Rural Shops

Brexit: No-deal outcome could force shopping bills up by £800 a year, says union

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Some very interesting economic analysis about food, which of course sits at the heart of the rural economy, here, this story tells us:

The cost of a family’s weekly shop could rocket by more than £800 a year if the UK leaves the EU without a deal, a major union has warned.

Analysis for the GMB found that the bill for a typical supermarket basket of goods would increase by £15.61 a week – 17 per cent – if Britain was forced to fall back on World Trade Organisation rules, which require tariffs on many goods.

Under the WTO’s “most favoured nation” rules, the price of a 250g pack of butter would rise by 42p (up 28 per cent). Other increases would include 62p for a 460g block of cheddar(up 29 per cent), 43p for a pack of eight sausages (up 25 per cent), 32p for 2.5kg of potatoes (up 14 per cent) and £2.56 for a bottle of red wine (up 32 per cent), according to Acuity Analysis

What’s happening on the UK High Street?

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This story is ostensibly about Northampton but it has a far wider resonance. It makes me ponder on the need for the recently opened Stronger Towns Fund to be open to places below 30,000 population. In its more general analysis it tells us:

Each year, more shops close than open in the UK and the gap is getting wider.

According to figures from PWC and the Local Data Company, 2,692 shops shut in the first half of 2018 – about 14 per day – while 1,569 opened, a net loss of 1,123.

That compared with a net loss of 222 in the same six months of 2017. Clothes shops and pubs were the biggest casualties.

In January 2008 the internet accounted for 5p in every £1 of retail sales. By August 2018, it was 18p in every pound.

In 2018, 43 retailers with multiple stores either closed or went into administration, affecting 2,594 shops and 46,000 jobs according to the Centre for Retail Research.

A further 15, with 266 stores and 2,706 employees, did so by the end of February 2019.

Why rural communities are becoming more isolated

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We know all this but this is a really great summary of the key issues which underpin our movement. It tells us

What is the problem?

Key services for many rural communities – from local policing to public transport and ATMs – have been cut relentlessly over the past eight years. Village shops, pubs and rural town high streets are also struggling to survive in the face of online competition and out-of-town superstores. The employment picture is no more optimistic, with fewer agricultural jobs available as the farming sector continues to switch to automation.

Public transport

Local authority bus budgets in England and Wales were cut by £20.5m in 2017/2018 and the number of bus journeys has dropped by 10% since 2008, according to Campaign for Better Transport. More than 3,300 bus routes in England and Wales have been reduced or withdrawn since 2010. “The lack of affordable public transport…stops people getting access to training and jobs,” says Stephen Joseph, former chief executive for Campaign for Better Transport. “It makes access to healthy food in shops more difficult. Cuts in bus services add to poverty and social exclusion, and to isolation and loneliness.”

Broadband

Up to 50% of rural homes – around 1.5 million properties – are unable to get broadband speeds of 10 megabits per second (mbps) or higher, according to Ofcom. Government data shows average rural broadband speeds are around 5mbps, compared with 25mbps or higher in most cities.

Policing

As reported in our January issue, rural crime is at an all-time high. Almost 70% of farmers and rural-specific business owners have been victims of crime in the past 12 months. Rural crime cost the UK £44.5m in 2017 – an increase of 13.4% on the previous year.

Bank and ATM closures

Analysis by Which? shows almost two-thirds of bank  branches have closed over the past 30 years; 19% of people live almost two miles from their nearest bank. In January 2019, Royal Bank of Scotland began closing 216 branches across the UK, with the loss of 1,050 jobs. Also, 300 free-to-use cash machines are closing every month. Independent operators, who manage ATMs in many rural stores, say cashpoints are increasingly unprofitable.

Automation of agriculture

Agriculture is one of the sectors most likely to be affected by automation, according to a report by the Organisation for Economic Cooperation and Development. UK agriculture currently supports around 400,000 direct jobs – from farmers to seasonal crop pickers and landscape management – but this number is dropping as robotic systems increasingly harvest crops and fruits. Driverless tractors are being developed that can plant and gather crops, while precision spraying by drones and robots is another area where human labour is set to be replaced.

Shop closures

Around 400 commercial village shops close each year, according to the Plunkett Foundation, which supports rural businesses. The internet has both positive and negative aspects for the rural economy. Businesses desperately require fast broadband to compete and operate routine tasks, while rural residents can now go online to easily buy goods not available locally. At the same time, village shops and high streets are undercut by online services with lower overheads.

House prices

The lack of new affordable housing is driving young families and working-age people out of rural areas, according to the National Housing Federation (NHF). The cheapest rural homes are 8.3 times the income of typical first-time buyers, much higher than in urban areas. The NHF says this reinforces the trend for diminishing village populations and services: almost half of households in rural areas are predicted to be aged 65 or over by 2039.

Empty shop numbers ‘set to rise in 2012’

According to this article a report by the Local Data Company has identified that empty shop numbers are due to rise. The article tells us:

“The report said that although the share of shopping taken by out-of-town shopping centres had risen to 31.5% in 2011 from 28.1% in 2000, the main cause for the decline of High Street shops was online shopping. LDC quote research from retail consultancy Verdict which shows that online sales doubled from 5.1% in 2000 to 10.2% in 2011.

“Technology is driving consumer behaviour to a world of engagement, entertainment and the ability to shop where, how and when we like,” said Mr Hopkinson. “Town centres need to adapt to this changing environment if they are to survive and thrive.”

This issue is really interesting in raising a fascinating facet of the downside of the impact of the internet on rural communities. In most cases we argue better internet connectivity can make rural places more sustainable. I wonder if one unintended consequence of increasing connectivity might be the loss of local shopping and the consumption of local facilities – when people have the option to easily ditch their rural service centres through enhanced connectivity and shop online like everyone else! Feels wrong somehow to be saying this but it is an interesting thought – what do you think?

I am sure there is scope to grow the potential of niche and interesting rural retail and small town operations when they increase their own virtual footfall via internet strategies. Is there enough support to enable them to do this?

 

How social enterprise can transform rural life

This article by the CEO of Plunkett thoughtfully reflects on the positive support they give to a number of aspects of the economic and social life of rural communities. In relation to their work with village shops he states:

“The fantastic thing about community enterprise is that it often thrives where commercial ventures fail. Taking the example of community-owned shops, only 10 of the 278 to ever open have closed, giving them a 97% success rate. Compare that with the 47% five-year survival rate of small businesses and you begin to appreciate their worth. But there’s no secret to it – it’s the community engagement that ensures they are successful. Because they are owned and run by the customers themselves, they listen to what they want, and respond accordingly.

And because the customers are the owners, they really care about what happens to the business and want to support it. And we’re seeing this right across the board, from shops and pubs to transport services, broadband provision, energy services and much, much more.”

Undoubtedly good stuff – however 278 shops is a tiny drop in the ocean. He goes on to talk about Village SOS a Big Lottery project recently bringing rural regeneration to a TV near you – which has generated 750 telephone enquiries from the 11 million or so people who live in rural England.

I like the work of Plunkett, Sheffield Hallam University are currently evaluating the impact of Village SOS in detail. The big question we need to ask is how can this good work be scaled up to have a macro economic impact on some of the real challenges facing rural England?  Perhaps the proposals to mutualise 2000 post offices will offer some bigger scale insights

Mary Portas has good ideas for restoring our town centres. Local councils must listen.

This article has much symmetry with the Plunkett piece on social enterprise. It sets out some of the perceived impacts of local authorities on the viability of Town centres. It tells us:

“Some of Miss Portas’s ideas do require some imagination on the part of the local traders and a willingness to innovate and modernise. But many obstacles to high street renaissance are erected by local authorities: costly business rates make it hard for shops to turn a profit, while the lack of easy accessibility deters customers. The cost of parking in particular is something that councils should address urgently, yet they refuse to do so because of the amount of cash it generates. This is ultimately self-defeating: as fewer people visit the high street, so parking revenues will fall.

To encourage shoppers to return, councils should look seriously at introducing controlled free parking and abolishing evening and weekend charges. They should also consider a community right to buy or “right to try” empty properties, which could breathe new life into decrepit shopping streets. So, too, would ensuring that the Government’s controversial planning shake-up prioritises town centre development over rural building.”

Much of this resonates but I still think ultimately it is the business skills of retailers which will determine their success or not. This is where public policy should focus. I recall, what seems a life time ago now, being challenged by a shop keeper in Gainsborough over the impact of the pedestrianisation of part of the town centre on her business. She was proud to have only taken the price of running her car out of the business for the last 5 years and was accusing the Council of now jeopardising even that. I reflected that she had a significantly under capitalised business and through relying on her husband’s salary had been running a hobby business. That’s not to say it wasn’t providing some real utility but as the recession is now exposing, along many high streets in England, there is no real sustainability in the way many of our smaller town centres have evolved over the last quarter of a century – with many shops having struggled to “stand on their own commercial feet” for years.

I was reflecting earlier in the week on exactly the same issue in the context of small farms dependent on the off farm income of one or both partners in a relationship and the impact the recession is having on their viability. But that is a story for a future edition of Hinterland!