Market Failure?: Can the traditional market survive? - Communities and Local Government Committee Contents

5  Realising the potential of retail markets in medium and small towns

102. Large markets in Leicester, Bradford, Manchester and the like require serious investment and strategic management thinking by local authorities to sustain success, but also offer obvious sizeable economic and non-economic benefits in return. Michael Felton, for one, was not worried about "large markets, particularly in the north-west and north east and the Birmingham conurbation in this country, the big indoor markets, [which] will certainly survive."[181] Equally, our witnesses were bullish about the prospects for farmers' and continental markets. Some witnesses expressed more concern, however, about local markets in medium and small market towns and small open street markets within metropolitan centres, such as the smaller street markets in London covered in the previous section. As Michael Felton explained:

My main concern is the smaller market town and the smaller open street market. These are the ones which I see in distinct danger and are still currently very much in decline […] time and time again when one goes to the smaller places you see nothing but problems occurring there, i.e. a lack of traders or one week suddenly the greengrocer vanishes and stays away. This is where I think the greatest loss to our traditional market and our heritage aspect on markets will in fact be suffering.[182]

In this section, we consider whether his fears for medium and small market towns are justified and, to the extent that they are, what action can be taken to address them.

The challenges facing smaller, local markets

103. Struggling, even badly managed large metropolitan markets can survive in decline because they retain a sufficient range of products to attract footfall. Local markets, by contrast, are less resilient—it takes much less for them to lose 'critical mass'. The loss of one or two key stalls—a greengrocer for instance—can quickly generate further irreplaceable trader and customer exodus. During his evidence, Chris Hurdman, who sells confectionery and dried fruit at a number of local markets in Oxfordshire, told us that even a thriving local market can quickly collapse if, for instance, the market operator hikes rents for short term gain:

If you have a successful market, they [in this case, private market operators] would raise the rent on a yearly basis, and sooner or later it becomes cyclical; a few traders leave so the public stop coming, and a few more traders leave and the public stop coming even more […][183]

104. The results of a membership survey conducted in December 2008 by Action for Market Towns, a membership organisation open to market towns with a population between 3,000 and 30,000 as well as individuals and organisations who wish to promote the viability of market towns, further emphasised the challenges facing smaller, local markets. From those surveyed who indicated that their town did not have a market, 50% reported that a market was previously held. Of this latter cohort, 43% indicated that the market had closed in the last five years. From those surveyed who indicated that their town did have a market, 46% replied that the number of stalls had either decreased or greatly decreased over the last 5 years, compared with only 20% who replied that the number of stalls had either increased or greatly increased over the last 5 years. Of those surveyed, 60% felt that there were obstacles hindering the successful operations of their existing market traders, with two main causes cited—location and local authorities—the latter of course having an important say in the former.

105. The impact of the vagaries of local councils are perhaps more keenly felt by local markets, because their position is more precarious. From the smaller councils' viewpoint, there are sound reasons why supporting the local market may not be a priority. First and foremost, their profit-making potential is limited. As Graham Wilson, Chief Executive of NABMA, observed during his evidence session:

I think it is also right to acknowledge that a number of our members are currently subsidising their markets. One of our members, at a meeting we had this morning, Oswestry Town Council, is a market town, operating a market hall and an open market […] the town council are subsidising their markets on an annual basis to the tune of between £30,000 and £50,000 per year […] we certainly would argue that in the past more of our members have benefited from this cash cow principle, and some continue to do so, but in the smaller authorities I think it is the case that currently a number of markets are being squeezed and being subsidised.[184]

We also heard from Bletchley and Fenny Stratford Council how the income they received from their market had declined markedly over the last few years, and was likely to move from profit to loss at the end of the 2008/09 financial year. Particularly, as in Bletchley's case, when it is the lower tier town council that is managing the market, issues highlighted in the previous section relating to investment and management expertise are even more starkly presented.

106. The question then arises of why many councils persevere with local markets. In some cases, it seems to be benign neglect, with councils acting neither to improve the market nor to close them. There is a sense that councillors do not want a centuries old market to die out on their watch. More positively, though, a number also clearly see the wider benefits of running even a loss-making market. Graham Wilson also explained how for Oswestry Town Council "those markets are an essential part of the community life of that town."[185]

Actions for local government

107. We certainly do not underestimate the challenge facing local authorities who wish to support and develop their local markets. Particularly where they are not making a profit, they clearly need to think carefully whether the continued presence of a market is a greater priority than the other challenges they face. Councils need to have a clear strategic vision of how they intend to secure the long-term sustainability of their markets. It may, for instance, be impossible to secure the long-term viability of all local markets, and better to close down non-viable markets now so that resources can be directed to those with a better chance of survival in the longer-term. However, in a small town, a local market can still provide many if not all of the benefits identified in the second section of our Report, particularly the important social cohesion function, so we encourage those local authorities who retain a market to review very carefully the other options available to them before they elect to close it down. One option, as in the previous section, would be to create a market champion on the council, possibly aligned with the town centre management function. Smaller councils should also explore the feasibility of sharing a market champion to oversee markets in more than one locality.

108. Given the vital importance—when one or two key stalls can make all the difference—of attracting the right mix of stalls and market traders, smaller local authorities should also place particular emphasis on employing a market operator capable of building up a sustainable market. One problem here is that, particularly in smaller councils, markets are often managed at the site level from departments in the council that have no special expertise in markets. In her research paper, Professor Sophie Watson cited the example of Lowestoft market, where the market site was managed by the person in charge of car parking. The suggestion from a number of our witnesses, which we think is a good one, was that local councils might need to look to the private sector to find such a person. Michael Felton explained that where local markets are successful it is often "because they have a dedicated man known as a 'toby' in charge of the market who is employed by a private operator. He probably works something like five markets a week, moving from place to place. His sole occupation in life is to set up a market, get it advertised, get the traders in, interest the public and get the thing working, and for that he gets a salary and a bonus depending upon turnover."[186] Given that a 'toby' can run more than one market, we recommend that the local councils of neighbouring market towns consider a cost-saving joint-employment arrangement. If local authorities do not wish to use the private sector, then they can draw on NABMA's advice service, something we consider in more detail in the next section.

109. Local authorities should also consider carefully the location of their markets, particularly in the light of the AMT study cited above. In his evidence, Chris New stressed the importance of place, observing that:

I have been working, for instance, in Hereford lately, where we are putting a new open market into the pedestrianised precinct in Hereford, lifting it out of the outskirts, cattle market position where it is doing badly and bringing it into a new city centre position where it will be a great service to the community and bring vitality to that city centre.

Linked to this, there is also evidence that councils need to consider more carefully developments that they authorise around markets. Chris Hurdman graphically explained the problems that can arise for market traders from relatively minor council decisions, when the implications for market traders are not thought through. He observed, for instance, that in Thame, a long street market in a high street, simply moving his stall "four stalls up or 40 foot down" could have an impact as regular customers, used to finding him in the same location, fail to find him. He also told us that "I had a trader come to me a month before Christmas, or thereabouts, in tears because they had put a CCTV camera space right in the middle of where his stall was, four weeks before Christmas", the location of the CCTV physically preventing him from putting up his stall. He commented:

What they [the council] do not see is the effect that would have on a man that trades on that particular market for two days out of five. You are, effectively, saying: 'Do something else. Go on the dole.[187]

As Chris Hurdman's examples indicate, small decisions can make a big impact, and a heartfelt plea from much of our market trader evidence was that councils needed to include them in consultation when they were considering changes to the market environment- a plea which we endorse.

110. We see one further option that councils with local markets should explore, namely the potential for greater partnership working, including non-council streams of funding, to further joint goals. We believe that lower tier authorities, possibly in conjunction with upper tier authorities, can—on a smaller scale—pursue the same wider objectives (healthy eating, community cohesion etc) as metropolitan councils. We were disappointed to hear that this was an area which some local councils with local markets had not so far explored.

111. In the last two sections, we have focused primarily on the role of local authorities in supporting a diverse range of markets. We have seen that there are a number of actions that councils can take to improve their chances of success in relation to their markets regardless of the size either of the council or the market. One theme we have explored is the benefits of partnership working, and we shall explore this further in our next section, which considers in more detail the role of the various components of the market industry.

181   Q 175 Back

182   As above. Back

183   Q 114 Back

184   Q 94 Back

185   As above. Back

186   Q 181 Back

187   Q 128 Back

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Prepared 23 July 2009