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


Memorandum by Market Place [Europe] Ltd (MARKETS 29)

  In response to the specific questions contained in the email dated 9 January 2009 from Mr A D Griffiths, 2nd Clerk to the Committee, Market Place [Europe] Ltd. wish to put forward the following views and opinions:

TRADITIONAL MARKETS TODAY

1. How has the picture changed over the past 10 years?

  Generally markets are in decline although there are some exceptions which prove the rule. The rate of decline is detailed in the Rhodes Report. However, in periods of recession, markets have generally fared better than other sectors of the retail industry.

2. Are the number and types of markets in decline? If so, why?

The numbers are in decline but there is an increase in specialist, niche markets. There are too many reasons for the decline to list in this response but out of town shopping and the increase in the number of bargain shops have been important contributory factors. Markets have found it difficult to respond to changing retail pressures over the last 20 years.

3. Are there obstacles preventing the creation of more markets?

No—except in London where the London Corporation Act prevents LA's from generating a profit from their street "markets". It is therefore not viable for the street "market" operator in London, invariably the L A, to engage dynamic, innovative management which could invest in and improve the "market".

At this point we feel it important that the Committee fully appreciate the difference between the vast majority of markets operated throughout the country and those operated in London. Elsewhere in the country markets are created by several methods, primarily being by Royal Charter, Prescriptive Rights or by Statute—the latest being the 1984 Food Act. The operator is permitted to apply realistic commercial charges to the traders and such profit generated can be re-invested in the market or used to provide other benefits for the local community.

In London, the street "markets" are not strictly markets in the legal sense of the word. They consist of a number of individual Licenced Street Traders [licensed under the London Corporation Act] who all congregate together at the same time and place to give the outward appearance of a market to all intents and purposes. The crucial difference here is that the L A can only recoup certain basic operational costs and cannot derive a profit from the operation of the "market". As such London L A's often regard their "market" as a necessary nuisance which they would rather not have to deal with and accordingly allocate the minimum resources—often of indifferent quality—to manage and develop the "market". A change in the legislation allowing London L A's to generate a profit from their street "markets" would directly lead to greatly improved operational management and make investment on the infrastructure of such "markets" a more realistic probability.

4. Are there obstacles hindering the successful business of existing market operators and traders?

  No—other than the confines of the London Corporation Act referred to above.

5. What has been the impact of specialist markets eg continental and farmers markets, and do such markets integrate successfully with older markets?

The Rhodes report states that where occasional specialist markets exist within a town or city the rate of decline of the traditional market is far less and in some cases negligible, as opposed to those towns and cities which do not have such specialist markets. However, due to the temporary nature of such markets where the stalls are erected and dismantled each day they do not easily fit into traditional markets where the stalls are of a permanently erected nature.

SOCIAL AND ECONOMIC EFFECTS

6. What social and economic effects do traditional retail markets have on their local communities?

  The social and economic effects of markets are enormous but sadly mostly unquantifiable. Attempts have been made, mainly by L A's, in the past to create benchmarks to quantify such benefits but all to no avail. Estimates as to the national economic benefit vary from £1.1 billion to over £3 billion per annum—thereby highlighting the difficulty in quantifying such benefits.

As regards continental markets operated by MPEL we can accurately demonstrate that the four day market held in Sheffield City centre attracts an additional 100,000 persons to the market site each event.

Of greater impact to a City is that of Belfast where the 29 day Christmas market operated by MPEL is now a major factor in the economic vitality of the city. The 2006 Events Evaluation Report [the latest available report] conducted by Messrs. Millward Brown, Ulster, commissioned by Belfast City Council, states that the event attracted some 250,000 visitors over the 29 days and that "... the level of spending associated with the event is estimated at over £15.2 million." and that "... additional expenditure ... from visitors who would not have come to Belfast if the event had not been staged is estimated at £2.7 million."

7. What qualities contribute to a successful market delivering social and economic benefits, and are there examples of best practice that have a wider application?

  The main qualities are good management, vision, promotion and effective partnership working, As a generalisation, we find that such elements are often missing in the vast majority of markets. There are of course a number of notable exceptions, but overall the standard of market management, both in the public and private sector, throughout the UK is not of the highest standard.

REALISING THE POTENTIAL OF TRADITIONAL MARKETS

8. Does Local Government support markets effectively?

  Varies greatly throughout the country with some having a great deal of involvement whilst others all but ignore them. It is clear that where an L A does support the market it is a better market for it and sometimes has strategies and development plans which help the wider local community as well as the market itself.

9. What are the advantages and disadvantages of local authorities having power to operate markets?

A clear distinction has to be made between the overall provision of markets and the physical operation of markets.

There must be some mechanism to regulate the number, operational days and location of markets to prevent a free for all with markets springing up all over the place—often in wholly unsuitable locations. We feel that local authorities are the best means of providing such overall control.

As regards their physical operation we feel that the constraints of the democratic process placed upon local authorities often hinder the implementation of dynamic, innovative and forward thinking management. On a local level, political realities often dictate that capital investment by the L A on the L A market is difficult, and often impossible, to obtain on an ongoing basis and that profits derived from the market are not re-invested in the market but go to other services/functions within the authority. We believe that a case therefore exists for local authority markets to be outsourced to the private sector or to an arms length company—a good example of such being the markets at Glasgow.

10. Does central government support markets effectively? If not, what additional support should be provided?

  Central Government has recently shown some support through PPG 6 although the benefits of this have not yet been evident. Throughout the industry it is felt that markets do not have a high priority on the Governments' agenda.

A good alternative model is that employed in Holland. There, a civil servant in their equivalent of the D.T.I, has special responsibility for markets and, following consultation processes with the main players and organisations within their market industry, reports to their equivalent of the Communities and local Government Select Committee. As a result, Holland now has a well administered, progressive and thriving market industry.

  Another example is in the municipal market at Barcelona. However, the restrictive legislation which virtually forces supermarkets to be located at first floor level of a market hall, makes this option an unattainable model at present.

11. Could central government make better use of markets to achieve national goals, particularly with regard to social adhesion, health and regeneration?

  Yes. Either through the adoption of the Dutch model or by the implementation of national performance indicators for markets—currently there are no such indicators. Although NABMA, the L A Market Association, have tried to formulate such indicators in the past it has been unable to achieve any meaningful degree of co-operation from even their own fellow L A members, and absolutely no co-operation from the private sector. We feel that the only way forward on this issue is for central government to impose a mandatory set of key performance indicators for all markets.

PLANNING AND LICENSING ISSUES

12. Do local and national planning regulations support or hinder the development of markets?

  We see no major problems in the current regulations.

13. Do licensing regulations support or hinder the development of markets?

We strongly feel that Street Trading licences and the accompanying legislation severely hinder the development of markets situated on highways—especially those in London referred to earlier in this submission.

MPEL carried out a markets consultancy last year for the London Borough of Hackney [the location of the first site visit for the Committee] and it is clear that the licensing restrictions have a very significant negative effect upon the market. We are currently conducting a markets consultancy for the London Borough of Lewisham and it is evident that similar difficulties arising from the licensing regulations are having an equally negative effect there.

14. What improvements could be made to the planning and licensing regimes to aid the development of markets?

Legally constituted markets throughout the UK have no requirement for and should not be subject to licensing arrangements. Licensing legislation, throughout the whole of the UK, including London, should be revised to allow the L A issuing the street trading licence to charge a realistic commercial charge for so doing.

In addition to the above responses to the specific questions raised we would like to put forward certain of our considered proposals in respect of the provision and development of markets throughout the UK the following views.

1. Cost/benefits of market locations

  In order for markets to flourish we believe that, amongst other things, they need to be located in prime locations within a town or city.

However, exclusive occupation of prime space with permanently erected stalls with a market operating two or three days a week cannot be financially viable or sustainable. The solution is to have flexible markets with modern demountable stalls—erected/dismantled on a daily basis— whereby the market can be sited on either temporarily unused space or on the High Street and can change shape, size and location as required.

  At present too many markets are situated in edge of town locations with permanently erected stalls which prohibit alternative uses of such space on non market days. We feel that such markets are inevitably unsustainable and need to be replaced sooner rather than later.

2. Effects of the current economic crisis

  In times of recession, markets, with their low overheads should fare better in comparison to other forms of retailing on the High Street. Although there are some exceptions—notably Bury and Burnley markets where trader induction courses are held for prospective traders— it seems that few markets are taking advantage of the present difficulties.

Although no hard evidence exists to support it, we perceive that in the current recession the sales of the food offer on most markets is holding firm but that of non- foods is experiencing hardship.

3. Public perception and Image

  Traditional Retail markets suffer from a very poor image and have little or no "street credibility" with the younger generation. The stereotypical market shopper is 45 years plus and socio-economic groups C2, D and E. We feel that such a profile renders the future of market shopping somewhat questionable.

We strongly feel that standards in markets infrastructure and market management, both in the private and public sector, need improving and that traders need to be better educated in areas of customer satisfaction issues, presentation of goods and that general personal appearances and practices need to become far more professional.

  We also find that whilst most traditional markets around the UK are in decline, the specialist, niche markets such as continental markets, farmers markets, craft markets etc are thriving. We feel that this arises out of often better locations for these markets, stronger management and a higher class of goods being sold than on the traditional market.

  We feel that for traditional markets the adoption of the Dutch method of trading and the setting of mandatory key performance indicators by the central government, together with management mentoring such as that offered by MPEL, would assist in improving the shortcomings on the traditional markets.








 
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