RURAL RETAILER winter 2013

RuralRetailerThe Journal of the Rural Shops Alliance

www.ruralshops.org.uk Issue 20 ● Winter 2012/2013

■ How to get free advertising■ Selling your shop - the property market

■ Government consultation on alcohol pricing

Discount Offer on

bags for life inside

2 RuralRetailer ● Winter 2012/2013 ● Issue 20

for moreinformation

and news...

In this issue...

Cover photo:Many farm shops

have beentrading welldespite the

recession

Your contacts...

RuralRetailer ● Published by The Rural Shops Alliance. ● Printed by: Russell Press, Nottingham. ● Design: Kavita Graphics.

Contents...

● Rural Shops AllianceEgdon Hall, Lynch Lane,Weymouth, Dorset DT4 9DN

● Tel: 01305 752044● Fax: 01305 772949● E-mail: [email protected]● Website: www.ruralshops.org.uk

● Chief Executive writes.....● Our Partners● Your Action Checklist...● When a shop becomes a tourist attraction● Ecobags: Special discount for readers of Rural Retailer● Price Comparisons● Facebook: Marketing for Free● RSA Views: Countryside hit hardest as government cuts

council funding; Consultation on Alcohol Sales in Englandand Wales; Local Government Finance Act 2012; PropertyExtensions; Police and Crime Commissioners

● Selling a Rural Shop● The Risk of Flooding● Legal Bits and Bobs: Red Tape Challenge; Health and

Safety; Financial controls; Employment; No Smoking signs● Buying stock in the 21st century● Retail Apprenticeship Scheme● The Biscuit Fixture● Standardised Tobacco Packaging

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Ken Parsons, RSA chief executive, writes...

Who picks up the Bill?The connection between the Chimney Sweeps Act of 1834 andrural retailing may seem a bit tenuous. In fact, this Act was oneof the first modern pieces of social legislation.

At the time it prompted cries of anguish frommany quarters, the argument being thatbanning the employment of children under theage of 10 to clean chimneys would inevitablyincrease costs and drive the industry tobankruptcy.

All government interference with the free-market prompts the same basic debate, wherethe balance lies between protecting workersversus adding unacceptable costs to industry.Each year the RSA makes a submission on theproposed level of the National Minimum Wageand each year the debate follows this sametemplate. But more recently, there has been amarked increase in pressure from trade unionsand other organisations to persuade employersto pay the “national living wage”, a higherfigure based on the estimated cost of providinga designated standard of living irrespective ofaffordability. A number of public sector bodieshave agreed to pay these rates – not hard to dowhen the money comes from taxation.

However, the picture is very different inindustries such as retail. When I discuss thiswith retailers, they are all agreed on two things.Firstly, they would very much like to pay theirstaff more, and secondly, they cannot afford todo so. Very often, the owners of these family-run businesses are themselves workingalongside their staff but paying themselves farless than the national minimum wage. Andhere lies the dilemma. In the hard commercialworld, there are some sectors such as retail,

hospitality and cleaning services where it isvery hard to increase staff productivity, butwhere wages are a crucial part of total costs.Every retailer I have spoken to has, withoutprompting, told me that paying significantlyhigher rates would inevitably lead to theemployment of fewer staff hours, less moneyto reinvest in the business and/or potentiallydisastrous increases in prices. When staffingmakes up half your costs, it could not beotherwise.

Achieving the right balance between theinterests of employees and business ownerswill never be easy, but I would be moreconfident that the debate would be on asensible level if more politicians had experienceof the real wealth–creating economy. Instead,many of them have moved seamlessly fromuniversity to internships, think tanks orconsultancies and then into politics, circleswhere low paid staff are few in number andsomebody else picks up the bill.

Issue 20 ● Winter 2012/2013 ● RuralRetailer 3


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To obtain further information on any of thesecompanies, please contact the RSA [email protected] or phone 01305 752044

Our Partners...

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Rural retailers are usually a key part of their local community. Thisincludes the responsibility to doeverything possible to ensure that agerelated products are only sold tocustomers entitled to buy them.

A practical way of supporting your communityand ensuring that you meet your legalobligations is to encourage customers to applyfor a CitizenCard. This Home Office approvedcard has all sorts of advantages for the holderand is widely accepted as proof of the holder’s age.

We would encourage all rural retailers todistribute CitizenCard application leaflets in their shops. In addition to meeting your socialresponsibilities, there is also a very useful

CITIZENCARD

5. CONSIDER IMPLICATIONS OF LEGAL CHANGES


commission paid to you for every one of yourcustomers who signs up.

■ For more details, see the RSA website atwww.rural shops.org.UK.

■ To apply, e-mail or phone your contact detailsto the RSA, [email protected] orphone 01305 752044.

“I moved here after running a pub on the edgeof the Chilterns near London, and while I’llnever make my fortune, I wouldn’t swap this lifefor anything, even if I did once have a customerknocking on my door in the early hours becausehe’d run out of cigarettes!” says Tony.

When the shop and café came on the market,Tony’s parents, who used to run the pub inWithypool, suggested he swapped pulling pints forthe life of a rural shopkeeper. “I saw there waspotential, so I thought I’d give it a go. Anita joined

A tourist attraction...


When a shop becomesa tourist attraction!

Since moving to the village ofWithypool, at the heart of the Exmoor

National Park, 15 years ago, TonyHoward has thrown his heart and soul

into running this tourist hotspot’s onlyshop and the tea rooms just across the

road, and, with the help of his wifeAnita, has been steadily building up

the business.

The shop with its petrol pump standing guard

me 14 years ago, and we got the café up andrunning across the road,” Tony recalls. The villagemay only have about 200 residents, but in thesummer months customer numbers quadruple,with queues for the shop and tea rooms stretchingover the famous Withypool Bridge. The visitorsenjoy everything from the famous home-madecream teas and cakes to buying inflatable dinghiesthat children love floating on the wide, shallow

stretch of the River Barle which flows through themiddle of the village.

Although recent wet summers have had a hugenegative impact on sales, the Howards havenoticed that the tourist season is getting longer,which helps balance the trade out a little.

Holidaymakers can also take their memorieshome thanks to a personally-selected range ofhigh quality gifts which Tony also sells. “Istarted selling cheap toys and souvenirs for thetourists, but soon realised my mistake. I startedto stock good quality items which not onlyappealed to visitors but to locals alike.” So nowthe small gift section of the small 1,000 sq ftshop boasts a range of hunting-themed itemsincluding bronze statuettes of stags, horses andhounds, which fly off the shelves.

The site is awkward to manage, with the shopon one side of the road and the tearoom and a


The tearoom with adjoining toilets

disused petrol forecourt on the other. Thesepumps are a tourist attraction in their own right,whilst another 1950s petrol pump stands like asentinel in front of the shop. Together they arereminiscent of a bygone age: they were some ofthe last working gallon pumps in England. “Wewanted to keep them going but then foot andmouth came along in 2001 which virtually shutExmoor down, so we decided to finally close thepumps,” recalls Tony.

Visitors and locals alike are also well catered forin terms of the mouth-watering choice of localproduce on sale, including beef from just fivemiles away, free range eggs, Somerset cheesesand preserves, and home-made cakes andscones on sale in the tea shop.

Tony also runs a pre-ordering service for peoplein self-catering accommodation so theirshopping is all ready for them when they arrive.“We offered this service first for our ownholiday cottage, but now we’ve extended it toother holiday rentals and seen an increase indemand. Holidaymakers arrive with cars loadedwith full supermarket bags, but once they seeour great range of fresh goods, they order fromus next time. They say using the local shop ispart of the holiday experience and want to leavethe supermarkets at home.”

What with running the shop – open seven daysa week - and Post Office, and starting a familyfour years ago, the couple tried to hand over thereins to the café to tenants a couple of times,but it didn’t work out. “In the end, wediscovered no-one can run it quite like us, sonow we’ve got to win back the café’s reputationand make it really work for us,” says Tony,ruefully.

Part of the re-think for the café involves theHowards buying the public toilets next door –also used by families changing into theirswimming costumes before a paddle in theRiver Barle - and an adjoining small room,currently owned by the Exmoor National Park.

“We’ve agreed a price with the National Park,now we’re just hoping we get planningpermission to put a pitched roof on the building,take over the toilets and convert the emptyroom into a purpose-built kitchen addition forthe café – complete with a dishwasher whichwill cut down on the washing up, and give usmore space for tables - hopefully in time for thetourist season.

The National Park has spent quite a lot over theyears on the loos – I think they’re quite glad tohand them over. We’re a bit concerned aboutthe cost of maintaining them, but thedevelopment of the tea rooms should increaseour trade to compensate.”

The Howards employ one full timer – Jill Scoins– and supplement the summer staff in the caféwith local young people happy to workweekends and school holidays.

The nearest supermarket is 15 miles away, so,during times of flood or heavy snow, the shop isa lifesaver not just for the villagers, but forpeople living in neighbouring hamlets, withTony and Anita keeping an eye out for older

A tourist attraction...continued


The former forecourt

residents. “There are supermarket homedeliveries, but in the winter, the vans haveproblems negotiating the lanes whereas mytrusty 4WD always gets through – even with 4ftof snow! Luckily for us we get snowed in quietoften; I love those times, as everybody pullstogether. We work hard to make sure our localsare kept supplied,” says Tony.

And even when the weather is fine, Tony is stillon hand helping villagers get on-line, sorting outtheir TVs and video players and organising babysitters, gardeners and cleaners.

“Before we had the children, I took very fewholidays, but since the girls came along, I havehad to force myself to take some time out andhave really begun to explore the beautifulcountryside around here,” says Tony.

“Although we’ve been an official National ParkInformation Point for some time, now I canactually make personal recommendations aboutwhere people should go!”

Getting the business balance right betweenseasons in a tourist area is a challenge for anyrural retailer, ensuring that locals don’t feelvisitors are demanding all of Tony and Anita’sattention at the height of the summer. Incomefrom holiday season has to be sufficient to carrythe business through the winter.

It is a fine balance though – Tony reckons thatgroceries account for around 35% of thebusiness, with the tearooms a close second, thengifts (20%) then newspapers and the NationalLottery, the latter being a new venture. Althoughthe Post Office is currently open only 19 hours aweek, it provides a much-valued local serviceand does bring customers into the shop.

So a combination of dedication, innovation,different income sources and an ‘Open all

Hours’ mentality is proving a recipe for success.Even four-year-old Amy gets in on the act andhelps her dad sort out the papers before shegoes to school each morning!


The RSA viewThis shop is a classic case to demonstrate just howimportant village shops are, both to local people and asa key part of the tourist industry. The business is viablebecause of the multiple income streams, all contributingto the whole. Of particular interest is the gift andsouvenir range, which includes some quite expensiveitems, contributing significantly to turnover but moreimportantly offering very good margins. There is apotential lesson here for other shops in tourist areas –souvenirs do not need to be cheap and tatty. Theproblems the Howards have experienced finding goodtenants for the teashop highlights the tight managementthat these businesses demand – profit margins can bevery good but they still have to be earned; staff costsand wastage can soon erode profits.

Below - Bridge Cottage on the River Barle - Withypool

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When we are out visiting stores, we often hear thecomplaint, “customers think we are expensive incomparison with the supermarkets, but really, we arenot. What can we do about it?”

As a question, it is probably up there with the meaningof life or why people still laugh at Bruce Forsyth’s jokes.However, it is clearly an important issue that demands aconsidered response from retailers. The problem iswidespread. The results of every local market researchsurvey that the RSA has helped to conduct, has shownthat local shops score very highly for personal andfriendly service and not at all well for cheap prices andgood special offers. These results need to be kept incontext. Although price is crucial to some low wagefamilies, for the majority of the population it is but onefactor amongst a number in terms of deciding where toshop. The eye watering prices at some garage forecourtshops highlights the fact that in a trade-off betweenconvenience and price, convenience often wins.

Nevertheless, it is not an issue that can be ignored. Thereality is that for the majority of rural shops, their priceswill be somewhat higher overall than their supermarketcompetitors. We do know of some shopkeepers whohave consciously tried to match supermarket prices, atthe expense of a much reduced gross profit margin, andit is fair to say that not many of them are still trading.There used to be a saying in the retail trade, “any idiotcan give stuff away”.

We are often asked whether it is a good idea to makedirect price comparisons between the shop and itsnearest supermarket competitor. This often takes the formof a basket of goods displayed near the entrance with atriumphal price comparison. Our Price £25, Tesco price£27, that sort of thing. We have always been somewhatcautious of this approach. There is a very real danger thatyou merely publicise the fact that supermarket X is theprice leader, the place that everybody is trying to beat,and in the process you are in danger of making

supermarket X seem like the best place to shop. Theother danger is that comparisons can only be ofproprietary brands, whereas in practice price sensitivecustomers are likely to be buying their own labels, whichnow make up over 40% of supermarket sales.

To be blunt, the big supermarkets are spending tens ofmillion pounds a year to convince the country that theyare providing good prices. Much of this expendituremerely negates the similar advertising from competitors,but overall this wall of price messages creates abackground impression that is very hard indeed for asmall shop to overcome. This is particularly true ofindependent stores not affiliated to a symbol group – forsymbol group members the position is somewhat better.

Of course you make the most of the situation to ensurethat customers know your pricing is fair. Of course youdisplay your wholesalers special offers prominently andstock a good range of price marked packs, particularlyin ranges such as biscuits where they are so important.But what you don’t do is to make price the central plankof your communications with customers.

What you do is to play to your strengths. For most localstores, this will be friendly and personal service, theavailability of local products.,

Pay particular attention to the pricing of Known ValueItems (KVIs), the relatively few best-sellers wherecustomers do compare prices and do support yourwholesaler's special offer programme. But for most ruralretailers, we would not suggest attempting to persuadecustomers that you are actually cheaper than thesupermarkets.

Rural Shop issues...


Price comparisons

Marketing for free...


Here is how it works:To create a Facebook page for your business isvery straightforward – just follow the prompts.Start by going to www.facebook.com/pages/create.php Then:

■ Select a business classification from the sixoffered

■ Fill in details of your business■ Upload a main photo■ Complete the “About” section – 2-3 sentences

that sum up your business. Be sure to includea link to your company website.

■ Use the “Admin panel” to add moreinformation or to make changes.

■ Postings to your page add further content.■ Whatever you do, do make sure the page is

kept up-to-date.

At this point, you then need to attract yourcustomers onto your page.

■ Send emails to invite existing contacts toconnect with you or ‘like’ your page onFacebook.

■ Introduce your business by puttinginformation in your profile, linked to yourwebsite, if you have one, and to othercommunity websites. It can help to get thingsgoing if you encourage staff, very loyalcustomers and suppliers to post messages toyour page, giving it a buzz. Writing

Facebook is the fastest growing socialplatform in the world. It provides smallbusinesses with a way to market theirbusiness to potential customerswithout having to spend anything; it is free to use.

comments publicly to another user is “writingon their wall” in Facebook jargon.

■ Post pictures about you or your business,make the pictures interesting if they are ofpeople ensure they are cheerful and smiling

■ Post information about the services you offer,post regularly, but keep them brief, to thepoint, relevant and current. Do not overdo it –make sure that your posts are genuinelyinteresting and newsy, use pictures if possible,and provide links to other sites. So a posttelling your customers that this season’sasparagus has arrived would work better witha tempting photo and perhaps a link to thesite of the farm where it was grown.

■ If people make comments or post on yourpage make sure you respond to keep the‘feed’ live.

■ Facebook is really quite easy to get to gripswith and you do not have to be a computerexpert. If you need them, there are lots ofuseful websites which will give you furtherhints and tips; just search on “usingfacebook for business”.

RSAViews

Rural councils will face a bigger reduction in central grantand spending power than urban councils, according to aninitial analysis by the Rural Services Network, a group ofmore than 200 organisations working together to improvethe delivery of rural services across England, of which theRSA is a member..

Information released by the government is incompletewith much detailed information to follow. But an initialassessment paints a bleak picture for the countryside. Itcertainly does not represent a fair deal for both urban andrural communities, as claimed by the government.

The Rural Services Network calculates the reduction intheir formula funding from central government fordifferent types of local authority as follows:

Urban local authorities -2.04% Predominantly rural local authorities -3.81%Rural local authorities -5.21%

Rural Services Network chief executive Graham Biggssaid: “This is a body blow for rural councils already

struggling to provide services to countryside communities.Even before these reductions, urban areas received abouthalf as much more funding per head than do rural areas.This settlement further widens the gap. Rural residentsalready pay more council tax for fewer services becauseof historic government underfunding, so the settlement isvery bad news for the countryside.”

On average, district councils will fare worst, with a 6.78%reduction in formula funding.

It is very difficult to speculate as to how local authoritieswill respond, particularly as the Department forCommunities and Local government is trying to pressthem into a zero increase in the other main component oftheir income, the rates that local authorities themselveslevy. However, it is a fair bet that expenditure on anythingthat is not a statutory duty will come under considerablepressure.

■ For the local government finance settlement 2013-2014, see: http://www.local.communities.gov.uk/finance/1314/settle.htm

■ For information on the Rural Services Network, see: http://www.rsnonline.org.uk

■ The rural definition and classification were devised bythe Rural Evidence Research Centre (RERC) at BirkbeckCollege. Further information on these can be found onthe RERC website at www.rerc.ac.uk

Winter 2012

Countryside hit hardest as government cuts council fundingRural communities will bear the brunt ofgovernment cuts that will force localcouncils to slash their services. Thiswarning follows the publication of thegovernment’s finance settlement, whichdetails the amount of central fundinggiven to local authorities.

RSAViews

The consultation includes a total of 35 questionsalthough respondents do not have to answer all of themand there are just a few that are likely to be of specificinterest to rural shopkeepers with off-licences.

One proposal is for issues of health to be considered,alongside the existing licensing conditions, when dealingwith applications for a new off-licence. We think thatthis would be unlikely to affect many rural retailers ifimplemented, having more impact on urban high streetswhere the number of premises with off-licences mightbe curtailed, although it is hard to be sure.

The two most important issues for convenience retailersare:

MINIMUM PRICING OF ALCOHOL The government has already decided that there shouldbe a minimum price for alcohol, but is consulting on thelevel at which it should be set and how it should beadjusted over time. The initial proposal is for a minimumprice per unit of 45p, intended to be a level that woulddiscourage problem drinkers without interfering with thepleasures of moderate imbibers. The minimum pricesfor some typical products at three different minimumprice levels would be those shown in the chart below.

At 45p, products such as white cider would surely suffera marked decline in sales as they cease to be cheap. It

CONSULTATION ON ALCOHOL SALES

The Home Office is currently consultingon alcohol issues. The document goesunder the snappy title, “A consultationon delivering the Government’s policiesto cut alcohol fuelled crime and anti-social behaviour”. The consultation closeson February 6, 2013, and we would urgerural retailers that sell alcohol to respondto it. The consultation invites views on:

• a minimum unit price for alcohol• a ban on multi-buy promotions in the

off trade• reviewing the mandatory licensing

conditions• health as a licensing objective for

cumulative impact policies• freeing up responsible businesses

product

300ml

500ml

75cl

2 litre

70cl

size

3.60%

4.50%

13%

7.50%

40%

av

1.2

2.25

9.75

15

28

units

£0.48

£0.90

£3.90

£6.00

£11.20

40p

£0.54

£1.01

£4.39

£6.75

£12.60

45p

£0.60

£1.13

£4.88

£7.50

£14.00

50p

bottle of lager

can of beer

bottle of wine

white cider

bottle of spirits

RSAViews

has been estimated that 59% of all units are soldcurrently for less than 45p, so collateral impact onnormal drinkers will occur. The consultation documentitself implies that the off trade would gain windfallprofits of about a billion pounds from a 45p minimum –and you can be sure most will stay with supermarketsrather than being shared with their suppliers!

There will be a clustering of brands at the minimumprice point, so we would expect competition betweenbrands to become very interesting.As regards the issue of how the minimum price shouldbe adjusted over time, a straightforward link with theRetail Price Index (RPI) would seem the moststraightforward.

To repeat – the consultation is not about the principlebut about the level at which the minimum price shouldbe fixed. Would customers buy less? Continue to drinkbut cut back on other things? We would welcome yourviews!

Reportedly, the European Commission has written a ninepage letter to the UK government suggesting that theproposals amount to a restraint of trade, with wine-growing countries keen to kill the idea. Scotland hassimilar proposals, only at a price of 50p per unit,prompting the surreal picture of Berwick-on-Tweed inthe future being full of Scots seeking cheap booze.

BAN ON MULTI-BUY PROMOTIONSSecondly, there is a proposal to make it illegal to sell thesame product in quantity more cheaply per unit than theprice for one, so, three bottles of wine could not be soldfor less than three times the price of a single bottle ofthat particular wine. Some rural retailers have been verysuccessful promoting wine in this way, but the mainbeneficiaries of this practice have of course been thesupermarkets. The practical problems of drafting

legislation to close off potential loopholes are quitesignificant. As a measure, we would on balance see itprobably helping to make rural shops more competitivewith supermarkets.

RETAIL OPINIONAs always, we would welcome retailers’ views to help usdraft our own response to this consultation – do let usknow how you think these measures would affect yourbusiness.

RESPONDINGThe full consultation document can be found at:■ http://www.homeoffice.gov.uk/publications/about-us/

consultations/alcohol-consultation/alcohol-consultation-document?view=Binary

The contents of the House of Commons wine cellar canbe viewed here:■ http://www.parliament.uk/site-information/foi/

foi-responses/foi-disclosures-2012/foi-disclosures-january---march-2012/content-of-house-of-commons-wine-cellar

IN ENGLAND AND WALES

RSAViews

The prediction from Government is that the new systemcould deliver around an extra £10bn to the widereconomy by 2020 and generate more business rateincome for councils. Minister Brandon Lewis said:

“These reforms allow councils to stand tall, and rewardsthem for supporting local jobs and local firms”.Unfortunately, this is allied to the decision to delay therevaluation of business rates for two years.

The current system of pooling business rates nationallywas set up to overcome the inequalities resulting fromlocal authorities in successful business areas being ableto spend more, thus encouraging more inwardinvestment, thus rewarding existing winners andpenalising declining areas. We have seen no evidence tosuggest that the same dynamic will not occur in thelong term this time around.

Local Government Finance Act 2012The Government has outlined its plansfor local councils to retain more of thebusiness rates they collect from April2013. The idea is to encourage localeconomic growth. Councils will retain a50% local share of business rates and willalso keep a 50% share of any growththey generate, subject to a levy

The consultation proposed to facilitate the process ofextending a home or business by temporarily relaxingthe regulations on permitted development. Currentlybusinesses or homes can extend their premises by50m2 without the need for planning permission; theconsultation proposed to extend this to 100m2.

It would seem that either 50m2 or 100m2 is the rightlevel; a temporary relaxation does not seem to makemuch sense.

Property ExtensionsThe government have carried out aconsultation on the ‘ExtendingPermitted Development Rights toHomeowners and Businesses”.

Their first task is to develop a 5 year Police and CrimePlan for their area in consultation with local governmentand other organisations, setting out their priorities.

It is obviously important that issues that affect smallshops are given appropriate weight in this planningprocess – we would expect resources to be limited for

objectives that are low priorities in the plans. The RSAwould urge shopkeepers to engage with their local PCC.Obvious issues of concern are local crime, anti-socialbehaviour and licensing issues.

■ Details of the newly elected PCCs can be found at:www.chosemypcc.org.uk/election-results.

■ More details of the role of PCCs can be found at:http://www.homeoffice.gov.uk/publications/police/pcc/what-partners-need-to-know?view=Binary

Police and Crime CommissionersFollowing the local elections last year,Police and Crime Commissioners (PCCs)are now in post.

National business transfer agents EM&F had alsothought that this would happen, but theirexperience is that this has just not materialised.Nevertheless, they report that sales of villagestores & Post Offices are running more or less inline with 2011 levels, despite the challengingtrading conditions facing the sector.

The majority of buyers are new to the industry.A change in lifestyle and wanting to spend moretime with family are the key factors in thedemand for rural shops and Post Offices. Anumber of buyers come from professional/management backgrounds such as accountancy.

They want to leave City life behind and take ona new challenge - which a busy village store/PostOffice can certainly provide!

Many of these buyers want a high turnover storewhich can generate substantial profits not too

Running a rural convenience store is avery particular lifestyle choice.Undoubtedly there are a significantnumber of soldiers in Afghanistandreaming of eventually running a ruralshop or pub, or pen pushers inWhitehall desperate to exchange theirsemi in the suburbs for a new life in thecountryside. For most, it will remainjust a dream.

However, the RSA had expected theeconomic downturn to increase thenumber of people being maderedundant and then looking to buy arural business.

different from their current salaries. Demand forstores that can do this is high, which, coupledwith a distinct lack of supply, ensures stronglevels of interest when such a business doescome to market.

We all know that high turnover does not alwaysmean high profits. Running costs such as rent,rates and staffing can be particularly high in themajor towns and cities. There is also the ‘fear’factor of a large national opening up nearby ascompetition.

This feeds the demand for businesses in smallertowns and villages, where these factors are lessacute. Rural villages are predictably attractive toolder buyers looking for a change in lifestyle,whilst younger buyers, and particularly buyersfrom the Asian community, are less interestedin finding an attractive location and concentratemore on turnover and profitability.

Property matters...


Selling a Rural Shop

Llangernyw Post Office: This general store is at the heart ofthe community in thius picuresque village, famous for its4,000 year old yew tree. As a freehold business opportunity it proved a popular choice.

EM&F confirms that confidence in the marketfor businesses including Post Offices remainsstrong, especially following the news that POLhave retained the DVLA Vehicle Licensingcontract. They report that the prospect of PostOffice Local contracts have not really had animpact as yet as all sales so far have involved anexisting PO contract.

During the year, the RSA has received a numberof calls from prospective purchasers ofbusinesses, aghast at the reduced remunerationfrom a PO Local contract compared with theexisting sub postmaster’s remuneration. EM&Fbelieve that the real impact of this will takeplace in 2013, when most purchasers will haveto take on the new PO Local Contract. Oncethey work out the drop in revenue and adjust avendor’s accounts accordingly, EM&F believesthat they may try and re-negotiate on priceaccordingly.

It can be no surprise that asking prices forbusinesses need to be realistic for today’s tradingconditions, not based on higher expectationsfrom the past. Michael Taylor from EM&Fcomments, “An ambitious asking price can betried but invariably this leads to lower interest


and the property becoming ‘stale’. By the time itcomes to reducing the price, the initial marketingimpact has been lost. Even if a sale is agreed at ahigh price, there is always the risk of it ‘fallingdown’ when it comes to the valuation, inparticular if bank finance is required”.

In the natural order of things, at any one timethere are hundreds of village shops on themarket. If you are planning on selling a businessin a couple of years’ time, it is thereforeimportant to plan now to make your business asattractive as possible. It is not hard to do.

It goes without saying that your accounts shouldpresent the business in the best possible light.Attention needs to be paid to keeping key costssuch as electricity and staffing down. Year-endstocks should not be too high – it would not bea good idea to have a large order arrive the daybefore your financial year end, for example.

Michael Taylor adds, “Get the property in order –make sure it is presentable. There is no need tospend huge amounts of money, just do thoselittle jobs – touching up paintwork, etc. Crucially,make sure your accounts are up to date.

Ideally accounts need to be to hand 3 monthsfollowing your financial year end, as anypurchaser is going to ask for up to date accountsin order to evaluate trading last year, Purchasersare very cautious in the current climate and willnot buy on historic information”.

■ Our thanks to EM&F for their help incompiling this article.

■ If you are thinking of selling your businessthen E M & F would be delighted to provide a free market appraisal, please visitwww.emfgroup.com for details of your localoffice or alternatively contact E M & F HeadOffice on 01404 813952.

Property matters...continued

Colyton Stores: A desirable location, just off the JurassicCoast, plus sales of about £15,000 per week, ensured strongbuyer interest.


provides funding through grants to theEnvironment Agency, internal drainage boardsand local authorities to actually carry out thework. The system does not inspire confidence.

Village shops have always been a lifeline forlocal communities when it snows, but it is clearthat shopkeepers have also risen to thechallenge of floodwaters, in extreme casesenlisting the help of local farmers with theirtractors to ensure supplies get through. It is vitalthat local residents are reminded of theseefforts, made when supermarket home deliveryvehicles were notable for their absence.

The RSA would be delighted to hear from ruralshopkeepers who have particular stories to tellabout beating the floods and we’ll aim topublish some on our website and in a futureedition of Rural Retailer. At a national level, wewill be reminding government that village shopsdo continue to matter.

According to the Environment Agency,over 5 million homes in the UK are atrisk of flooding.

Hence this is a massive concern for hundreds ofrural shopkeepers and the customers they serve. In fact, village shops are very often in the oldheart of the village, whereas often the propertiesaffected by flooding are the more modernhouses built on the outskirts of the settlement, afew feet lower and closer to the localwatercourse; our ancestors knew aboutfloodplains. Sometimes modern developmentseven have names such as Water View or RiverClose – once evocative of rural charm butprobably not good marketing when it comes toselling properties these days.

David Cameron tweeted his support for thevictims of the recent flooding but governmentactions tell a different story. Back in the year2000, the government and the insuranceindustry came to an agreement, which expiresin June 2013. Provided government keptspending on flood defences, then the insurancecompanies promised to provide affordableinsurance to all homeowners. It is clear that thegovernment has not kept its side of this bargain.The Coalition Government cut funding for flooddefences by over 25% on taking office andthere are as a result nearly 300 flood defenceschemes that have not been built. This willmean that flood insurance premiums for housesat risk will soar, or at worst, that some homeswill become uninsurable.

DEFRA has responsibility for national policy onflood risk management. The government then

Flooding Risk...

“Water, water everywhere, nor any drop to drink”

The Government hasannounced its intention toscrap thousands of regulationsand to free many businessesfrom burdensome health &safety inspections.

After April 2013, only higher risksectors or businesses with a poortrack record of poor performance willface health & safety inspections.The Government is also introducinglegislation to ensure that businessesare only held liable for civil damagesin health and safety cases where it isproved that they have been negligent.At present businesses can be heldliable even if they have not beennegligent. (Enterprise & RegulatoryReform Bill)

On the 1 October 2012 HSEintroduced its new cost recoveryscheme – Fee for Intervention (FFI).Under The Health & Safety (Fees)Regulations 2012 those who breakhealth and safety laws are liable forHSE’s related costs, includinginspection, investigation and takingenforcement action. This new systemmeans that the businesses concerned,rather than the state, will pay thesecosts. It goes without saying thatbusiness owners do need to manageH&S risks, not only to prevent harmto employees and customers, but alsoto ensure that your insurance coverremains valid.

■ For more information see:www.hse.gov.uk

Red TapeChallenge


In its drive toreduce red tape,the Government

has announcedthat it will replacethe present “One-in, One- out” rule

with “One- in,Two- out” which

means that everynew domestic

regulation thatplaces a new

financial burdenon businesses

must be off-set byreductions in red

tape that will savedouble the cost of

the newregulation.

As with the oldrule, One- in, Two-out will not apply

to EU legislationthat has been

introduced intoUK law, unless the

introduction hasgone beyond the

minimumrequirements of

the EU law and isputting UK

businesses at adisadvantage

Legal Bits and BobsHealth and Safety

Financial ControlsLate paymentsThe new Late Payment Directiveapproved by the European Parliamentmust be brought in by member statesby the beginning of 2013.

Under this new directive publicauthorities must pay their bills within30 days and companies must do sowithin 60 days or face penalties andpunitive interest rates. The 60 daysperiod cannot be extended “unlessotherwise expressly agreed in the

contract and provided it is not grosslyunfair to the creditors”.

Taxes – PAYE

H M Revenue and Customs (HMRC)have extended the piloting of its newReal Time Information (RTI) servicewhich makes very substantialchanges to the PAYE system.

Under the current PAYE system,employers tell HMRC what they have

deducted from employees pay afterthe end of the tax year. Under RTIemployers will be required to tellHMRC what deductions are beingmade from employees pay when orbefore the payment is made.

Subject to the pilot being successfulmost employers will begin to use theservice from April 2013 and allemployers will be using it by October2013 according to HMRC

NoSmokingSigns


The Smoke FreeSigns Regulations2012 revoke theSmoke Free SignRegulations 2007and replace thedetailedrequirements ofthe earlierregulations with arequirement thatat least one no-smoking signmust be displayed.The newRegulations cameinto force on 1October 2012.

Unpaid Parental LeaveTo comply with an EU Directive onParental Leave the Government isintroducing legislation to increase theparental leave allocation from 13 to18 weeks and grant employed agencyworkers the right to request flexibleworking on return from parentalleave. These changes are expected tocome into force in April 2013.

Recruitment – Vetting and BarringThe Protection of Freedoms Act 2012makes various amendments to TheSafeguarding of Vulnerable GroupsAct 2006 and reduces the number ofpeople who will have to undergocriminal record checks. The CriminalRecords Bureau (CRB) and theIndependent Safeguard Authority(ISA) merged into the Disclosure andBarring Service (DBS) in December2012. The DBS will combine thecriminal records and barringfunctions. From March 2013 it isintended that employers will be ableto use the checks instantly online.

Employee owner contract.Under Government plans a new formof employment contract isintroduced. The employee owner’scontract will provide workers with adifferent set of employment rightsand shares in the business ofbetween £2000 and £50000. Anygains will not be subject to CGT.

In return the employee owner willforego certain employment rightssuch as those relating to redundancypay, training, flexible working andsome unfair dismissal. They will alsohave to give more notice to theiremployer if they intend to returnearly from maternity or adoptionleave.

Following consultation theGovernment is proposing variousamendments, including a renamingof this form of contract to “employee– shareholder” contracts.

Age DiscriminationThe Equality Act 2010 madeprovision for the Government to banage discrimination against those aged18 and over in services and publicfunctions.

Any discrimination on the basis ofage is now unlawful unless it iscovered by an exception from theban or good reason can be shown forthe preferential treatment (“objectivejustification”). Exemptions relevant toretailers mean it is lawful to provideage-based concessions and to applyage verification procedures for age-related sales.

Employment

“I haven’t been to a cash & carry inabout 18 months – it’s about 12 milesaway and I decided that by the time I’vepaid for a litre of diesel, and taken acouple of hours out of the day, it’s justnot worth it.” Colin Woods, owner ofAmberley Village Stores in Sussex, istypical of many rural retailers who nowshun a shopping trip to the cash & carry.

Perhaps unsurprisingly, delivered wholesalerPalmer and Harvey has worked out that using acash & carry can cost independent retailersmore than £2,500 a year in extra staff andtravel, and reckons it takes up more than fourhours a week – and probably more for ruralretailers who have to travel further. But thesedays it’s not just a simple choice between goingto the local depot or poring over catalogues andbrochures, explains Patrick Mitchell-Fox, seniorbusiness analyst at IGD. He says that untilrecently, supply options for small retailers hadbeen limited to two types of wholesaler service:delivered or cash & carry, which meantstoreowners were faced with a trade-offbetween the convenience of delivery againstlower cost prices.

This distinction is beginning to blur, saysMitchell-Fox, as cash & carry operators havelaunched their own delivery options. Oneexample of this is Booker, which now deliverfree of charge at cash & carry prices from all itsdepots. Mitchell-Fox continues, “Deliveredwholesalers, such as Palmer and Harvey, haveresponded by lowering prices to match cash &carry operators and being more flexible.”

This has also meant a surge in online orderingsystems, allowing stores to pick and choose froma wider choice of suppliers whilst comparingprices. The Federation of Wholesale Distributorsbelieves that online ordering is a big opportunityfor the sector, and predicts that at the least 50%of order capture will be online soon.

Booker was the first to launch a viable onlineservice, and its online sales in its last full year

Buying Stock...


Buying stock in the

were £635m, more than 16% of its totalturnover. To put this in context, it is a biggerproportion than online sales are for Tesco – withonline sales growing at 11% this year, reportsMitchell-Fox.

Both delivered and cash & carry players, such asBooker, Bestway and P&H, now give retailershand held scanners to scan barcodes, which aredownloaded through a USB port. P&H alreadyhas 3,400 retailers using them, and aims to get70% of its customers on board by 2014. Says aspokesman: “We’ve heard that some customersused to spend up to seven hours a week goingthrough brochures and placing their orders; nowmany retailers are saying they’re completingtheir ordering in around ten minutes.”

Woods at Amberley Village Stores is a convert,getting deliveries from both Booker and P&H,using hand-held scanners to scan barcodes. Hereveals that by using both scanners, he’s able towork out which wholesaler gives him the bestprice. “If you just go to cash & carry youwouldn’t know what price other wholesalers areoffering,” explains Woods.

In recent years, the big wholesalers haveencouraged retailers to integrate their EPoSsystems with on-line ordering. Chris Sharrinton,who runs a Spar shop in Helston, rural Cornwall,has used EPoS for 20 years to buy stock throughthis symbol group and reckons it’s worth forkingout for an off-the-shelf system, as it will pay foritself in the long-term.

“We couldn’t run the shop without it,” saysSharrinton. “We don’t run out of stock, can find

out what lines aren’t selling, and replace themquickly. For small retailers without muchbackroom space or cash, it means your stocklevels are reduced.”

Delivered wholesaler J.W. Filshill in Glasgowdistributes into rural Scotland and MD SimonHannah says while its customers are embracingscanners which upload orders onto its website,EPoS can make life even easier by managingstockholding and margins for stores. Heacknowledges the initial outlay is off-putting,

By Helen Gregory


21st century

for the service. Could the concept work forwholesalers? Nisa has already looked into it andthe IGD’s Mitchell-Fox says that while somedeliveries can be subject to charges or minimumdrop sizes, there is still scope for wholesalers tooffer click and collect services: “This would givecustomers even greater flexibility to purchasethe exact quantities they want, when they wantthem,” he says. In a small shop, sales can godown and retail theft can go up when themanager is out of the shop, while anotheradvantage of not going to the cash & carry isthat you won’t be tempted to impulse buy.

However, going to the cash & carry in thenormal way is still a good option for thosestores watching their cash flow. Fox comments:“ We understand that our customers’ time isprecious so deliveries can make their liveseasier, while visits to branch mean they canlearn about emerging trends and see if anythingnew catches their eye. This connection betweenour customers and their local branch issomething that really helps our independentretailers to grow and adapt their business.”

David Bolton, manager of Sulgrave Village Shop inNorthamptonshire, agrees, “When you’re at thecash and carry you can see everything, and pickand choose, whereas if you’re ordering from acompany they won’t send you something if theyhaven’t got it. Going in person means you can bemore flexible in what you order, and we can alsomake sure we get any good promotions.”

It is clear that new ways of working aredeveloping rapidly and becoming mainstream,although for many retailers the drive to the cashand carry will remain part of their lives for manyyears to come. The key message is that it isimportant for retailers to keep their systems underreview in order to achieve the best approach ormix of approaches for their particularcircumstances.


which is why he has just started offering EPoSsystems free on loan to retailers. “They get thebenefits and we are able to use their data to getbetter deals from suppliers, although we do insistretailers then give us 100% of their business.”

Steve Fox, Sales Director for Retail at Bookeragreed with these benefits: “”Epos systems arean essential part of an independent store andwe are delighted to be providing them free ofcharge for our customers. This system helpsretailers improve and develop their businessefficiencies including price changes, stock levelsand promotions. It is also a great way ofordering, saving both time and effort. The system can also produce reports to helpretailers identify profitable lines, slow sellers andcategory sales.” Last year Booker launched afree Epos system for independent retailers whoagree to spend more in their local Booker. So what’s the next step in the wholesalerevolution? Click and collect works well in theretail sector because shoppers love the fact theydon’t have to be at home for deliveries or pay

At the RSA, we are constantly reinforcing themessage that one of the key advantages smallretailers possess is their ability to deliver goodpersonal service. That, of course, depends onthe quality of staff and the way they are trainedand managed. There has never been a moreimportant time for retailers to develop, train andretain a talented and skilled workforce.

Despite this, few independent and smallerretailers employ apprentices. The reason isobvious; the pressures of day-to-daymanagement leave little time for recruiting,training and supporting an apprentice in-house.The idea behind the Retail ApprenticeshipScheme is to take away this burden, whilstproviding retailers with access to affordable andtalented new recruits, enthusiastic people whocan make a real difference to their business.

The apprentices are recruited and employed bythe Retail Apprenticeship Training Agency(RATA). Before they start work, each apprenticeis given two weeks classroom-based training.This includes courses on retail knowledge,customer service, numeracy and literacy. Thisensures that retailers gain a work-readyemployee from day one. The placement is for12 months, during which the apprentice willattend 10 one-day training sessions to continuetheir learning. Crucially, RATA retainresponsibility for the welfare, H&S, learning andemployment of each apprentice, thereby

reducing the risk, cost and time commitment forthe retailer. The scheme is open to independentretailers employing fewer than 250 employeesin England. To take part, retailers need to:

■ Provide a work placement for up to a year of30 to 40 hours per week, with a clear role jobdescription.

■ Provide a safe working environment■ Be involved in the selection of their

apprentice from a pool of candidates■ Pay a weekly fee of about £140 towards

apprentice wages, NI contributions andadministration

■ Provide appropriate induction and uniformfor the apprentice

■ Provide a supervisor or mentor for theapprentice

The apprentice is employed on a full-timecontract, which may include Saturday andSunday working. During their year, theapprentice will complete a Level 2 Retail SkillsCourse which covers the practical skills neededto become a good retailer. Units include workingeffectively in a team, storage of stock, stockcontrol, displays to promote sales, processingpayments, customer service, health and safetyand security. At the end of the year, the retailerhas the opportunity to recruit the now-trainedand experienced apprentice, but has noobligation to do so.

■ More information can be found at:www.nsaforretail.com/RAS

■ The National Skills Academy for Retail can becontacted: Telephone: 0844 264 0238. E-mail: [email protected]

Providing young and talentedstaff to independent retailersThe Retail Apprenticeship Scheme isdesigned to help independent retailers tobenefit from young and talentedapprentices, without getting involved inany administrative burden.


Retail Apprenticeship Scheme...

As an impulse purchase, it is important thatbiscuits are displayed in a high traffic area, nottucked away at the back of the store.

For most stores, the extra sales will more thanjustify the investment of space. Price-markedpacks have become very common on the biscuitshelves in recent years. Some retailers do resentthe loss of margin they often demand, but thegeneral experience is that extra sales donormally compensate and that their presencedoes reassure customers that the store as awhole is providing fair prices – a real halo effect.

According to Burton's Biscuit Company,the UK biscuit market is worth amassive £2.4 billion per annum, withgrowth at a healthy +5% per annum.

The British certainly love their biscuits, makingthem one of the most important product groupswithin grocery. And they are also products thatcustomers pick up on impulse, often duringvisits to convenience stores. They are anaffordable treat, something that manycustomers appreciate when budgets are tight.Biscuits are a vital product group in our sector.

Biscuits...


The Biscuit Fixture


Medical professionals apparently become instantworld experts on consumer packaging, whilstsome defenders of the status quo seem to knowto the finest detail how counterfeiters willrespond to a new set of pack designs to replicate.

The RSA response to the consultation was, wehope, fairly measured. We highlighted that ourresearch of the impact of standardisedpackaging on retail operations – the best workavailable, but still only a simulation, showedthere would be a negative impact on the retailindustry and suggested that the Australianimplementation would soon provide real world data.

The results of the Department ofHealth’s public consultation on themerits of tobacco standardisedpackaging have been delayed by theneed to analyse the massive numbers ofresponses received. This does highlighthow emotive the issue has become –perhaps not surprising, given its nature.

SCOTLANDIn the meantime, Scotland is joining the rest ofthe UK in banning open display of tobaccoproducts after a legal challenge was rejected bya five-strong panel of judges on the UK SupremeCourt. This ban is expected to come into effectin April.

EUROPEAN COMMISSIONLate in December 2012, after years ofdiscussions, the European Commission hasadopted its proposal to revise the TobaccoProducts Directive.

The proposed legislation consists of new andstrengthened rules on how tobacco products canbe manufactured, presented, and sold. It bansthe use of cigarettes, roll-your-own tobacco(RYO) and smokeless tobacco products withcharacterising flavours, such as menthol. It alsomakes the use of large pictorial health warningsmandatory on cigarettes and RYO but does notgo as far as to demand plain packaging.

Tobacco packaging...


Standardised Tobacco

Australia has always been an early mover onanti-tobacco laws, banning advertising on TVand radio as early as 1976, in newspapers in1989, and sponsorship of sports and culturalevents in 1992. One of the world’s toughestanti-tobacco laws came into effect in Australiaon December 1st, banning all companybranding and logos from cigarette packaging. Apack of cigarettes in Australia is now an olive-green box with dominant and graphic healthwarnings, with the brand name and variantwritten in a discreet, generic font at the bottomof the pack.

It is early days and there is no hard evidence asyet on the long term effects of the newAustralian packaging on tobacco smuggling,smokers or retailers. Not surprisingly, anecdotalcomments emerging from Australian retailerstend to support the RSA’s findings. Thefollowing are a few quotes that have found theirway onto the Internet but are not claimed to bea representative sample:

James Yu, who runs the King of the Packtobacconist in central Sydney, said the uniformpackaging made it harder to stack his shelves,"It used to take me an hour to unload a delivery,now it takes me four hours," Yu commented."The government should have just banned themaltogether and then we'd go OK, fine, we'redone, we'll shut up shop," he said, throwing hishands up in the air.

"People are still coming in and saying, 'Oh,that’s terrible.' But they’re still smoking," saysshopowner Brenda Jones. She thinks the graphicimages haven’t really deterred any of hercustomers, and the hundreds of look-alike

packages have just made it harder for smallbusiness owners like her to keep up withstocking shelves and placing orders. "[It's] verycostly; costly in time and effort. I’m supposed tohave gone home at half past two, and I’m stillhere because I’m still doing orders, because ittakes us twice as long to do.”

CTC Tobacconist Bruce Whatley said theintroduction of plain packaging had not reducedtobacco sales at his Cairns business. "I’ve beenin the game since cigarettes were 20c perpacket, it hasn’t affected anything, consumersdon’t care," he said. "We’ve had to create anextra 20 to 40 staff hours because we can’t tellwhat each product is, we’ve had to restructurethe whole business to look after it."

Meanwhile, Sandra Ha of Zico Import Pty Ltd,said demand for cigarette cases (silicon coversto go over and mask the unpalatable packets)had shot up, suggesting that the graphic picturesmay be having the desired effect on smokers.


Packaging

Documents

RURAL RETAILER winter 2013