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


Examination of Witnesses (Questions 262 - 279)

MONDAY 20 APRIL 2009

MR GEORGE NICHOLSON AND MR JEAN-PAUL AUGUSTE

  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?

  Mr Nicholson: 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 countries—Spain, Italy and France—the 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 markets—whether street markets, markets inside shopping centres or wholesale markets—in 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 market.

  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 in London.

  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 London sites.

  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 taking experience.

  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 particularly well?

  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 from.

  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 Geraud!

  Q276  John Cummings: Do we have anything comparable in this country?

  Mr Nicholson: There are other companies—not so old. Do you mean are there other private market operators?

  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 it.

  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 country—the City of London and maybe one or two others—with 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.


 
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