Post 2008 Independent Retail - Opportunity Knocks?
Post 2008 grocery or food retail in the UK has been an intriguing market after several decades of predictability. Opportunities for independents such as Farm Shops, urban grocery stores and box schemes have been very good despite often patchy retail skills employed.
While Sainsbury in the 1980s,Tesco in the 1990s and Asda in the noughties all expanded in the UK as well as abroad and seemed unstoppable, this trend has ended. Initially sales shrank at out of town big stores but even smaller urban branches have found a less interested public.
Aldi and Lidl have been obvious winners, from a low base, while quite a bit of edge of town grocery space has been re-let for other uses eg Screwfix.
Reduced market share has left the supermarket chains with too much supply chain capacity ie warehouses, trucks and admin staff.
Independent food retailing through from 70s onwards was a Cinderella experience of bright starts, tiny market share, and public scepticism. We had an informal network of wholefood shops till the 1990s, sporadic delis and Farm Shops, but Sainsbury+co were so much better that new starts didn't usually last long.
Why, beyond the more ideologically committed, would you use your local wholefood store when most of its popular lines were cheaper and turned over faster at the supermarket with handy parking? Lack of basic retail skills in presentation, pricing, layout and HR continue to the present day.
Having traded through this period, as well as more recently, I can confirm it was possible to carve market share out or build a loyal following by providing good value and customer service, but it was always a slog, the main difference post 2008 being that far more members of the public are receptive.
Prior to 2008 there were windows of opportunity - eg Alar on Apples, BSE, Sallomonella scare - which generated new waves of customers, but media coverage and the state basically said supermarkets were cheap,safe and reliable.
So every great trade deal we achieved at Unicorn Grocery (my old stomping ground 1994 onwards) eg Meridian or Windmill/Biona, would impress a sprinkling of customers, but an external event such as Gillian McKeith ("You Are What You Eat"on tv/books) had a much more profound effect with lurches upwards in sales, volumes and new faces.
We had to do everything right week in week out to retain and add customers but external events shaped our world. This is particularly true beyond the obvious deeper green segment - say 10% of the market – to the great big chunk in the middle, essentially supermarket believers.
These customers have been popping up at Unicorn, Farmers Markets etc, quite a bit more post 2008 for reasons I feel relatively little grasped. Let’s have a run through factors at work here to try and get more of a handle on current sentiment.
Firstly during 2008 a massive transfer of public cash took place to private bank balance sheets, the very same institutions busy financing significant international drugs and arms trading.
Little opposition was voiced or effected and public scepticism in official institutions must have increased. Belief in Tesco particularly faded fast as the press piled in to a bloated corporation. Aldi and Lidl began to look good value rather than just cheap.
Intriguingly many people began to feel they were savvy if they were in Aldi. After many years, food spend growth stopped and actually dropped.
Secondly while some groups benefited from money printing and nominal interest rates - eg mortgagees - many people became either worse off or found they had static incomes.
Frugalism was enforced on many, beyond those that were also being frugal through choice. It is possible to be frugal and food literate (well illustrated at Unicorn Grocery) and we now have more people with the latter attribute.
At the same time as food education has progressed, globally traded cheap commodity foodstuffs have chipped nutrients off the menu of low income people.
Laissez-faire governments - eg in the US+UK - have refused to intervene or restrain companies armed with marketing power and subsidised oil, carbs and corn syrup.
Therefore an increasingly polarised food market is resulting - a sobering thought even if you beat off your local Waitrose. You’ve got plenty to aim at but those at the poorer end are harder to get through the door than it was for the Rochdale Pioneers….
One should not also forget that are many more people in the UK than previously with a positive migration rate set to continue. English cities particularly are bigger than they used to be with more mouths to be fed.
So the opportunities are there, will they be taken up? The wider legislative and commercial framework - eg ignoring factory farms and marine pollution - is in the hands of voters in the UK.
A less neo-liberal government would inevitably mean intervention and less market rigging. This may depend on the losers from globalisation a) realising it and b) taking up the cudgels .
Regardless of future elections young entrepreneurs may also need more than just a good cashflow projection and a nice logo. Getting trained and doing your 10,000hrs are foundations but I am mindful of the almost zero take-up from earlier attempts to promote start-ups.
A real need to make a living - ie not hobby retail or lifestyle stuff - is necessary but maybe the added steel from some ideology might be important too? Many capitalists - eg Carnegie and his “Gospel of Wealth” - had and have beliefs to justify their more dubious actions. The top Goldman Sachs chap mentioned doing God’s work in a candid moment.
A firm belief in altruism and explicit commitment to look after the biosphere for all might prove rather popular with the public and complete the offer.
You’ve still got to get the baked bean price right but if you do that too why would Asda look at all attractive any more?