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


Memorandum by Geraud Markets (UK) Ltd (MARKETS 25)

You may not be aware but Geraud Markets UK Ltd is the main sponsor of the National Association of British Markets Authorities (NABMA) which is one of the primary stakeholders in the Retail Markets Alliance (RMA). We have a very close working relationship with the organisation's principle officers with whom we consult on a regular basis. Our company's own principle, Monsieur Jean-Paul Auguste, is also likely to be asked to support any delegation which may be invited to represent the industry at future meetings with the Select Committee. Monsieur Auguste is also the incumbent Chair of the Retail Sector of the World Union of Wholesale Markets.

Whilst we will continue to play an active role in promoting the industry's joint response to the Select Committee, together with our colleagues in NABMA we have concluded that it may be helpful to the process if we were to submit a separate document in support of the main submission based upon our own experiences as Europe's largest private sector market operator.

Geraud Markets is uniquely placed to provide a private sector perspective by drawing upon its extensive experience of commercial market operations and joint public-private sector partnerships in the UK, France and several other European countries. Since its foundation in 1880, we have specialised in the development and regeneration of community retail markets, building an association with over 300 local authorities for whom we manage in excess of 1,500 markets each week through 600 separate contracts. We are proud of the fact that some of those contracts have continued through the entire 129 years of the company's existence. It is perhaps no coincidence that since its foundation, the company has remained in the same private ownership of the Auguste family.

  The experience we have gained in the creation and regeneration of local authority markets is, we believe, unique amongst European market operators and something which could add value to the work of the Select Committee. Geraud Markets UK Ltd (GMUK) is the UK arm of Groupe Geraud and whilst GMUK Ltd has acquired a number of wholly-owned business interests, we still believe very strongly that the management of community based retail markets is our core activity.

  Since 1999, when the company was established in the UK, GMUK has grown to become the country's leading private sector market operator. In 2003, we established with Liverpool City Council, a ground-breaking joint venture partnership. Six years later, Geraud Markets Liverpool Ltd (GMLL) remains the UK's only public-private sector joint venture market operating company, managing nine of Liverpool's indoor and outdoor retail markets plus the city's Wholesale Fruit & Vegetable Market. In that time, GMLL has overseen a dramatic reversal in the financial performance of the city's markets portfolio. Prior to the company's involvement, the City Council's markets were operating at a significant annual deficit. However, within four years of the company becoming responsible for the strategic and operational management of the portfolio, that deficit was eliminated and an aggregate profit of over £1,000,000 realised. Major initiatives currently being progressed in the city include the relocation of the city centre Charter Market in St Johns Centre to a new purpose-built location, the relocation/redevelopment of the Wholesale Market and the redevelopment of the city's oldest street market, Great Homer Street.

  Our other local authority contracts include Allerdale, Clevedon, Swadlincote and most recently Ipswich, where the revival in the town's market since we assumed control in September 2007 has exceeded both our own and we believe also our partner, Ipswich BC's expectations.

  In the UK, a wholly-owned subsidiary of GMUK, InShops Ltd, comprises 40 centres from Aberdeen in the north to Chatham in the South. Our combined UK operations employ 250 people and generate income in excess of £22m per annum. InShops is an entirely private commercial venture which has reinforced the company's experience and expertise in the UK's extremely competitive retail sector.

  In the context of Geraud Markets UK Ltd's contribution in support of the main RMA submission, it would be neither appropriate nor feasible to provide an exhaustive account of the company operations, experience and philosophy of markets management. However, it is perhaps particularly appropriate to include a brief reference to certain key areas as "headline" discussion points which could be explored in greater depth, should the members of the Select Committee so wish.

PARTNERSHIP WORKING

  The principle underpinning the company's philosophy and approach to each and every one of its public-private associations is one of true "Partnership". Whilst the structure of the company's relationships vary from simple management contracts to full Joint Venture Companies in which both parties are shareholders, the relationship is always based on openness and transparency and the key to sustaining that relationship, communication, is invariably conducted in a spirit of mutual respect for each other's aspirations.

Whilst we and our partners recognise that as public and private sector organisations, we are subject to different and occasionally conflicting constraints in the delivery of our respective objectives, we also understand that each party has an equally important and valuable contribution to make to the relationship and that the key to sustaining that partnership is to ensure that we establish an agreed set of key objectives and an agreed strategy as to how those objectives will be delivered.

  We believe, and our extensive experience in partnership with numerous local authorities demonstrates that whilst the public and private sectors seek to achieve a mixture of social, environmental and economic objectives, these need not be mutually exclusive and with appropriate planning and consultation, it is entirely possible to satisfy the aspirations of both parties.

  Geraud Markets UK Ltd is a commercial market operator. However, whilst the company needs to achieve a financial return on its investments, short-termism and profit maximisation are not principles which our organisation advocates. Our approach recognises and values the important role of all stakeholders in delivering popular and sustainable market operations. If we are able to provide a service which customers enjoy and continue to support, market traders will be attracted to and benefit from the buoyant trading conditions. The local authority in turn will enjoy the benefits of a thriving alternative retail offer. If we succeed in satisfying each of the stakeholders' aspirations, our own commercial return will inevitably follow. Our reward is a consequence of delivering our partners' objectives.

  Public-private sector enterprise is our core business and our company is, we believe, unique in having developed long associations based upon our ability to meet our partners' aspirations to create vibrant and sustainable community based retail markets.

  In relation to the Select Committee's remit, our approach is perhaps best illustrated by two examples of how partnerships can be structured very differently to achieve the objectives of the stakeholders.

  The first example which is mentioned earlier in this document is the joint venture company which was created in partnership with Liverpool City Council (LCC). For statutory reasons, LCC's shareholding in the JV Co is limited to 19.9% with GMUK holding the remaining 81.1%.

  Whilst LCC holds the minority shareholding, a schedule of "Reserved Matters" was incorporated into the contract and Board approval on these matters must be unanimous. In effect, through a "Golden Share", LCC is able to exercise a degree of control which is disproportionate to its minority shareholding.

  The second example is our relationship with the London Borough of Southwark (LBS) which in contrast to the structured legal relationship of the Liverpool partnership, is based upon a very loose, informal arrangement.

  In September 2007, LBS invited GMUK to assume responsibility for its Street Trading Section. The initial interim contract period of three months has been extended until July 2009 (potentially 2010) to allow the authority to undertake a fundamental review of its Street Trading Service. Members of the Select Committee will be well aware that unlike the provinces, markets within the capital are governed by the London Local Authorities Act 1990 (LLAA). There are particular provisions within that legislation which govern the management of markets within the 31 London Boroughs and Westminster which do not exist elsewhere in the UK. It is interesting to note that GMUK has successfully managed the Borough Council's markets for a period of 17 months without LBS delegating any of its statutory powers to GMUK's staff. In reality, the management of the Council's markets portfolio has been achieved without the benefit of regulatory powers provided by the LLAA 1990 and which all London Boroughs no doubt consider indispensable to the effective management of their Markets Services.

  Our relationships with Liverpool and Southwark illustrate the point that whilst one is based upon a very clearly defined, legal structure and the other is a much less formal arrangement with no written contract, both suit the individual circumstances and both have achieved the objective of providing an effective management structure which is capable of realising the respective authorities' objectives. In Liverpool, where we enjoy a long-term relationship of 15 years with an option to extend for a further period of up to 10 years, we are able to take a long term view and develop proposals which complement the city's own regeneration initiatives. In Southwark, where our tenure is much shorter, we are still able to provide the same efficient operational management support. In both instances, our role is specifically designed to fit the individual sets of circumstances prevailing in that area.

STRATEGIC PLANNING

  No two markets are identical. Social, economic, and demographic factors influence the nature of the market offer. The location and physical constraints of the site determine the scale and configuration of the operation. Political support or opposition from various groups combine with other considerations in an endless permutation of variables to determine the unique nature of each market.

One of the main advantages which markets enjoy in an increasingly innovative and competitive retail sector is the speed and flexibility with which they are able to respond to often very rapidly changing consumer preferences, shopping patterns and numerous other factors which impact upon the industry. The uniquely close relationship which market traders enjoy with their customers provides them with an understanding of the consumer which High Street retailers and national multiples by the nature of their management structures and scale of operations, find difficult to match.

  Whilst there is no magic wand nor prescriptive formula which can guarantee the viability or sustainability of a market, if the experience and expertise gained in 129 years in the industry has taught us anything, it is that the inclusion of the views of all stakeholders in translating a vision into a bespoke strategic and operational management plan, is essential to ensure that whatever potential may exist for that market, is realised.

  The final point to make on this subject is that successful and sustainable markets are not achieved overnight. They need to become embedded in the social and commercial fabric of the town or city. Only when a strong local identity has been established will a genuine sense of ownership develop amongst the local community. It is this sense of ownership which is the essential element in ensuring the long term sustainability of the market.

WHOLESALE MARKETS—SUPPLY CHAIN

  Whilst the most visible sector of the markets industry is community retail markets, it would be wrong to overlook the importance which wholesale markets play in the supply chain. Indeed, wholesale markets are the hub of the fresh produce industry, underpinning the most fundamentally important elements of every general market.

Fresh produce traders are the "anchor tenants" of any general retail market. However, the extent to which the large supermarket chains have begun to dominate the retail sector over the past 25 years has seriously undermined the ability of traders in fresh produce to compete. A modern, thriving, national wholesale market network is essential to supply traders who are required to service a generation with increasingly more sophisticated tastes, demanding of ever wider choice and better quality.

  Whilst any detailed analysis of the relevance of wholesale markets and their importance to the commercial activity of cities and regions throughout the UK is clearly beyond the scope of this document, it is perhaps worth including the briefest of references to our European connections.

  Our own company commissioned a very detailed study from colleagues in Rungis, Paris which is generally acknowledged to be Europe's premier wholesale market. That study provides important evidence from leading European experts in the fresh produce industry. We believe that it would be of interest to members of the Select Committee and could be made available, if required.

  Our vision for the wholesale markets in Liverpool is to create an integrated food hub which includes:

    — Wholesale Fruit Vegetable and Flower Markets.

    — Meat and Fish Markets.

    — Food Preparation and Processing.

    — Food Packaging.

    — Related and Ancillary Commercial Activities.

  The benefits from the vertical integration of the fresh produce supply chain not only provides commercial and logistical advantages for those involved but there are obvious environmental benefits from the reduction of food miles and the consequential reduction in carbon emissions.

  Inevitably, improved efficiency in the supply chain results in benefits for the end user. Healthy eating and other socially desirable food related initiatives all become more achievable as a result.

MARKETS—DIVERSITY AND CHOICE

  A final point which the Select Committee may wish to have regard to is the increasing popularity of Farmers, Continental, Christmas and other speciality markets throughout a difficult period for the markets industry as a whole.

Our company's Special Events Division operates an extensive and very successful programme of events throughout the UK and last year we piloted a number of International Street Markets in Stockholm and Copenhagen. Such was the success of those events that a programme of over 20 markets is being developed for 2009 in response to the interest generated amongst other Scandinavian towns and cities.

  In an age of increased mobility where the barriers to economic migration are becoming fewer, a demand for increasingly more diverse and unusual products is developing. Speciality Markets are perfectly suited to satisfy that demand and we believe that this trend will continue in spite of the present challenges facing world economies.

  The growth and popularity of food based speciality markets underlines the opportunity and indeed requirement for a proactive approach to encourage into the industry the next generation of traders to satisfy the increasingly sophisticated tastes of the modern consumer. The role is not exclusively that of the private or public sectors but is best achieved by a multi-agency approach where central and local government creates the necessary framework in which the private sector can use its experience and expertise to implement a holistic solution which addresses the structural problems within the industry which have been largely overlooked for too long.

  As we have already stated, this document is intended to support the main submission of the RMA by providing a personal perspective of the markets industry in the UK and Europe from our own experience as commercial market operators, albeit with extensive involvement with the public sector.

  We have attempted to do no more than provide an understanding of our company's ethos and to raise a limited number of keys points which we believe are relevant to the work of the Select Committee.

  If you feel that you would like to discuss the matter further, we have no doubt that Monsieur Auguste would be delighted to meet members of the Select Committee and we are sure that as the head of Europe's largest private sector market operator, his personal contribution to the process would be invaluable.








 
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