How small business can survive against big and/or chain businesses?

in Chris Holgate by Chris Holgate. Permalink.

It is getting harder and harder to be loyal to independent retailers as supermarket chains are taking over. But Chris Holgate has some ideas to help small business survive.

As a small business owner I’ve always been an advocate of supporting the small independent retailer. I always have, and always will, prefer to give my hard earned money to a small business rather than a large chain store.

Unfortunately, I’m finding this ethos more and more difficult to follow in my local community as there are a number of “sticks” pushing me towards the big boys.

I live in the coastal town of Paignton which boasts a moderate sized population of approximately 50,000 people. Over the last decade our local council has given planning permission to every major supermarket, while at the same time hammering the smaller retailers in the town centre with a proliferation of parking meters. Parking in the town centre even for a couple of minutes would set you back a pound and so the out of town Sainsbury’s and Morrison’s are doing a fine job of mopping up the once local trade.

The situation reminds me somewhat of the cheesy action flick “Demolition Man” – please bear with me – as, although I’m aware that it’s undoubtedly a Sunday morning hangover film, there are parts which seem quite representative of the way in which we are moving. Set in a dystopian future, the story focuses on an ex-policeman who was cryogenically frozen from our time only to be bought out to life many years later in an unfamiliar world.

I hope you’re still with me.

There’s one scene in particular where our hero saves the life of the city leader and is subsequently invited out for dinner at American fast food chain Taco Bell. Being unfamiliar with this time period, he naturally expresses confusion that the reward for saving the life of the most powerful man in the city is dinner at a budget fast food joint. It would be the equivalent of saving the Queen only to have her take you out for a Big Mac and fries as your reward.

It is explained that in the future Taco Bell is now the only chain of restaurants that survived the franchise wars – so now, literally every restaurant is a Taco Bell. No one thinks this odd and everybody enjoys their evenings out at Taco Bell as they know no different.

Although fictitious, we’re not a million miles away from this situation and we’re actively taking steps towards this kind of future. Twenty years ago when my town didn’t have a single major supermarket we had a thriving town centre with many locally owned and run businesses. Now every major supermarket has a place in our small town and it seems the only ones not struggling in the centre are charity shops, presumably as they don’t have the cost of stock or business rates to worry about. It wouldn’t be unrealistic to assume that if I wanted to buy a pear in twenty years’ time, it would have to be purchased in an Asda store.

Although I believe in the free market and open competition I do believe that government and local councils have a duty of care to ensure they’re not exasperating the situation. Local councils shouldn’t try to plug holes in their budgets by decimating entire town centres with parking meters. At the same time national government should tighten planning restrictions to ensure that large chain stores and supermarkets aren’t given a significant competitive advantage, and a captive audience.

I struggle to digest the newspaper headlines whenever our council gives the green light for yet another out of town supermarket… “Council creates 400 jobs by giving planning permission for new development” and so on it goes. Unfortunately, this headline is incredibly misleading and self-serving. These are large corporations which enjoy low tax bills, low business rates and low staff costs. The majority of supermarkets now even get you to serve yourself by way of a self-service checkout so their staffing requirement is minimal.

You will never “create” a job by opening a supermarket; the entire concept is an oxymoron – you simply redistribute a larger number of jobs to a smaller number of jobs in a different location. We have to assume that the creation of these 400 jobs comes at the cost of 600 jobs from smaller businesses; as such the headline would be more accurately written as “New supermarket puts 200 people in to unemployment and places further pressure on local town centre”. Not quite as catchy.

It is getting harder and harder to be loyal to independent retailers as supermarket chains are taking over. But Chris Holgate has some ideas to help small business survive.

Independent butcher shops: definitely not selling horse burgers…

Not only is this obsession with supermarkets bad for employment, it’s also bad for food. Just recently every major supermarket got caught supplying own brand beef products which contained horse DNA. If you stand outside my local butchers you will see him receiving entire carcasses which have been sourced from local abattoirs which he then cuts down on the premises to create steaks, brisket, chuck, burgers and mince. The abattoir would have to wake up pretty early in the morning to sneak a horse through those doors.

Like many people, I wouldn’t have a problem eating horse if I had bought it as horse and could trace where it had come from. The fact that my beef burgers were created overseas, contaminated with horse, loaded with preservatives, frozen, stored for months and then flown several hundred miles says a lot about the standard of food we’re prepared to accept. Once complete dominance of the sector is achieved they will have a complete monopoly over what we eat.

Twenty years ago, if a small butcher shop got caught selling horse as beef then they would invariably close down through either public or governmental pressure. When practically every supermarket does the same it’s front page news for a week until invariably the fiasco is forgotten and people resume their old habits as the alternatives are considered too inaccessible or inconvenient.

I think it’s fairly safe to say that the days of the traditional town centre are now somewhat numbered and no degree of rose tinted vision or Mary Portas reviews are going to change this. Regardless, the government still needs to do everything it can to ensure that a small number of large businesses don’t have complete control over the way that we shop and the way in which our food is sourced. We need to think outside the box a little and not be afraid to load more pressure on those with the broadest shoulders.

Out of town shopping is likely to remain the preferred way of doing the weekly shop for the majority of people. The fact that only large chains have the funds to secure planning permission, build and operate out of these large units means that the out of town market is a movement being enjoyed by a select few and herein lies the problem.

There is no inherent reason why all out of town stores have to be twenty five thousand square foot in size and that all small independents have to be located in the town centre. New housing is no longer positioned around a town centre, so for many the centre is an area that’s often expensive and inconvenient to get to.

Smaller businesses need to redeploy over a broader area in order to adapt and survive.
Although controversial, planning laws need to be changed so that in order to create an out of town development, a developer has to also include provisions for a number of smaller shops and stalls that can operate within a close proximity to the store. The ownership of these smaller units would be with the council but local independent companies could apply to operate from within these smaller shops while paying both business rates and a reasonable rental fee to the council.

The supermarkets would of course complain that this was unfair and that they shouldn’t have to assist with the development costs for units that would ultimately be snapped up by smaller competitors. But the only alternative would be for one of your larger, more co-operative competitors to take the same location and build there themselves; very quickly assisting local business wouldn’t be such a bitter pill to swallow.

There is a lot of detail to work on but, in principle, I think the idea has some merit. The government encouraging an environment whereby local butchers, bakers, farmers and other independents can hawk their locally produced wares in the vicinity of multi-national companies shouldn’t be an unrealistic or ridiculous proposition.

Chris Holgate is the owner of the printer cartridge supplier Refresh Cartridges.

Source: www.realbusiness.co.uk

Posted by: www.in-tune.biz

In Tune specialises in finance and accounting outsourcing, human resource (HR) outsourcing to SME business owners in Malaysia; that traditionally cannot afford professional services which they now can at a fraction of the cost less the headache; so that they have more time to focus on the business operations that matters to them.

Why hire an executive when you can now get at least one qualified professional with an executive at less than an executive pay?

Tags: , , , ,

No comments yet.

Leave your comment