RURAL RETAILER Summer 2013

RuralRetailer

Issue 22 l Summer 2013www.ruralshops.org.uk

■ Fresh meat inconvenience stores

■ Who are yourcustomers?

■ Free shop localposter inside

The Journal of the RuralShops Alliance

2 RuralRetailer ● Summer 2013 ● Issue 22

for moreinformation and

news...

In this issue...

Cover photo:Pauline Phipps with

some of her excellentpasties

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● E-mail: [email protected]● Website: www.ruralshops.org.uk

● In My Opinion, By RSA Chief Executive● Our Partners● Your Action Checklist...● R A Phipps Family Butchers company profile● Fresh meat: a real opportunity for convenience stores● RSA Views: Retail to residential permitted

development proposals, shop theft, business rates relief, VAT flat rate scheme

● So who are your customers? 2011 Census data● Energy Bills● Ice cream – keeping one village shop alive● Small Business Saturday● Banking for small businesses● The Coffee Fixture● Collect Plus – delivering convenience

to rural communities

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21 222425262730

In my Opinion...

At the last RSA National Meeting, the research agency Him! gave a veryinteresting presentation, based on thousands of interviews withconvenience store customers.

It highlighted the main reasons why thesecustomers do not use convenience stores more.There were four basic points. Two – prices andlimited range – were entirely predictable. Theother two, the limited range and quality issueswith fresh produce, were less so. In fact, manyretailers know how important fresh produce is tocustomers. However, it is worth repeating: manycustomers base a lot of their judgement on thestore overall on its fresh produce offer. However,produce sales may only make up a few per centof total sales. Although gross margins areprobably good, by the time the staff costs ofservicing the range and the inevitable wastageare taken into account, then financially it canhardly be worth stocking for many retailers.

I have been raising this issue with retailers atmeetings and on my store visits. In many partsof the country, it is clear that it is very hard tofind a good wholesaler, one prepared to deliverrelatively small quantities, sufficiently frequentlyand at acceptable prices. Some retailers didreport that such paragons do exist and inseveral of my meetings the retailers presentthen spent a very productive five minutesexchanging details of their produce suppliers.

But this issue does highlight how ruralbusinesses can be interconnected. Sometimeswholesalers will only deliver to a village whenthere is sufficient business to justify theirmileage. This “critical mass” can only begenerated if there are pubs, restaurants, schoolkitchens, works canteens or other customers as

well as the shops. When rural businesses close,overall demand weakens. Less frequentdeliveries from weaker wholesalers can meanthat the produce display is tired andundesirable; a downward spiral ensues.

On the plus side, several of the symbol groupshave improved their range of fresh producemarkedly in the last few years and in manyconvenience stores the displays have neverbeen better. We also know of independentretailers who have consciously decided that theyneed to develop their produce range. They haveaccepted that it may take several months ofexcessive wastage and financial loss to establishthe range and to get it onto a “virtuous spiral”.As customers buy more it becomes easier toprovide freshness and good availability. Thisleads more customers to buy locally, making iteasier to keep the display fresh….and so on.The reality is that many other rural retailersshould really be following this hard path.

● Do let us know (on [email protected])if you have an excellent local producewholesaler we can tell other retailers about!

Issue 22 ● Summer 2013 ● RuralRetailer 3

Fresh produce – getting “the spiral” going the right way


Retail Services Team Credit and debit cardacceptance service

Supply wide range of cards with great service

H&S and firerisk support

EPos systems designed for independents

Excellent cover andcompetitive rates for rural retailers

Identity cards for all ages

Buying and selling retail businesses

Electronic security systems

Free help to reduceelectricity bills

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

Our Partners...

Wide variety of bagspersonalised with your logo

Your Action Checklist for this issue...1. REVIEW APPROACH TO

FRESH MEAT IF APPROPRIATE p

3. GET CENSUS DATA ON CATCHMENTPOPULATION p

4. MAKE SURE YOU ARE CONTROLLING ELECTRICITY COSTS p

p6. REVIEW COFFEE FIXTURE

SEEPAGE 10

2. PUT UP SHOP LOCAL POSTER p

SEE PAGE 15

SEEPAGE 21

SEE PAGE 22

SEE PAGE 26

SEE PAGE 27p

We have heard from a number of membersoperating sub post offices that the new RoyalMail postal charges introduced in April, whichhave increased the price the sending parcels ofcertain size/weight combinations considerably,are reducing the number of parcels being sentthrough post offices. This change was to

Post Office

5. PROVIDE VIEWS ON SMALLBUSINESS BANKING TO OFT


ensure that Royal Mail covers its costs, no doubtan important factor before privatisation but onethat seems to be harming some rural post offices.On a more positive note, Royal Mail and PostOffice Limited will be launching a “click andcollect” service later this year, to compete withservices such as Collect+ (see page 30).

We know that a significant number of RSAmembers with National Lottery terminals werevery concerned at receiving a letter fromCamelot in June suggesting that outlets withsales of lesson £800 a week could lose theirterminal. After a meeting with Camelotmanagement, we can confirm that this was ageneral letter (many retailers had thought this

Camelot threat was directed to them personally) and thatthe number of vulnerable outlets at present isactually quite low. We do know that a significantnumber of the new outlets that received theirNational Lottery about nine months ago areconcerned. Some may be designated ascommunity outlets and therefore protected.Others are struggling to achieve this requiredminimum level. We can confirm that no storewhich has had a terminal for less than 12 monthsis included in the cull this time round.

When Graham and Sylvia Phipps wereexpecting their third child, the champagnewas ready to be popped to welcome a babyboy – an heir to the family butchersbusiness in Hanley Swan, Worcestershire.But when the child proved to be a thirddaughter, Pauline, the bottle was put backin the cupboard unopened.

still remember him looking up, pointing at meand saying: “You: out!”, and I ran.”

But later, when her father took over thebusiness, Pauline was allowed to get moreinvolved. “My dad reared his own cattle andsheep, as well as running the abattoir at the endof the garden and the butcher’s shop, so I lovedhelping out with the animals, and in the shop.After I left home, over the years, I found myselfback in the village, helping out occasionally inthe shop. But I had no thoughts about takingover; butchery was very much a man’sbusiness.”

Almost 20 years ago Pauline found herself at acrossroads. “I’d recently moved back to the

R A Phipps: Family Butchers...


Suppliers were taking bets on

“My father was one of eight children – thePhipps family had run the butchers shop since1932. Everyone was hoping for a boy to carryon the family business. Then I was born!” laughsPauline. As a small child, Pauline’s grandfatherAllan even refused to allow her into the shop. “I

Some of the mouthwatering pies on display

village with my young daughter, and when myfather died suddenly my mum didn’t know whatto do with the business, so I said that, so long aswe could pay the bills, we could run the shop;we’d just give it a go,” she recalls. Little didPauline realise that the shop’s suppliers weretaking bets on how long she’d last running thebusiness! “One only gave it a year! Almost 20years later, I think they’ve realised a woman canbe a successful butcher,” she says – althoughbeing only just over 5ft tall and a lightweight 8stone does mean lifting carcasses is a challenge!

Pauline’s love of animals and knowledge ofanimal husbandry has given her a passion forthe best quality meat, reared and butchered withcare. “I can tell just by looking at the meat if theanimal has been over-stressed, or has arthritis -no amount of cooking will make it tender,” shesays. “People know I have very high standardsand I’ve used the same suppliers – often otherfamily businesses – for many years. I knowwhere all my meat comes from, and I like tokeep the ‘food miles’ to a minimum, as travelstresses livestock. I know what I am looking for,and my suppliers understand that. For example,I’m expecting two Gloucester Old Spot pigs thisweek – I know where they were born and bredand I know they will be of the best quality,because that’s what I expect. That passion forgood meat, well cared for, comes from growingup in a butcher’s family.”

A chance discussion with a salesman atHereford Refrigeration a few years ago whenPauline wanted a new chiller unit led to her nextmajor business decision: to branch out intomaking pies. “He took me round to some localshops which made their own pies, and it gave

me the idea. I started with a basic meat pie,which proved very popular. That started mycreative juices flowing!”

That simple meat pie spawned a whole range ofdelicious, national award-winning pork pies,meat pies, sausages, pasties – and even fruittarts, all home-made with the finest local

By Beth Whittaker


how long she would lastWorcestershire asparagas and strawberries

Part of the meat range

ingredients by Pauline and her mum. “We havebuilt such a reputation for the quality of our piesthat we have customers coming from Coventryand Nottingham,” says Pauline with pride.“They can buy them frozen to bake off at home,or already cooked. They often buy in bulk!” Therange of meats and pies is matched by anexcellent range of local cheeses, fruit andvegetables.

The very popular Blackmore caravan andcamping site at the foot of the Malvern Hills, justa mile away, is a rich source of customers, asare the thousands of visitors en-route to themany events at the nearby Three CountiesShowground.


“Hanley Swan is very pretty village with a duckpond and village green; and the shop is eye-catching, decorated with flowers and looks veryattractive. We built an old-fashioned wheeledcart, painted green and red with a stripedawning to display our fruit and vegetablesoutside the shop, as we had no room inside, andthis attracts custom too.”

Even the catering businesses which trade at theThree Counties shows stock Pauline’s sausages;she also supplies a local children’s nursery and aresidential nursing home with all their meat.Recently, Pauline and her mum prepared 700assorted pies for a customer to sell at the GoodFood Show, and she sells dozens of her porkpies to hungry bargain hunters at a local fleamarket. As the ultimate in praise, one visitorfrom Cornwall was so convinced of the superiorquality of Pauline’s Cornish pasties that theyasked whether she would post some – a realheresy across the Tamar.

“About half of the business now comes from thepies. To keep a traditional butchers businessgoing in the 21st century, you have to keepcoming up with new ideas: you can’t stand still.You have to move with the times – people aregetting more interested in the cheaper cuts of

R A Phipps: Family Butchers...continued

Produce cart provides extra selling space

The shop is not large The building with the walk in chiller, freezer and the kitchen


meat, but they don’t know how to cook them.That’s what a good butcher can help with – wecan tell them the best way of cooking any cut ofmeat. We also sell marinated meats forbarbecues and offer ‘veg and meat’ boxdeliveries – although we find most of ourcustomers prefer to come into the shop to buy –and to chat!”

Pauline employs another butcher and isconsidering taking on an apprentice – but sheknows she will be the last Phipps to run theshop. “My daughter is training to be a surgeon,so wielding a scalpel is as close as she will get,but that’s not a problem – I’ll be happy to sellthe business eventually. My grandfather wouldbe shocked that a woman is running the shop,and that we now make and sell famous pies, buthopefully he’d be pleased that Phipps theButchers is still going strong after more than 80years!”

● For more details, see:http://hanleyswan.net/shops-businesses/shops/r-a-phipps

The RSA viewFor most retail businesses, it is the sales area that is thevital part. For Pauline, the service building at the back isnearly as important. In addition to the walk-in freezer formeat, this contains a walk-in chiller, necessary for thebatch production of the pies and pasties. It alsoaccommodates the kitchen, where Sylvia works hermagic. This building was set up and equipped about 13years ago, with help from a local government- fundedscheme to help rural businesses in Warwickshire andWorcestershire, as well as a significant investment fromPauline herself. The resulting long-term success is anexcellent example of how this type of grant support forcapital investments can provide long-term benefits forsmall businesses and the rural economy. There is a reallack of such schemes today in England (Scotland andWales do have support programmes). Some localauthorities have run successful schemes but withbudgets under such extreme pressure, these arecurrently few and far between.

Over the years, many rural family butchers have closed,but the recent horse meat scandal highlights howimportant it is that outlets such as this for locally rearedmeat provide a real alternative to the supermarkets.

The shop is close to the pond in the centre of the village, with aresident heron

Pauline Phipps

“I had to double-check the price when six sausages came to £6.98 the other day,” admitsRichard Jones, who runs Colne Engaine Village Shop near Colchester, who adds: “It sometimessurprises me, but then this is an affluent area and people are happy to pay for quality.”

His customers gladly snap up chicken breasts andham from The Rare Breed Meat Company andBlackwells Farm, just three miles down the road,as well as meals made by the farm – despite theprice tag – mainly because locals like knowing theprovenance of their meat, believes Jones. Heoperates on margins of 35%, and has a goodworking relationship with the farm: “We work withthem side-by-side, getting deliveries three times aweek. Meat sales are important to us but nothingwe do here takes business away from them.”

Some butchers who supply rural stores agreethat they too are in a win-win situation, such asSue Harris of Tywardreath Butchers, in Par,Cornwall, who says: “A lot of the people whobuy from the village shops – where there is alimited stock - also come here, whereas beforethey didn’t, so it is good advertising for us.”

And those butchers who make big deliveryrounds are also more likely to find supplying

Fresh meat...


Jon Thorner supplies dozens of stores

A REAL OPPORTUNITYFOR RURALCONVENIENCESTORES

small shops worthwhile. Jon Thorner’s farmshop and butchery counters in and aroundShepton Mallet sell to dozens of rural stores in a50-mile radius. Owner Jon Thorner says hisbusiness model works because these villageshops also buy baked products such as pies andquiches from him, making deliveries more cost-effective. The company’s gas atmospherepackaging machine gives meat a seven-day shelflife instead of the typical two days you get withcling film, which helps to prevent wastage.Thorner gives most shops approximately 30%profit on cost and adds: “They can make areasonable margin – our mark-up on meat isenough to allow us to do that.”

Wastage can be a problem when you’re sellingmeat; who hasn’t bought in a bumper back ofsausages and burgers only to fall victim to an

optimistic weather forecast?Getting customers to placeorders instead of holding stockon shelf can be a way round this - somethingcommunity co-operative Radley Village Shop inAbingdon, Oxfordshire, does successfully,buying from local butcher Q Gardens. Avolunteer picks up orders once a week,otherwise Radley shop manager JohnGoodenough reckons the butcher wouldn’t thinkit was worth his while. The shop gets 20% offeach order but profits are minimal because ittakes so few – about five a week, saysGoodenough, who reckons it’s partly becausethe final retail price can fluctuate, sometimesgiving customers a shock.

If the answer to really successful meat sales is avery close relationship between village shop and


Brindon Addy, Chairman of the Q Guild of Butchers

By Helen Gregory

butcher, you can’t get much closer than atK.W.Clarke butchers, in Bramfield, Suffolk,where half the butchers shop is also the villagestore. Two-thirds of sales come from meat whileit also supplies about a dozen other villagestores, particularly with home-cured ham andbacon, along with beef from owner JeremyThickitt’s farm. He says: “It’s definitely worththe business for everyone – if a pack ofsausages is £2 here, it would be £2.20 for them,but I’d take 20% off so I’m selling to them for£1.80, so they make 40p.” Adds Thickitt: “Ourset-up works well because there’s a lot ofcrossover between the two parts of the businessand people will pick up groceries to go withtheir meat. They complement each other.”

However, a sense of duty and sentimentalitycan keep chops and mince on the shelves ofsome rural shops, rather than any hard-nosedbusiness decision. “I can take four chickens butthen be left with three that I have to put in thefreezer,” admits Kate Hogg, owner of LerrynRiver Stores in Lostwithiel, Cornwall, wheremeat sales can fluctuate wildly. “We carry meatbecause we like to give customers the full rangeof options – otherwise they might go elsewhereto shop.” Hogg is supplied by TywardreathButchers, which also delivers weekly to fiveother village stores in a 40-mile radius. OwnerSue Harris says that it takes time to packageproducts – typically fresh sausages, burgers,

mince, steak and chops – individually, whichmeans that products in the village stores sell forslightly more than in the butchers. But it seemsthe arrangement is not always lucrative for hereither, as Harris admits that as a family butchersshop she doesn’t want to let these stores down.“It’s really not worth our while in the winterwhen sales are lower, but it makes up for it inthe summer when sales go up.”

This situation is not uncommon, with otherbutchers recognising that small orders anddelivery costs can dent profits. “Not many of ourmembers supply small shops,” says BrindonAddy, chairman of the Q Guild of Butchers, whoattributes this to the stores’ lack of refrigerationand small margins: “Our usual 40% marginminus their 20% doesn’t leave a lot.”

Fresh meat...continued


The RSA viewThe recent horse meat scandal has made consumersmuch more aware of the provenance of the meat theyare eating, with many independent butchersexperiencing massive sales increases as a result.Although inevitably a lot of customers have drifted backto their old supermarket habits, at least some havehopefully remained.

Rural convenience stores that stock fresh meat havealso done well. Irrespective of the horse meat issue, thefact does remain that more people are shopping locallyrather than visiting the supermarket quite so often. Thismeans that there is a real opportunity for conveniencestores to provide, in the horrid jargon of marketing, a full“meal solution” for their customers.

Clearly stores need to consider issues such as the costsof extra refrigeration and wastage, but for many storesthis does represent a real opportunity. And if customersknow they can get their meat at the store, then theyhave the opportunity to sell them the vegetables, thesweet and the bottle of wine to go with it.

RSAViews

This would provide further flexibility for change of usefrom certain agricultural and retail uses to residential use,“to increase responsiveness within the planning system”.This is the latest in a series of changes to the planningsystem aimed to reduce planning barriers and stimulateinvestment. Specific flexibility is already enacted whichincludes time limited use class changes as well aspowers to allow for businesses to extend by up to 100 m²without requiring planning permission. The specificproposal has been prompted by the fact that many towncentres have a lot of retail premises empty and thatalternative use of these buildings for residential purposesmakes some sense. This involves conversion of premisesdesignated for retail use (A1) to residential (C3).

In rural areas, many village shops and post officesoccupy buildings converted from houses, often makingfor a very straightforward reconversion back toresidential use. In thousands of rural settlements, highhouse prices mean that premises are worth more ashouses than they are as shops. Where this is the case, itwould take a high-minded individual to sell their propertyas a shop, rather than market it as a commercialproperty. Indeed, as the property is often the retirementinvestment for the owner, few could blame them for

maximising their financial return in this way. At present,most planning authorities have policies in place to makeit very difficult to convert the last shop in the village toresidential. Typically an applicant has to prove that theyhave made real efforts to sell the business as a goingconcern for a reasonable length of time. Relaxation of thesafeguards could have a significant effect on the rate ofshop closures in rural areas.

The Department for Communities and Local Governmentis planning to consult on this issue – indeed, theconsultation may be underway by the time you readthis. We do not at this stage know what the detailedproposals will be. Clearly it makes sense to allow shopsin marginal locations in big cities to be converted toresidential use, particularly as online retailing continuesto take market share from bricks and mortarbusinesses. However, it is important that any relaxationin the regulations takes into account the very differentcircumstances of other parts of the country. We haveexpressed these concerns to the Department.

We would urge rural retailers, parish councils and otherinterested parties to keep an eye open for theconsultation – details will be provided on the RSAwebsite when we know them – and to make sure thatyou express reviews on this important topic.

The right answer is of course to provide limitedgovernment support so that rural shops are sufficientlyprofitable that the premises they occupy are worth asmuch as a shop as they are as a house.

Summer 2013

RETAIL TO RESIDENTIAL PERMITTED DEVELOPMENTProposed government consultationIn his budget statement in March, theChancellor announced that the governmentwould be consulting on extending existingrules on “permitted development” to alloweasier change of use for buildings.

This would mean that shop theft of £200 could not beheard in a Crown Court but only by magistrates, whohear the vast majority of such cases anyway. However,there is a very important implication. This clause wouldchange how shop theft is dealt with by the police andthe Crown Prosecution Service. It would make it easierto process guilty pleas for shop theft. A present, thepolice have to collect evidence of the shop theft andpresent the case to the CPS, who then makes adecision whether it is in the public interest to proceedwith the case. This process would change, so the policewould present their evidence to the defendant, whowould then makes a decision whether to plead guilty ornot. If they decided to plead guilty, they could post theirplea to the magistrates court without having to attendand they would then be issued with the appropriatepenalty. Existing legislation already allows for the issuingof penalty notices for shop theft up to £100.

Clause 133 makes provision for repeat offenders byallowing defendants charged on the same occasion withtwo or more offences of shoplifting to have the valuesinvolved aggregated – this will probably not happen thatoften.

Priti Patel MP., Chair of the All Party Parliamentary SmallShops Group, raised the concerns of many smallshopkeepers during the second reading of the bill, “Iurge the government to look again at clause 133 on lowvalue shoplifting. Owners of small shops in particularwill be concerned about what they will see is adowngrading in the way that thefts of a value below£200 are treated.”

The RSA would suggest that concerned shopkeepersshould contact their MPs to express their views. Inparticular, we would suggest that repeat offendersshould be treated more seriously, with the potential fortheir case being referred to the court system.

SHOP THEFTRSAViews

Shop theft is a crime that sometimes the governmentfinds hard to deal with. There is an understandabledesire to keep the costs of the criminal justice systemunder control, to avoid if possible giving young people acriminal record for behaviour that hopefully they willgrow out of and a feeling that theft from a business hasless impact on the victim than theft from domesticpremises.

A new bill is currently progressing through Parliamentcalled The Antisocial Behaviour, Crime and Policing Billwhich has significant implications for retailers. Late inthe day, the Home Office has included a new clause –clause 133 – into this Bill. If enacted, this would changeshop theft of goods below the value of £200 from beingan “either way” offence to becoming a “summaryoffence”.

Priti Patel MP

RSAViews

Rural rate reliefIf your business is in a rural area with a populationbelow 3,000 you could get rural rate relief. You can get relief if your business is:

● the only village shop or post office with a rateable value of up to £8,500

● the only public house or petrol station with a rateable value of up to £12,500

By law you must be given 50% off your business rates.Your local council can at its discretion also: ● top up the mandatory 50% relief to 100% ● give relief to other rural retail businesses of up to

100% (for properties with a rateable value under£16,500)

Small business rate reliefYou can get small business rate relief if:

● you only use one property● its rateable value is less than £12,000

Until 31 March 2014, you will get 100% relief (doubledfrom the usual rate of 50%) for properties with arateable value of £6,000 or less. This means you won’tpay business rates on properties with a rateable value of£6,000 or less.

The rate of relief will gradually decrease from 100% to0% for properties with a rateable value between £6,001and £12,000.

The deadline for 100% relief has been extended severaltimes in the past and this may happen again.The problemBusinesses that qualify for rural rate relief cannot alsoapply for small business rate relief. The rural rate reliefscheme takes precedence. In the past this did not matter.The vast majority of rating authorities provided thediscretionary top up to rural rate relief, meaning thatqualifying rural businesses did not pay any business rates.

However, the pressure on local authority budgets hasmeant that this cost is coming under increased scrutinyand some businesses are not getting any or all of thediscretionary component. This means that at presentthey are being penalised compared with businesses inlarger settlements unable to claim the rural relief – thecomplete opposite of government’s intentions.

The RSA has brought this anomaly to the attention ofrelevant parties but at present the anomaly remains. Itmay be a useful argument to deploy if your localauthority is minded to refuse to pay discretionary ruralrate relief on your premises.

● See: https://www.gov.uk/apply-for-business-rate-relief/small-business-rate-relief

TWO GOOD APPROACHES COME INTO CONFLICTBusiness rates can be a significant cost formany rural retailers. Fortunately there is ascheme in place to provide relief for smallretailers but unfortunately it contains agreat big anomaly.

In principle, this is a very attractive concept for smallretailers. If your VAT taxable turnover is less than£150,000, you can elect to pay HMRC a fixedpercentage of your turnover, rather than calculating theactual amount of VAT you owe each quarter.

The Flat Rate Scheme can massively reduce the timethat you or your bookkeeper needs to spend onaccounting for and working out your VAT bill. It soundslike a no-brainer, a really good way to reducepaperwork.

Unfortunately there is one great big flaw with this. Most rural retailers will fall into the HMRC category of“Retailing food, confectionary (sic), tobacco,newspapers or children’s clothing”. For this category,the flat rate is 4% of turnover. (Quite why children’sclothing, which is zero rated for VAT, is lumped in withthe rest is a bizarre mystery wrapped up in an enigma).

This means that a retailer with a turnover of £150,000a year will pay HMRC £6000 VAT per year (4% ofturnover). This immediately highlights the “gotcha”. Very,very few retailers (if any) would pay anything like thisamount under the normal VAT rules.

This is because:● A significant proportion of convenience store sales

are zero rated● You reclaim the VAT on your stock purchases and so

only pay VAT on the difference between your buyingand selling prices

● You reclaim VAT paid out on purchases such as shop fittings or consumables

At the RSA, we have tried various realistic sales mixes,profit margins and cost structures, and for everyscenario we have tried, the VAT bill is significantly higherunder the flat rate scheme.

This situation is really frustrating. We have agovernment dedicated to reducing red tape. Here is anideal opportunity to dramatically cut administration forsmall retailers. In the past, we have briefed an MP onthis issue, who then raised it with HMRC. Unfortunatelythey are not prepared to budge on this issue.

We have recently met a couple of retailers who hadelected to sign up to the scheme and who went ashenwhen we pointed out how much extra tax they werepaying as a result.

Obviously every shop has different circumstances and ifyou are in any doubt, we would strongly advisediscussing the issue with your accountant.

Our advice is quite clear, that unless simplifiedbookkeeping is overwhelmingly important to you, thenmost shops would be far better off living with theadministration and remaining on the standard VATscheme.

● For more information, see: http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm#3

VAT FLAT RATE SCHEMERSAViews

So who are your customers?...

Figures from the 2011 National Census are nowavailable for small local areas and can provide afascinating snapshot in numbers. For example,we are often told when visiting shops that thevillage we are in is a retirement area, containinga large number of old people. Quite oftenreference to the census data shows this not tobe true – shopkeepers think they live in aretirement area simply because it tends to bethe older people who make up a majority oftheir customers. Knowing that in fact there are alot of younger people of working age livinglocally can lead shopkeepers to review theranges they stock, their approach to marketingand even the shop opening hours.

Access to the 2011 Census data is freelyavailable online and it is very easy indeed to use.

● Go to: http://www.neighbourhood.statistics.gov.uk/dissemination

On the right of the homepage, see“neighbourhood summary”.

When we are talking to shopkeepers, two of the RSA’s constant themes are that theyneed to know their customers and that theyneed good information in order to manageeffectively. Data from the national censuscombines both of these themes, providingas it does a clear picture of the number andtype of people living in their particularcatchment area.

Insert your postcode in the box and click on“search”

This will provide you with top line informationon various aspects of your neighbourhood,including the number and type of people livingthere, the nature of the jobs they do, thenumber of cars they own and what type ofhouseholds they live in. Comparisons are alsoprovided with national and regional averages,which provide a useful context for the local data.

If you want more detailed information than thissummary, then on the homepage you can accessmore data via “find statistics for an area”. Atstage one, insert your village name or postcodeAt stage two, click on “more areas”, which willallow you to access parish level data – click onthis option. Click “search”

This will give you access to a vast array ofdata tables for your area. If you arereally keen, you can downloadthe information into an Excelspreadsheet and produceyour own charts andformats!

2011 Census datanow available...


After carrying out a consultation exercise,Ofgem announced the following changes at theend of June 2013:

1. Protecting more businesses by expanding thedefinition of a micro-business. The thresholdfor energy consumption is being raised to100.000 KWh for electricity

2. Suppliers will have to show clearly on everybill or statement of account the date on which

Ofgem is the Office of Gas and ElectricityMarkets. As the industry regulator, theywork on behalf of all energy consumers topromote value for money, security of supplyand sustainability. They do this through thesupervision and development of markets,regulation and the delivery of governmentschemes.

the contract will end and the deadline forcustomers to give notice to terminate.Customers will be able to give notice thatthey will terminate the contract at any timeduring the course of that contract. This willeliminate the current practice of somesuppliers which requires notice to be givenduring a narrow timeframe, typically just 30days. Suppliers are urged to make thesechanges as soon as possible but they mustensure customers have access to theinformation in relation to their contractsbefore March 31, 2014.

3. Put in place and enforceable Standards ofConduct (SOC) that require suppliers to treatmicro-businesses fairly. This will coveraspects such as contact information,switching supplier, deemed contracts andbilling. To comply, suppliers must make sureinformation is not misleading and actpromptly to put things right if they make amistake.

4. Increased monitoring of customer transfersbetween suppliers with enforcement actiontaken where necessary by Ofgem.

5. Further steps will be taken in respect to thirdparty intermediaries for energy relatedservices.

The RSA very much welcomes these changes. Inparticular, ensuring that small businesses areable to keep track more easily of when theircontract expires is very important, as is theability to give notice at any time during thecontract.

Excellent news!

● See: http://www.ofgem.gov.uk/Pages/MoreInformation.aspx?docid=539&refer=Markets/RetMkts/rmr

Energy Bills...


OFGEM changes to the energy


market for small businesses

well worthwhile considering this option if you dohave museum-quality refrigeration still in use.

5. It is possible to add lightweight plastic doors to thefront of many open deck chillers. The cost may bequite high – some manufacturers can spot acaptive market when they see one – but again thepayback period in terms of reduced electricityconsumption can be very short. Most retailersreport that these doors are acceptable to theircustomers and do not materially affect sales.

6. Turn off soft drinks and alcohol chillers overnight –this product is only chilled for customer enjoyment,not to preserve the product. Do you need all therefrigeration currently being used? For example,could the ice cream freezer be removed in winter?

7. Is the refrigeration positioned optimally in relation toair conditioning units or natural flows of air? It mayneed a specialist engineer to provide the answer tothis question.

8. Make sure the compressor and other parts are keptfree of fluff and dust. Running a vacuum cleanerover them regularly can enable them to work moreefficiently and extend their lives.

9. Make sure inlet ducts to refrigeration are notblocked.

10 Make sure the door seals on freezers are in placeand undamaged. Self-closing doors that do not selfclose can have the same effect of allowing cold airto escape, to the detriment of energy costs.

Energy costs are obviously one of the key expensesof running most retail businesses, especiallyconvenience stores with a large number of chillersand freezers in operation, often operating in aconstricted sales area with low ceilings, meaningthat heat from compressors has nowhere to go.The following suggestions may fall into the“teaching grandmother to suck eggs”category buthopefully for many retailers it may be useful to havea consolidated checklist.

1. Do make sure that you know when your contractcomes up for renewal. Have it marked in largeletters in your diary and on your calendar; we arestill surprised at the number of businesses thatallow themselves to be rolled over onto contractextensions at significant extra cost.

2. Do consider using a professional to help you findthe best contract. The RSA has a partner in USC.The services are free (they get a commission fromthe providers) and they can save you a lot of timeresearching the market as well as finding the bestdeal. Email [email protected] for details.

3. Use an electricity monitor to find out how muchelectricity each of your pieces of equipment isusing. These small instruments can be boughtonline for £10-£20 and can highlight which chillersare running efficiently, and which are usingexcessive electricity.

4. Modern electrical equipment often uses a lots lesselectricity than older kit. The payback period forreplacing ancient freezers can be very short. It is

10 WAYS TO KEEP YOUR ELECTRICITY BILL UNDER CONTROL ...

My wife and I, with a bit of very reluctant helpfrom our `potential Royal Marine` son andseveral part-time staff, run a village shop / PO/ ice cream parlour / tearoom and garden onthe River Severn in Worcestershire. We alsodo 2 paper rounds and try and keep the localshappy. We also have quite a few walkers,canoeists, cyclists and railway buffs who allneed sustenance and ice cream.

Ice Cream...


OUR SHOP WOULD NOT BE HERE

ahead of plan and last year. We have to rememberthat the business only has 56 days a year - sunnyweekends - to keep us through the winter.

The upside of this business is that we sell icecream on almost every day of the year, as childrenespecially seem immune to the cold weather andare addicted to the stuff.

The down side is that the scooping machines, plusone upright and one chest freezer, take up quite abit of space and consume a fair bit of electricity.Following some advice from Ken Parsons of theRSA, we rearranged the shop, so that we nowgreet the customers face-on when they comethrough the doorway. We also installed big icecream display signs inside and outside thepremises.

When my wife Jocelyn and I were discussingbuying this business we could not believe thevendors’ assurances that they had a healthy icecream trade. Well, they did. It now accounts forover a third of our turnover. This is not your MrWhippy soft aerated version but `straight from thecow to the freezer` artisan type.

The margin is not as good as Mr Whippy but if youcan get the portion size correct, it will keep you inbusiness. Our best sales were 661 scoops in oneday! Suffice to say that the poor weatherdecimated our sales last year and our GP%suffered accordingly but this year with a couple ofgood bank holidays and weekends we are well

Peter with his external ice cream sign - hard to miss!

The serve over freezer

We encourage children to empty their parents’,and especially their grandparents’, pockets byoffering:

● Monthly special flavours ● Taste before you buy, ● A range of sprinkle and chocolate cones ● Free sauces and sprinkles.

My ambition would be to create a full ice creamparlour but space and cash preclude it. However,given our location and setting I could see itbecoming a real destination for children on a day-out with their grandparents.


By Peter Smith, Upper Arley Post Office & Stores

WITHOUT IT!

Small Business SaturdayThis is an American shopping holiday held on the firstSaturday after Thanksgiving Day, during one of thebusiest shopping periods of the year. It was first run in2010. Conceived and promoted by American Express, ithas really taken off in the States. Last year, evenPresident Barack Obama visited an independentbookshop on the day – endorsements do not get muchbigger than that. It has been very successful in generatingawareness and sales for small businesses.Chuka Umanna MP is the Labour shadow Secretary ofState for Business, Innovation and Skills and is nowbringing this initiative to the UK. “I saw the success in theUSA of Small Business Saturday where it has become anational event. Spending in small shops on the day roseas well, leading to a long-term increase in customers. Italso helps local small business to come together andchampion their vital role in local communities”.

The first event will take placeon Saturday December 7,when it is intended that theday will celebrate smallbusinesses and encouragecommunities to support themat a key time in the shoppingcalendar. For many ruralretailers, this is a time of yearwhen they see even loyalcustomers making a foray into big supermarkets tostock up before Christmas. Any activity that encouragespeople to shop locally at this critical time of year canonly be welcomed.

The RSA will provide more information when it becomesavailable.

Chuka Umanna MP

The RSA viewThe investment of staff time, money and space neededto sell ice cream in this way is significant and it clearlyneeds a good level of sales, usually only found in touristspots, to make it viable. Here its contribution to theoverall business has helped to keep the village shop andpost office open for the benefit of local residents. Thereare a good number of rural shops in tourist locationswhere this approach could provide a very welcomeboost to profits and where it would be well worth trying.

The shop also sells a good range of loosesweets - popular with all generations

This probably helps to explain many of theissues surrounding the UK banking industry. Atthe RSA we have been bemused by the twoconflicting views we hear on the issue. Ourmembers, almost all of whom are SMEs,consistently tell us about their banks refusingloans or only offering them with punitive andunacceptable conditions. Then we read thestatements from the banks, emphasising whatnice people they are and how much they aredesperate to lend to small businesses.

The Office of Fair Trading (OFT) has nowannounced that it is going to carry out a marketstudy on competition in banking for small andmedium-sized businesses (SMEs) and is seekingviews on its scope.

The central government seems to have twocontradictory objectives for the bankingsystem in the UK.

On the one hand, they are insisting that banksrebuild their balance sheets and reduce theirlevel of risk taking. On the other hand, theywant the banks to lend to companies in orderto drive economic growth.

The OFT is seeking views on:

● Competition in the supply of banking servicesto SMEs - do SMEs have access to servicesthat meet their needs and represent goodvalue?

● Competition in the supply of lending or otherfinance to SMEs - is any lack of competitionbetween banks holding back lending or otherfinance to SMEs?

● Are there types of SME (for example, start-ups or small financial firms) that faceparticular difficulties, and if so why?

Clive Maxwell, OFT Chief Executive, said:‘A competitive banking system and access tofinance is vital to businesses and to economicgrowth. Our review of SME banking is part of anongoing planned programme of work in thisarea to allow the Competition and MarketsAuthority to decide whether or not to make amarket investigation reference by 2015”.

● The OFT would like to hear from SMEcustomers of the banks and anyone whowould like to submit views can contact theOFT at: [email protected].

Banking...


IS YOUR BANK MEETING YOUR NEEDS?

A chance to tell theOffice ofFair Trading

According to the Local Data Company, HollowayRoad in north London has the most outlets,boasting no less than 24 along its length.Nationally there are more than 15,000 coffeeshops. The prices charged for a flat white or acaramel frappuccino mean that the turnover ofthe sector far exceeds the value of coffeeproducts for home consumption.

As a result of visiting coffee shops, a significantnumber of customers now see themselves asconnoisseurs of coffee, seeing it in the sameway as they view wine. They are interested inthe provenance of the beans and how they havebeen roasted and ground. Suddenly the word“barista” has entered the language, giving thelowly counter assistant new credibility.

Andy Harrison, chief executive of Whitbread,owners of Costa Coffee, claims that coffee nowhas a classless appeal. “The customer profile hasmassively expanded .There was a time whenthis was a habit of the middle classes, but now itis a mainstream activity. It has become part ofpeople’s daily lives.”

There is already some crossover into the homemarket, with brands such as Starbucks and

Costa developing youth targeted products forhome consumption. This can seem a worldaway from the typical rural convenience store,but many customers are in fact regular users ofcoffee shops and part of this national trend. Forthe office worker used to a mid-morningcappuccino, the coffee fixture in their localconvenience store can seem very staid.

Overall, the in-home coffee market is worthabout £850 million a year, making it animportant product group within the grocerysector, although volume sales growth has beenstagnant over the past five years. However, as part of the widespread interest inthe quality of the coffee they drink, customersare trading up to more expensive premiumproducts (“premiumisation” in marketing

Coffee...


THE COFFEE FIXTUREIn recent years, coffee shops have come todominate town centres up and down thecountry. Even in recession, they havecontinued to thrive, providing an affordabletreat and Wi-Fi access amidst the bustle ofthe high street.

speak). “Consumers are trying to replicate whatthey can get on the high street by choosing todrink better quality coffee at home,” says JeffreyYoung of analysts Allegra Strategies.

Not surprisingly, the emphasis on taste isinfluencing how coffee is made at home. While64% of consumers still use instant coffee,ground coffee is now drunk by 54% of people athome. A small but growing minority (15%) usewhole bean and coffee pods (pre-packagedcapsules of different types of coffee) and 12%make instant cappuccinos and lattes. Obviouslythe same consumer may make coffee indifferent ways on different occasions.

The convenience of soluble coffee is still key tothe “in the home” market, with premium andsuper premium market penetration now at 76%(compared with 58% four years ago). This iswhere the key opportunity for retailers lies. Thegeneral conclusion is clear. Consumers aretrading up when it comes to coffee quality, andthe reality is that most convenience stores have

not kept up with this trend. In addition,shopping habits are changing, with moreconsumers using small stores to top up ontraditional grocery lines such as hot beverages .This makes it even more important to makesure that the coffee fixture is given its fair shareof space and attention.

Whereas in the past it might only have beennecessary to stock a few lines of instant coffee,today the market is becoming far morefragmented. Certainly it is worthwhile reviewingwhether there is a sufficient range of groundcoffee on shelf and considering two other rangeextensions:

Coffee...continued


GOOD-BETTER- BEST ranging in action

A RETAILER’S VIEW

“My refill sales exceed my jars sales, while mycustomers are getting better value. KencoMillicano is a lovely products and it’s moving, forthose that want a high quality instant product it isa fantastic offer, while introducing 200g large jarshas helped drive my revenue further –thisopportunity has been a pleasant surprise to me .Cadbury Hot Chocolate has moved well and thestick packs have been another pleasingintroduction to my range, I'll be sticking with mynew planogram as my sales have increasedsignificantly both in value and volume terms!”

Derek Balding, owner of the Mace storesMundesley, Norfolk

Wholebean InstantCoffeeKenco Millicano isthe first ‘WholebeanInstant coffee’ fromthe company. It is aclever and innovativecombination offreeze-dried coffeeand finely-milledbeans, giving coffeelovers theconvenience ofinstant with the

quality and taste reminiscent of roast and groundcoffee at home. Kenco say, “It’s our closest thingto ‘proper’ coffee in an instant”. It is currentlythe number one wholebean instant product.

Refill packs – great for convenience Instant Coffee refill packs are growing very fast,

up by 54% year-on-year. This isimportant forconvenience stores,as refill packs arelighter and moreconvenient forcustomers walkingto the store


With grateful thanks to Mondelez for supplying informationfor this article.

Some tips1. Keep on top of the latest trends,

particularly the move to premiumproducts.

2. Stock refill packs. Refill packs offer bettervalue for money compared with jars.They are lighter for local customers tocarry and they have a positive effect onthe environment.

3. Make sure you use shelf space well. Awide range of tastes can be catered foreven in limited space

4. Cover a range of qualities from InstantGranules to Super Premium.

5. Lay out the category from ‘Good’ to‘Better’ to ‘Best’

6. Use POS such as shelf edge tickets tohighlight new ranges or lines.

7. Consider holding staff and/or customertasting sessions when you introduce newlines, so staff can talk with confidenceabout the different types of coffeeavailable and customers can actuallyexperience the taste.

8. Use layout to promote associatedcategories such as sugar and milk.Supermarket research shows that a goodcoffee and hot beverage range is likely toimpact sales of tea, preserves and spreads,biscuits and sugar, so site these near thehot beverage fixture if possible.

FREE TASTING KITSMondelez are giving away tasting kitsabsolutely free to 30 shops. These kitscontain trial samples of Kenco Millicano,disposable cups etc., to enable yourcustomers to try the superior taste ofwholebean instant coffee. The recipients willbe chosen at random. To be in with achance, email [email protected] your name and address.

Cadbury have been strong supporters of the RSA over manyyears. Our partnership has continued under Kraft's ownership ofthe company. Now the name for the group has been changed toMondelez, a constructed name intended to have the connotationof "delicious world".

Rural stores are central to the success ofCollectPlus and, throughout our growth,shopkeepers have played an integral role inmaking our services so popular with customers.Since the launch of CollectPlus in 2009, we haveprovided customers with seamless, convenientand cost effective parcel services. As a result,CollectPlus offers rural stores a great opportunity

Our customers will always rely on their local stores for essentials and services at convenient times. Yet the economicdownturn and changing shopping habitshave made it all the more important to tailor what you offer to your customers’needs to give you a valuable edge over your competitors and foster long-lastingcustomer loyalty.

to attract more customers and grow as abusiness.

CollectPlus is the largest store-based parceldelivery service in the UK and our network hasbeen strategically developed to incorporate thebest local stores. As a result of our rapid growth,89% of the UK population live within five milesof a CollectPlus shop in rural areas.

Our rural growth strategy is focussing onintroducing CollectPlus stores into towns andvillages where our customers are and we arenot, but which the extensive PayPoint networkallows us to do. By joining the CollectPlusnetwork, a participating store can expectsignificant commercial benefits, as offering ourservices is proven to increase sales over andabove the commission earned from CollectPlus.

Recent research has found that the averagestore earns additional annual revenue of £2,7121

from its CollectPlus customers Furthermore,almost two thirds (64%) of customers statedthey had not used the store for other visits orpurchases before using the CollectPlus parcelservice. With nearly 50% of CollectPluscustomers stating that they purchase other itemsfrom the store, as well as 63% stating they willuse the store again, there are instant and lastingbenefits for participating stores.

The strength of our service is its convenience.Nearly all outlets offering the CollectPlus serviceare open seven days a week, early until late.With 40% of CollectPlus’ customers sending ordropping off parcels outside traditional 9-5opening hours, the service solves a long-termproblem for residents in rural communities.

CollectPlus...


Neil Ashworth

Delivering convenience

CollectPlus has been designed so that it createsas little work as possible for the retailer. Nomoney changes hands – payments are madeonline, either when ordering goods from anonline merchant or when booking a parcel intothe system on the CollectPlus website.

When customers are sending a parcel, theydownload and print a label, which contains abarcode. All the retailer needs to do when thecustomer brings the parcel into the store is usethe PayPoint scanner to scan the barcode. ThePayPoint terminal prints a receipt for thecustomer and the retailer simply needs to storethe parcel for the next collection by a deliverydriver.

When a parcel is delivered to the store forcollection by a customer, the retailer scans theparcel in, stores it and scans it out when thecustomer calls to collect it. Commission is paidto the retailer both when customers collect theirparcels and when they drop them off.

CollectPlus offers three services which have allbeen designed with a focus on making the

experience as easy and simple as possible. The‘Click&Collect+’ service allows online shoppersto choose a CollectPlus store as their deliveryaddress from a growing number of retailers,including Amazon, House of Fraser, ASOS andVery.co.uk

CollectPlus also works with over 210 retailbrands to provide tracked returns solutions. Thisallows customers to drop off unwanted items attheir local CollectPlus store for delivery back tothe retailer.


By Neil Ashworth, Chief Executive, CollectPlus

to rural communities

Thirdly, CollectPlus offers the option for UKonline sellers to send items sold online tobuyers, or for individuals to send gifts to friendsor family, at their local CollectPlus store fordelivery to any UK address.

Customers sending parcels can choose betweenthe two working day Standard service optionand the 3-5 working day Economy service. Toreward customers regularly using CollectPlus,we have recently introduced a three-tieredVolume Reward Scheme through our website.Customers sending 50 parcels or more a month,using either service, now qualify for a discounton the price of all parcel labels purchased thefollowing month.

It has been a very strong 12 months forCollectPlus as even more retail brands and theircustomers have discovered the solution weprovide to a changing retail environment.Helping to redesign and augment the customerexperience, and making it as convenient aspossible, is key to how CollectPlus operates andis something we are continuing to invest in. Ibelieve that it is these core values that allow ourpartners to better align themselves with thebusy lives of their customers.

We are now handling 9 million transactions ayear. On average, five new retail brands are

partnering with us each month in order to offertheir customers fully tracked returns andClick&Collect+ solutions.

CollectPlus has responded to the needs ofconsumers by offering delivery and returnsservices that are seamless and fit in with theirday to day lives, which ultimately leads to anincrease in revenue and repeat business forrural stores. We are committed to a continuedexpansion of the network, acting as a trustedpartner to our network of stores and,importantly, enabling even more localbusinesses to reap the benefits of providing ourinnovative service.

● For more information, see:http://www.collectplus.co.uk

1 PayPoint store value research April 2013, conductedon behalf of CollectPlus.

CollectPlus...continued


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