at reducing

which is something the RSA has consistently been recommending. Both are sensible measures.

AUTOMATIC PENSION ENROLMENT Employers must automatically enrol all UK staff who are between age 22 and the state pension age and earn over £10,000 a year. If they don’t want to be in the pension scheme, the employee must then opt out. This requirement starts for employers from their individual ‘staging date’- this is based on the number of people in their PAYE scheme.

■ You can find out your staging date by visiting: http://www.thepensionsregulator.gov.uk/ automatic-enrolment.aspx

customers’ use of these bags and hence the RSA is recommending that members voluntarily fall into line and charge 5p for such bags.

TOBACCO GOING DARK This is yet another reminder of this important change.

We have added a document link from the Department of Health and the Trading Standards Institute to our website, “The New Tobacco Display Law From April 6, 2015 Your Questions Answered”.

We would emphasise that although we hope Trading Standards will provide guidance rather than prosecute any retailers breaking the law after April 6, legally they can take shop managers or even shop assistants to court with the prospect of a fine of up to £5000 or imprisonment up to 6 months.

You will need your PAYE reference (from your P6 / P9 coding notice or your P30BC yellow payslip booklet) to put into the Staging Date Tool. You have two key dates.

Firstly there is your staging date - the date when the law is ‘switched on’ for your business. Secondly, you have a registration date, when you have to provide information to the regulator (this is 5 months after your staging date).

Advice and guidance, as well as help finding a pension provider prepared to take on very small companies, is available, although usually with a cost attached.

■ Contact us on info@ruralshops.org.uk if you would like more details.

REGULATIONS INTRODUCED TO BAN PROXY PURCHASING AND SALES OF E-CIGARETTES TO UNDER 18S The Government has tabled two new regulations on tobacco and e-cigarettes. The first will introduce a restriction of the sale of e-cigarettes to under 18s. The second will introduce penalties for proxy purchasing of tobacco and e-cigarettes by adults for young people, Issue 29 ● Spring 2015 ● RuralRetailer 29

The Values behind a Brand...

A recurring theme in many of our profiles of retailers has been the need for village shops to combine and balance the often conflicting requirements of a farm shop and convenience store.

Rural customers usually want to be able to buy high-quality local products alongside the big national brands. Most of the time we have seen the issue from the side of a village shop, but of course it can look very different from behind the counter of a farm shop – we will be covering this in more depth in a future edition of Rural Retailer.

The farm shop operator is trying to maintain a clear point of difference with more mainstream retail and hence is in conflict with the convenience store operator trying to do the opposite.

A different front in the same war is opening up with suppliers. Historically, farm shops have often stocked ranges from small local suppliers,

people who are often more passionate about what they create rather than making lots of money. At the other extreme, there are huge brands that are nevertheless strong in the farm shop sector. One example of this would be Sanpellegrino, a premium water and citrusbased drinks brand that makes much on its website of its history from 1899, listing all major milestones except for the inconvenient fact that the company was taken over by Nestlé in 1997.

Provenance is important to many customers.

The key point is to retain their faith in the truth of a brand’s explicit or implied claims. The way it is sold in a retail environment can build or detract from those values. Retailers need to respect the story behind the brand in the way they display and sell it.

■ See: http://www.sanpellegrinofruit beverages.com/uk/en/history

Bus Routes in Rural Areas...

The RSA is somewhat ambivalent when it comes to rural bus services. On the one hand we are all in favour of anything that supports people living in rural areas and makes their life easier.

On the other hand, clearly bus services can take customers into town away from the rural shops that badly need their custom. In the past, we have strenuously objected to specific bus services. In one case, about a year ago, a heavily subsidised minibus service was picking up from outside village stores and specifically taking customers to supermarkets in the nearest town.

In recent years, subsidised rural bus services have been under considerable threat, as budget cuts have forced local authorities to review all forms of

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expenditure. A survey from the campaign for better transport shows that the picture does vary quite considerably across the country, but overall about half of all local authorities have cut funding for bus services in the last year.

About 500 routes have been cut or altered across England and Wales, of which over 200 have been withdrawn altogether. Since 2010, local authority spending cuts have led to 2000 routes being cut or withdrawn.

This picture emphasises the importance of keeping the local shop alive – without public transport, local people become even more dependent on it.

■ The report can be found that: http://www.bettertransport.org.uk/sites/defaul t/files/Buses_In_Crisis_Report_2014_Final.pdf

Bishampton does the Double...

You may remember that years ago we ran an article about how Bishampton parish council had bought their local village shop in order to save this asset for their community.

They had purchased the building by borrowing money from the Public Works Loan Board and then rented it out to a commercial operator.

We recently found out that they have in fact repeated this process to save their local pub, this time borrowing £300,000 to buy the building, before again renting it to a commercial tenant.

We can only applaud the courage and initiative of this proactive parish council!

■ For more information on the Public Works Loan Board, see: http://www.dmo.gov.uk/ index.aspx?page=PWLB/PWLB_pc_lending

“May you live in interesting times”...

This supposed Chinese curse rather sums up the economic situation, where the Bank of England has warned that inflation is likely to turn negative in the coming months.

The last time that there was an actual (brief) reduction in overall prices was over 50 years ago The current round of deflation has clearly not prevented some costs to retailers rising, meaning that net margins are under pressure for a lot of rural businesses. A number of different factors have contributed towards this situation, including the cut-throat competition currently playing out in the supermarket sector.

The “waterbed effect” suggests that the big grocery suppliers, squeezed by the big 4 to reduce their margins, will try to recoup them from smaller retailers with less market power.

Clearly this is not a time to accept any price increases from suppliers without long and hard negotiations. Indeed, with deflation on the cards, cost price reductions should be sought wherever possible.

The key message is that deflation demands a whole new way of thinking about the way business works – you have been warned!

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