Memorandum submitted by the Association of Convenience Stores (ACS) (SFS 34)

 

ACS Evidence: Executive Summary

 

ACS (the Association of Convenience Stores) represents more than 33,000 local shops throughout the UK. Convenience stores play a vital part in the public's access to food and in meeting consumer needs. Research undertaken by Ian Clarke of Newcastle University has shown that the prevalent food shopping needs of UK consumers and a choice of different types of outlet.

 

In our evidence we examine; food supply chain, food delivery and local produce. Looking at how these aspects of the market currently function and how they may change proving an issue for food security in the future.

 

ACS makes the following recommendations to promote long term food security:

 

1. Implementation of the Competition Commission's recommendation for the creation of an effective Ombudsman that proactively enforces the Grocery Supplier Code of Practice is vital to food security.

 

2. A robust and consistently enforced policy to prevent harmful out of town retail developments.

 

3. Encouraging the public to shop in local shops through sufficient town centre parking, local transport, and developing strong guidance around town centre first planning policy.

 

4. Develop an action plan to deal with food distribution in the case of a fuel shortage, prioritising supplies to local shops.

 

5. Better access to information about the local suppliers in their region. As well as advice on stock, display and marketing local produce.

 

6. Introduce targeted financial incentives to mitigate the initial risk of making a loss when retailers first stock local produce.

 

 

 

RE: Securing food supplies up to 2050: the challenges for the UK

 

1. ACS (the Association of Convenience Stores - Annex 1) represents more than 33,000 local shops and welcomes the opportunity to respond to this inquiry into food security. Convenience stores play a vital part in the public's access to food and in meeting consumer needs. Research undertaken by Ian Clarke of Newcastle University[1] has shown that the prevalent food shopping needs of UK consumers include the availability of a local shop within five minutes walk and a choice of different types of food retail outlet. It is in the context of these consumer needs that we have made comments to the committee.

 

2. Supply Chain

 

2.1. Maintaining a competitive supply chain is crucial to food security in the future. It enables innovation, a flourishing economy of home grown produce, provides thousands of jobs and enables people to access regionally grown food. ACS believes that the interests of producers, retailers and consumers are best served by the presence of open supply chains as well as fully integrated supply chains such as those operated by major multiple retailers. Open or shared supply chains have the benefit of allowing buying decisions to be made by a multitude of businesses, and allowing small businesses to share in economies of scale to minimise costs for buying and distribution.[2]

 

2.2. ACS also supports fair and competitive dealings between suppliers and retailers. The Competition Commission (CC) completed an investigation into competition in the grocery sector in April 2008. The CC found that the 'transfer of excessive risk and unexpected costs by grocery retailers to their suppliers through various supply chain practices if unchecked will have an adverse effect on investment and innovation in the supply chain, and ultimately on consumers.' To prevent this from occurring the CC recommended an extended Grocery Supply Code of Good Practice and an Ombudsman to oversee this.

 

2.3. However, these measures are under threat because:

 

the CC has no power to enforce the Ombudsman and instead has to get voluntary agreement with the main supermarket groups;

the CC has stated that if no agreement is reached then it would recommend to Government to impose the Ombudsman through legislation, but

Government have been equivocal about what they will do if a recommendation is made.

 

2.4. The creation of an Ombudsman would in part address the abuse of buyer power found by the CC. However, supermarkets are trying to convince Government, the media and politicians that the Ombudsman will limit their ability to keep food prices low for consumers. This is not true; the costs of an Ombudsman are small, estimated at around 2.5-4m, a tiny percentage of the annual turnover of the companies involved.

 

2.5. Furthermore the Ombudsman will ensure that unfair practices that undermine suppliers and distort the market to the detriment of consumers are prevented. If the Ombudsman is effective, it will improve the market for consumers and lead to sustainable low prices across the retail sector.

 

ACS recommends: Implementation of the Competition Commission's recommendation for the creation of an effective Ombudsman that proactively enforces the Grocery Supplier Code of Practice is vital to food security.

 

3. Food Delivery

 

3.1. ACS does not deal directly with technical issues related to distribution of food to retail outlets. However we recognise the importance of this issue to food security. In 2006, 51% of food consumed in the UK was imported to the UK. The UK imports food from a range of countries in Europe and around the world, with a variety of production systems and land requirements. Of the 49% of food that the UK produces itself, it is highly reliant on transport.

 

3.2. A high level of reliance on transport to make up food networks is an environmental challenge. Food transport accounted for an estimated 30 billion vehicle kilometres in 2002 of which 82% were in the UK and produced 19 million tonnes of carbon dioxide, of which 10 million tonnes were emitted in the UK; almost all from road transport. It also proves a risk to food security as oil stocks dwindle.[3]

 

3.3. There are significant drivers towards efficiency in food distribution. The most obvious example is the ongoing consolidation of ownership in the convenience store sector. Table A shows the number of takeovers in recent years. There is also an increasing trend towards retailers joining together in 'symbol groups' linked to major wholesale operations, a key benefit of which is efficiency of distribution. This consolidation brings down costs, but also presents risks.

 

Table A: Big Four supermarket convenience store acquisitions

Date

Acquiring

business

Acquired business

No. stores

Est. ave. t/o per store (m.)

Jan. 2003

Tesco

T&S Stores

1,215

2.1

Feb. 2004

Sainsbury

Bells Stores

54

1.0

Mar. 2004

Tesco

Adminstore

45

1.6

Aug. 2004

Sainsbury

Jacksons

114

1.3

Nov. 2004

Sainsbury

Beaumont

6

2.2

Apr. 2005

Sainsbury

SL Shaw

5

2.2

Total

 

 

1,439

ave. 1.98

Sources: IGD, company press releases and annual accounts, and Christie & Co estate agents Business Outlook 2003, 2004, and 2005.

3.4. We have seen an ongoing increase in store closures. This has the effect of reducing miles travelled to supply retail stores and this could produce results that might falsely be seen as environmentally beneficial. However the reduced access to food retail outlets increases the distances required to travel to food retail outlets by the customer themselves. In the UK in 2007 the UK public completed 12 billion miles in their cars accessing shops. Reducing numbers of retail outlets in the communities close to where people live increases shopping miles and this is likely to cancel out gains from distribution efficiency from delivering to fewer outlets. [4]


3.5. A key feature of food security is access to food within easy walking distance. Research commissioned by ACS shows that people want a food shop within 5 minutes walk (annex 2). Encouraging people to increase the amount of shopping that does not require a car is a key feature of effective food security. On an ongoing basis there need to be effective policies in place to encourage local shopping, using planning, town and local centre parking and public transport policies to ensure the prevalence and accessibility of local shopping options, as well as effective controls on harmful out of town and car reliant shopping.

 

3.6. The need for food access that is not reliant on the car has already shown itself to be acute when there have been crisis periods, like during the fuel shortage of 2000. At that time people were not able to rely on their cars, and therefore looked to local shops as a means of accessing food.

 

3.7. It is logical and necessary to prioritise the supply of food to shops close to where people live at times of crisis, rather than concentrating on supplying out of town shops that require people to travel in cars to access them. As it stands the approach to food distribution for access to fuel is wholly unsatisfactory and the issue needs urgent attention and a clear plan should be in place.

 

 

 

 

ACS recommends:

 

A robust and consistently enforced policy to prevent harmful out of town retail developments.

 

Encouraging the public to shop in local shops through sufficient town centre parking, local transport, and developing strong guidance around town centre first planning policy.

 

Develop an action plan to deal with food distribution in the case of a fuel shortage, prioritising supplies to local shops.

 

4. Local Produce

 

4.1. Many convenience stores stock local produce. Locally sourced products feature in most categories of products stocked including meat, vegetables and locally produced condiments and cakes.

 

4.2. There is a big challenge for retailers to market locally sourced goods alongside the better known products due to a perception of higher prices and less identifiable packaging. Some of the methods that convenience store owners introduce to make local produce attractive to clients include:

 

Signage with what is from the local area

Food miles signage (showing the customer how far the product has travelled to the shelf)

Special offers on local produce

Tastings and other events

 

4.3. If handled correctly local sourcing can be a successful part of the retail offer, increasing customer loyalty and increasing the amount customers spend in a retail outlet. However there are significant challenges including[5];

 

Many retailers are lacking in knowledge about products and what does and doesn't sell.

Some retailers are lacking in skills to source, range and market locally sourced products.

Retailers can quickly lose confidence in a product if it does not succeed quickly, especially if wastage is high.

Many retailers do not have the right contacts with local suppliers.

 

4.4. Sustain's research also found that there are challenges for local suppliers. Many suppliers are used to selling direct to the end consumers through farmers markets and farm shops. This usually requires minimal packaging, with display decisions under their control, and where the personal touch is an important selling point.

 

4.5. However these operations are invariably limited in scale and reduce opportunities to increase the penetration of local produce into the local grocery economy. Producers need support to develop their products so as to make it possible for retailers to use their products. This includes working on a cost efficient means of supply, probably through collaboration with retailers and other local producers and a focus on effective marketing.

 

4.6. A good example is Somerset Food Links who are working to develop such a brand, known as 'Levels Best' - to bring added value and marketing benefits to local produce, see http://www.levelsbest.co.uk.

 

ACS Recommends:

 

Better access to information about the local suppliers in their region. As well as advice on stock, display and marketing local produce

 

Introduce targeted financial incentives to mitigate the initial risk of making a loss when retailers first stock local produce.

 

 

James Lowman

Chief Executive

 

January 2009

 

Annex 1 - Association of Convenience Stores

 

ACS is the trade body representing the interests of over 33,000 convenience stores operating in city centres as well as rural and suburban areas. Members include familiar names such as Martin McColl, Spar and Thresher, as well as independent stores operating under their own fascia. Our members operate small grocers, off-licence or petrol forecourt shops with between 500 and 3,000 square feet of selling space.

 



[1] 'The Economic and Social Role of Small Shops: A Review of the Evidence' by Ian Clarke and Sunid Banga

[2] 'Buyer Power and its Impact on Competition in the Food Distribution Sector of the European Union', Professor Paul Dobson, 1999.

[3] 'The Validity of Food Miles as an Indicator of Sustainable Development', DEFRA, 2005.

[4] 'Food Distribution: An Ethical Agenda', Food Ethics Council, October 2008

[5] Eat Somerset project run by Sustain