Examination of Witnesses (Questions 40-49)
MS KATHERINE
EDWARDS, MS
SUE WILLCOX,
MR RICHARD
WILLIAMS AND
MR RUAIRIDH
JACKSON
11 MAY 2009
Q40 Chair: What about the big stores
though, how many of them are city centre?
Ms Edwards: I do not know the
exact proportion. It is a pretty large proportion and I am quite
happy to follow up and tell you exactly what it is.
Q41 Chair: That would be helpful.
Mr Jackson?
Mr Jackson: We are a slightly
different type of business so we run a small proportion of the
overall number but a large number of stores that are very marginal
because of the desire of our members to retain a presence in often
excluded communities that do not have options for alternatives,
so the situation is different for us. Broadly speaking, in our
profitable stores the vast majority of these are either in town
or neighbourhood centres. If I could respond very briefly to your
question about edge of centre, if the planning authority is taking
control of the issue and looking at a plan-led system effectively,
then if they identify there is a need and a rationale for extending
the town centre in a certain direction then they should be using
the full range of policy initiatives at their disposal as an authority
to provide improvements across that centre to make sure that the
potential benefits cascade effectively. They have a lot of levers
that they can pull and that are available to them. In my experience,
what tends to be the difference between success at edge and non-success
is the challenge of actually supporting and delivering wider benefits.
Mr Williams: Again, we are slightly
different still further. We are a single format operator and therefore
we are as likely to be successful in a town centre environment
as we are in an out-of-centre environment. The important thing
for us is the proximity to our catchment. We are a neighbourhood-type
store operator operating up to 16,000 square feet which is slightly
different.
Q42 Andrew George: In view of the
time could I concertina three questions into one. One may be again
asking for commercially sensitive information. The first is how
do you see the future retail trend? Do you think there is a trend?
You are very committed to town centre retailing. Do you see that
as a trend and as something which is going to flourish more in
the future and is going to grow or do you see that the trend to
out of town is going to continue? The second is the commercially
sensitive one: would you as a company see yourselves moving more
and more into the town centres or are most of your future projects
in terms of developments going out of town? And the third question
is: do you think that this new impact assessment will make life
for you, with regard to your out-of-town plans, easier or more
difficult?
Ms Willcox: I will start with
the last question first. I think that it will mean that for us
as applicants and for planning authorities in plan-making and
control decisions everybody will have to look a lot more closely
at the town centre, at the health of the town centre, and take
a more holistic view of what is right or wrong for the town centre,
so in some cases, yes, it will be harder. Certainly the burden
of proof is harder. Planning is moving much more to an evidence-based
system and probably quite rightly, so that means that everybody
will have to present their evidence. In terms of where the future
is going, obviously retailers respond to customers and if customers
demand a certain type of format then we will respond to it. For
example, we have got a very big programme to expand our Locals
convenience stores. We have a much bigger programme this year,
we are trying to open 55 new Locals this year and 120 in the next
financial year. By the same token we also have a demand from customers
for bigger stores in certain locations, so I think basically the
answer is that we will respond to customer needs, and competition,
and try and provide the best thing for our customers.
Q43 Andrew George: You must have
a clear view as to whether the trend is going more to in-town
shopping or out-of-town shopping because you have got your future
development plans no doubt over the next two to three years at
least?
Ms Willcox: We have obviously
got network plans of where we have assessed where there is likely
demand, where there are growth areas, where we might want to put
down floor space. In terms of precise locations, again, we will
work with local authorities. We have built the sequential test
into our site search mechanism in any event so we would go through
the sequential test and work with local authorities. We are building
a range of stores from 3,000 square feet up to the highest we
go which is about 80-85,000 square feet.
Q44 Chair: Can we go along the rest
of you and ask you to just add in? Ms Willcox seems to be saying
that it is consumer demand which is the major factor in driving
a lot of you into going for many more small convenience stores
rather than big out-of-town supermarkets. Is consumer demand more
important a factor than planning policy?
Ms Edwards: You can only work
within the planning policy even when you are meeting consumer
demand, so I would say the sequential test has been very good
at stopping out-of-town development and making it much more difficult
to get out-of-town development as it is. There are many areas
where you might go and do your public consultation and you are
in the town centre and it is more complex because you affect more
people. People who come into your exhibitions will often say to
you, "Can't you go and put it on that large green field over
there where it is not going to affect me and my house or whatever
else?" And we say actually we cannot. I think in that sense
it has been quite effective. I think Sue is right in saying that
because the impact assessment is quite a robust test that does
make you have to consider the general health of the town centre.
I think in some instances it will make it even tougher.
Q45 Chair: Have you anything to add?
Mr Jackson: Only very briefly.
In terms of future trends, I think when the Competition Commission
looked at things last time round there was recognition of a kind
of separation to large and convenience in terms of the retail
offer. I think there is some evidence now to suggest that there
is a return of the mid-sized, obviously there are entrants like
Aldi and others, but more generally perhaps a move into that which
offers another more flexible format. The most interesting thing
from last summer, and the analysis that we saw about the effect
on out-of-town, was the effect of petrol prices. It is the indirect
costs on the shopper which are likely to have a significant impact
on the locational choices they then take as to where they shop,
particularly if the offer is broadly similar in two different
locations but the cost of going to these locations is different.
Just on the question about consumer demand: retailers do not build
stores where people do not want them. That is the basic starting
point and then you work out how you can get to build there.
Mr Williams: I would agree with
what has been said. In terms of the new tests I do believe they
are rigorous and controlling and I think the important thing is
that they are very balanced and people will have to look very
carefully at the harm to existing centres, and I think that is
the important thing.
Q46 Mr Betts: Can you give any examples
of an application which has been turned down under the current
arrangements because it failed the need test that might have been
successful under the new arrangements?
Mr Williams: If I can answer that,
I think the example is page 67, Plymouth Greenbank store. I think
it would have been successful under the new arrangements.
Mr Betts: Does anybody else have an example?
So we are going through all this change for the sake of one store
in the country!
Q47 Chair: Can I ask a supplementary?
In my own locality it appeared to be that one supermarket put
in an application to expand in order to make it difficult for
the council to approve an application for a new store from a competitor.
It was put to me that that was essentially the first store using
up the retail need when commercially it did not actually have
a reason to expand except to keep the competitor out. I will not
name them. Are you aware of examples of it? Have you done it?
Have your competitors done it? Have you been sinned against?
Ms Willcox: It was something that
was discussed at the Competition Commission inquiry. That very
point was put to witnesses by the Competition Commission and I
think it was called "first mover advantage" and whether
or not people would exploit first mover advantage by putting in
applications to soak up need. That may have been need in the planning
sense but it might also be perceived floor space to put off other
new entrants coming in. That was the context of it. I think the
Competition Commission found very little evidence of it. We have
made applications to improve stores, but they would have been
plans to improve or extend stores in any event; they would not
have been to keep anybody out. So no, we have not done that and
I do not think the Competition Commission report found evidence
of that. That was the report that came out last week.
Mr Williams: Can I just come back
on that one example? Being a retailer who is looking to expand,
we have other examples, not always where we are ultimately refused
but where the need test is used to certainly slow down, and I
can give you examples where it has taken us seven years to get
planning consent, five years on the back of need as being the
reason for refusal.
Ms Willcox: I would agree with
that.
Mr Jackson: Very briefly, on Sue's
point, the reality is, if you have an operator who is in a monopoly
or duopoly position in a catchment, someone else is coming in,
then the operator is probably significantly over-trading, which
is leading to congestion and other issues in their store, so expanding
the store to improve the customer offer is a legitimate response
in that sense. The question on need, from our perspective, as
a retailer who is the incumbent retailer in the vast majority
of catchments, is that if you pass the need test, the rest of
the tests under the present system tend to be dismissed and therefore
impacts are looked on as okay because, broadly speaking, there
is this need available. We are not looking as a new entrant into
most catchments. We are looking as an incumbent who wants to invest
in the stores that we have, and the predictability of outcome
that is presently there just is not good enough, because there
are so many situations where a simple calculation on quantitative
capacity can override a wider understanding of the consequences
of allowing that floor space into that catchment.
Anne Main: The Chair cited an example
of where a store had expanded. I would ask you to consider that
need could also mean that a store would in principle be permitted
but not of the size that the retailer is trying to put in, and
the need was then used to say "You can have a store of X
size but not Y size, because the Y size would be perhaps home
and wear and electrical goods, which would then suck the life
out of the town, but X size would not." Sometimes—and
I am not naming and shaming—that can be the impasse, where
the retailer is trying to get in a much bigger store than the
local area wants.
Q48 Chair: The key question is, would
the need test be more likely to stop that or would the impact
assessment do the same?
Mr Jackson: The test of scale
would deal with that: is the scale appropriate for the catchment
area? An alternative response to that is, if you have one large
retailer with a very wide offer in a catchment, then it is legitimate
for another retailer, a main food retailer, to come in and say,
"I want to offer a comparable offer," and that is when
you start getting into arguments about scale and proportionality.
Q49 Anne Main: How do you think the
impact test will affect that?
Mr Jackson: The impact test should
still consider scale because scale is inherent in impact.
Chair: Thank you all very much.
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