Examination of Witnesses (Questions 262
MONDAY 20 APRIL 2009
Q262 Chair: Can I welcome both of
you here and thank you for managing to make your way through despite
the demonstration going on outside. Can I urge you, in responding
to questions, firstly not to feel it necessary to repeat something
if you agree with what the other person says and secondly, given
that we have already taken significant amounts of oral evidence
on this topic, we are particularly interested in examples from
your own personal experience, rather than necessarily repeating
issues that we have already had evidence on from other people
and where we may already have significant information. Could I
just ask both of you initially what your views are from your experience
on whether markets generally are thriving or in decline and whether
you believe there are regional differences, differences between
different types of markets?
It is quite complex. The markets world is no different to the
retail sector in the sense that you have hypermarkets at one end
and the corner shop at the other. To globalise it to one thing
called "the market sector" and ask the big question
is it declining or thriving is quite difficult to answer, not
least because there is not much data to inform the discussion
in any event. The market I have been involved in, Borough Market,
is a thriving, very successful market and there are other very
successful examples of markets in other parts of the country which
you have heard about in Bury, Leicester and other places like
that. There are very good examples of successful markets all over
the country. I do not think they would put that on a strong regional
basis. There are examples where markets are struggling a little
and there are reasons for that as well.
Mr Auguste: Historically, markets
had not many competitors. They were in city centres and life was
easy. Now it is a business. It has to be managed as a business,
publicly or privately, but it has to be managed as a competitor.
When a market is not adapting to that, it has the risk of losing
the competition. There are experiences on the Continent and here
of markets adapting and they are easily successful.
Q263 Chair: Mr Nicholson, Borough
Market is a successful market but many people have suggested it
is unique. Do you think it is unique or that there are other markets
which could learn from that experience?
Mr Nicholson: I do not think it
is unique. The only thing that is unique about it is that it is
a charitable trust, run by a group of trustees. It was set up
by statute 250 years ago, so the particular ownership and management
model of it is probably unique. The factors that led to the success
of the Borough Market I believe could be applied in other parts
of the country. You have to address the key issues which are to
do with ownership, investment, vision, management and promotion.
Those things are not applied in a coherent way in a lot of other
markets for reasons you have heard, whether because there is not
management or there has not been investment or a vision, and then
you will not have a successful market. If you apply those things
in the way that they are applied in some other markets in the
country, I believe both in this country and abroad you will have
a successful market. It is unique in that it was only started
10 years ago and now it is probably one of the most successful
markets in the country, if not in Europe. It is a new retail market
where there was not a retail market, where there was previously
a failing or declining wholesale market. In a sense, it is an
example of the turn around of a market. In that sense it is unique
but in relation to having conditions and applying the lessons
to creating a new market they could be applied in other parts
of the country. In fact, a lot of the traders that come to the
Borough Market come from places like Cumbria and they go past
the doors of a lot of the other markets on the way to London.
Q264 John Cummings: Good afternoon.
Would you tell the Committee what you believe are the key factors
that contribute to a successful market? Do you think there are
any pronounced regional differences, in your experience?
Mr Auguste: We should put food
back on the agenda in a better way. We should be more orientated
towards food because people have the need to eat and to buy each
day of the week. If we want our clients to go to markets for food,
we could have a more interesting basis of clientele. On the Continent,
mainly in Latin countriesSpain, Italy and Francethe
food stalls are between 40 and 60 per cent of the stalls of the
markets and this is the way to keep our clientele.
Mr Nicholson: It sounds simplistic
but to run a successful market you have to want to run a market.
It is a very simple observation but it happens to be true. A lot
of people who own markets or preside over marketswhether
street markets, markets inside shopping centres or wholesale marketsin
a sense have inherited these things. Often the structure of the
local authority has changed dramatically and the management of
those markets has changed. In essence it always comes back to,
whether it is publicly owned or privately managed, you have to
want to run a market, not just preside over something which happens
to be there.
Q265 John Cummings: Do you have any
practical examples for the Committee in relation to best practice
with wider applicability to London, for instance arising from
your involvement with Borough and Southwark Markets?
Mr Nicholson: London is unique
in the country because primarily it is street markets as opposed
to other parts of the country which tend to be more enclosed.
The Borough Market is slightly odd because it is a covered street
Q266 John Cummings: Do you have any
examples of best practice?
Mr Nicholson: I think the Borough
Market is an example of good practice. The market, the shops and
buildings around it are all collectively owned by the trustees,
so there is unity of ownership.
Q267 Chair: I do not think that pattern
could be easily replicated, from what we have understood, in most
other markets in London.
Mr Nicholson: In most other markets
it is replicated because the street is owned by the local authority
and most of the shops on both sides of the street are also owned
by the local authority. What is lacking is any coherent management
in relation to the market because of the particular circumstances
Q268 John Cummings: Is that applicable
to Southwark as well?
Mr Nicholson: You will have heard
in London that the issue is that, technically in law, they are
not markets. They are streets on which pitches are licensed by
the local authority.
Mr Auguste: On the continent,
mainly in France, we are used to what is the public domain. The
legislation allows city councils to manage street businesses like
markets under market rules. Certainly this is a way forward for
Q269 John Cummings: Do you have any
examples of best practice with the wider applicability arising
from your specific involvement with other English markets?
Mr Auguste: Liverpool is interesting
because it is through a joint venture company with the city keeping
its share in an agreed strategy decision and this is a joint decision
Q270 Chair: Did the initiative come
from Liverpool Council or from you?
Mr Auguste: We had contacts with
Liverpool City Council but they chose this unique experience of
creating a company.
Q271 Dr Pugh: Why does that work
Mr Auguste: Because we are obliged
to work together. The staff within the city administration are
obliged with us to understand what is the problem of the market
and manage it like an administration. It is a business. We have
so many competitors. We are obliged to understand the flexibility
and speed at which things are changing. It is so easy to speak
together that we like this experience in Liverpool.
Q272 John Cummings: Is there anything
that we could learn from successful markets in Europe? Could you
give some examples of European best practice that could be easily
adopted in English markets?
Mr Auguste: Absolutely. Besides
the food option I was citing, I have in mind mainly Bordeaux Capucins
Market, where there are two big market halls refurbished through
a very long term duration contract. Through this contract, every
partner, the city council and us, are obliged to eliminate any
short term speculation decision. We are obliged to think at least
10 or 20 years ahead. When we took over this market, we were left
with 40/45 food traders and the market was perhaps 40 per cent
occupied. It took 13 years and this is the first year the market
will be fully occupied and rented. It is a long term commitment.
The private company has to accept a big investment and it has
to accept transparency to work with the city council. You cannot
get city council commitment if you are not accepting the transparency.
It is a complete change compared to what could be said about private
operators in this country. I would not attack private operators
in this country because it is a sort of catch 22 situation. They
were offered short term contracts. You cannot have an answer which
makes these people aware of what is the long term interest for
the city council, a long term vision for the market, if they are
stuck on a very short life together with the city. Bordeaux is
very interesting in that aspect. Through that contract, the level
of market trends was jointly managed with the city council taking
into account the traders and the population interest also.
Q273 Chair: Relating to food trade
and wholesalers, I understand that in France the wholesalers sell
both to markets and to big supermarkets like Carrefour. Is that
also the case in the UK or are wholesalers only selling to markets?
Mr Auguste: It is less the case.
We should be back to better interaction between wholesale and
retail markets in this country. Where could we have good food
traders on retail markets if they cannot have access to diversity
and quality food? It is mainly through this wholesale market scheme
that they could be offered these products.
Mr Nicholson: I agree. To me it
would be inconceivable to think that we could go back to a situation
in this country that they have, say, in Germany where the Hamburg
Market for instance as well as the wholesale market is run by
the city council within the confines of the estate which they
own. They have a lot of private wholesaling companies who deal
with Aldi and a lot of the business for supermarkets and discounters
goes through the wholesale market in that way. It does not effectively
go through the public bit; it goes through a private company located
on the estate of the land which is owned by the city authority.
I cannot see that Tesco, Sainsbury's or Waitrose are going to
go back to buying their produce through a wholesale market in
this country. There is undoubtedly scope for more interaction
between the wholesale and the retail part of the market. That
is what the Borough Market does. We are what we call a composite
market. We have part of the market which is a wholesale market,
which is the historic bit of the market. Other bits of the market
are retail and other bits are shops, restaurants and cafes. In
a sense, that is a model like Covent Garden, with the wholesale
market diversifying into partly retailing and then the wholesalers
supporting the retailers. A feature of the Borough Market which
is a new development is that many of the retailers, small companies,
who have come to set up in the retail section are now becoming
quite large wholesalers. That in turn is creating a new wholesale
dimension within the Borough Market to add on to the traditional
fruit and vegetables. There is interaction between the wholesale
and the retail which I do not think is promoted as much as it
could be in this country.
Q274 Chair: Who could promote it?
Mr Nicholson: The wholesale market
could. If you go to Hamburg wholesale market, they have a stall
from the wholesale market sitting in the street market, so people
know when they go to the street market where the produce comes
Q275 John Cummings: Mr Auguste, I
see your company has been established for about 130 years. It
is wide ranging and very extensive throughout France. Do we have
a similar company in this country?
Mr Nicholson: It is called Group
Q276 John Cummings: Do we have anything
comparable in this country?
Mr Nicholson: There are other
companiesnot so old. Do you mean are there other private
Q277 John Cummings: Yes, larger.
Mr Nicholson: Not as big as Group
Geraud. Town and Country?
Mr Auguste: Perhaps 50 years.
I am not sure. To explain the longevity, we come back to the investment
and the commitment to long term contracts.
Q278 John Cummings: Did you ever
sell fruit and veg in a market?
Mr Auguste: No. I was born on
a market, to understand how traders are working. The problem is
the transfer of knowledge. You cannot read it; you have to live
Q279 Anne Main: Mr Nicholson, you
kept saying repeatedly that you really need to want to run a market.
In your submission you criticise a trend encouraged by central
government for local authorities to view markets as simply part
of a wider property portfolio, running the risk of misunderstanding
the nature of markets. We have heard in evidence from people and
from going round talking that this does seem to be quite an interesting
point but it does not seem to sit very comfortably with anyone's
property portfolio. You could end up "having it" as
part of your brief and you do not really know anything about markets.
You seem to think central government has been part of this marginalisation
process. I would quite like your views on that.
Mr Nicholson: When I first became
involved with markets 30-odd years ago, each local authority had
its own markets committee. It had a director of markets and a
mini-bureaucracy around running a market. Now, there are only
maybe one or two local authorities in the countrythe City
of London and maybe one or two otherswith that dedicated
political and bureaucratic structure based around the market.
If you go to any local authority in the country, you will find
where the market is managed in any number of different departments.
It might be in finance or parks and recreation.