Bakers will survive through to 2015, but other independents, such as convenience stores, grocers and petrol forecourts, are likely to be wiped out by then. That is unless key recommendations from the All Party Small Shops Group are taken on board, predicts a new Parliamentary report.
The report from the All Party Small Shops group of MPs says government policies can undermine bakers capabilities and competitive advantage, but they are relatively shielded from competitive pressures. This is due to three main factors – moderate local rivalry, the fact bakery suppliers wield low levels of power, and because there is little substitute for a baker’s shop.
As bakers tend to source from regional flour mills and Bako, the supply chain is “divorced from that of large businesses, with independents able to offer a larger range of goods with higher quality than can be achieved elsewhere”, the report says.
The group, chaired by Jim Dowd, MP for Lewisham West, suggests independent bakers foster innovation in the grocery market. Product innovation such as sourdough and organic products, first created by independent bakers, has influenced consumer demand, the report says. The supermarkets appear to copy these innovations, although they sell a restricted range of baked goods.
The long-awaited report High Street Britain: 2015, published on Wednesday, attacks a “heavily unbalanced trading environment”, which will damage the UK socially, economically and environmentally. The report says there are 184,695 businesses operating 278,630 shops in the UK, which constitutes 11% of all UK businesses. Of these, almost half are managed by a sole trader and 103,000 have fewer than five employees. But the UK has lost nearly 30,000 independent food, beverage and tobacco retailers over the last decade.
The report lists the damaging effects on small shops of aggression from larger competitors, distortion of the supply chain, the cost of property, crime, poor planning decisions, a lack of appropriate business support and disproportionate regulatory burdens.
Legislation can cost a small retailer anything over £10,000 a year, and the burden of red tape on small retailers is dis-proportionate, it says. And official agencies and regulators are failing to provide the necessary information on how best to meet legislative requirements, it adds. “Once a tipping point is reached, many small shops could be lost instantly, as wholesalers no longer find it profitable to supply them,” the MPs warn.
National Association of Master Bakers chief executive David Smith told British Baker: “The group has taken a very serious look at retailing and come up with some interesting points. Bakers have adapted and survived better than other independents. But this report is only good news if we can keep the diversity of the high street. People will not go down the high street if only the baker remains on it.”