Following December’s publication of Mary Portas’ “Review into the future of our High Streets” the Government was remarkably quick off the mark implementing one of her key recommendations – establishing pilot “Town Team” schemes. A formal response to all 28 recommendations is due soon but in the meantime Grant Shapps, Minister for Housing and Local Government at the DCLG unexpectedly stumped up enough cash for a competition to select 12 pilot towns, with each being given some £100,000 of funding to test the “proof of concept”.

On 4^th February he announced the competition on YouTube (no less) from Hatfield Town Centre.“Our High streets have faced stiff competition from Internet shopping and out-of-town shopping” he declared, in front of a very unexciting High Street. “We are leaving them underused, unloved and under-valued. The internet is not going to go away and so for our High Streets to survive they need to offer something new and exciting”.

Was there a note of nervousness in his voice? Maybe, as he might have been warned about redheads by his mother. In any event Ms Portas was in like Flynn with her response: “I hope my Review has inspired people with another vision of tomorrow where our High Streets are re-imagined as destinations for socializing, culture, well being and learning as well as shopping. I want the first twelve Town Teams to challenge the old ways of working, experiment, take risks and reaffirm their place at the heart of a community. A place we all want to be and can be proud of.”

The Portas review is a good read and highlights the internet opportunities and challenges for retailers both large and small. It shows how online sales were creating High Street vacancies long before the recession bit. As Sir Philip Green of Arcadia Group said: “Why carry a High Street rent when it’s easier to increase sales online?” Portas demonstrates how the growth of internet sales is affecting multiple and independent retailers alike, hence the demise of Woolworths. The report recommends Town Teams of local businesses to manage their High Street like a business, just like the big boys do with their Shopping Centres.

Embracing a willingness to adopt technology recommended by the Portas report the DCLG competition is staged and run entirely online. It was only announced on 4^th February and entries must be submitted by 30^th March. That’s not much time to prepare an entry but as Scary Mary says, speed of response is vital to successful retailers. All entries need to be accompanied by a video posted on YouTube showing why this entry is down on the streets wiv the kids, innit?

Entries can be lodged by anyone interested in the future of their High Street, not just the local Council. Local partnerships of investors and landlords have as much chance as stallholders or retailers but strong leadership is expected. The entry forms are very simple and applicants are expected to describe their vision, the potential for improving their High Street and their priorities. £1,000,000 of prize money is a cheap way to market-test the reports recommendations and find new ideas to be rolled-out across the nation. If you’ve not yet read the report download it from

www.communities.gov.uk/publications/regeneration/portasreview

and the application form from

www.communities.gov.uk/publications/regeneration/portaspilotsprospectus.

The problem with reports like this is the devil hides in the detail. Some recommendations are very relevant to Markets e.g. a new “National Market Day” when anyone could try their hand at being a trader or removing regulations to allow anyone to trade on the High Street. It includes a recommendation small businesses (presumably including indoor stalls) are offered concessions on their business rates – but the devil is in the detail of implementation. There’s no mention of awkward issues like Market Charters and pedlars licenses and I’d be happier if the legality of individual stall assessments was challenged before giving concessions. But putting the detail to one side for a moment the real value of the report is the debate it stimulates and the reaction of government.

THE multi-million pound refurbishment of the Indoor Market is on target to be completed this summer. Builders are about to move onto the second phase of the £3m project, set to revitalise the iconic shopping area. And a host of “wonderful” new traders are looking to move in according to Quarterbridge, who are overseeing the upgrade.

It is already confirmed the new-look – and newly named – Market Quarter will have a fresh food area, which will be filled with retailers including butchers, greengrocers, a fishmonger, delicatessen, and a host of world foods.

Other businesses are also lining up to rent stalls and excitement over the new market is growing. Local entrepreneur Giles Gottig believes the improvements will be of great benefit to the town. Currently considering renting space in there he revealed the mood was positive among town traders and spaces were filling up.

He said: “I believe the refurbishment for the market is the right way to move ahead in the town.

“This was the only option in my eyes and what is positive is a number of people believe in it as space is filling already.”

Raymond Linch, managing director at Quarterbridge, said about two thirds of the refurbishment was complete, and phase two of the operation is about to start. This will see traders currently operating in the market moving over to the completed area, so builders can work on the remaining third.

Mr Linch said: “Things are going very well. We are delighted with how phase one is taking shape, which will be handed over in a few weeks. We are doing extremely well also in the lettings for the new traders.”

Read the complete article by clicking here…

Quarterbridge advised the Council throughout on the design, fit-out and lettings. Director Jonathan Owen said: “The Council took a bold decision to install display equipment for traders but it was crucial if the project was to be delivered on time. Open sightlines and quality displays are what shoppers expect nowadays but getting the right quality whilst meeting EU procurement rules was pretty demanding.”

The 60,000 sq ft Market now hosts some 120 stalls and a foodcourt, with direct links into the Blackburn shopping centre and 1200 space carpark. Follow-up surveys by consumer research company ROI Team have confirmed the food offer is the core attraction and a far younger shopper profile now use the market. Blackburn’s design has learnt from the competition and it’s paid off. Well done everyone – give yourselves a slap on the back!

More information on the market is available at www.blackburnmarket.com

Havelske Market: Handicrafts made on the stall

How was your Christmas trading? Good I hope – despite the long hours, discount competition and light fingers looking for a little something extra. Anecdotal evidence suggests Market sales held up pretty well in 2011 as shoppers looked for bargains. Mainstream retailers announced a mixed bag of results though. Like-for- like sales for multiples were up 2.2% but that was nothing to crow about in comparison to Christmas 2010 when sales fell 0.3% because of awful weather and the recession. Despite the continuing recession in 2011 the unseasonably good weather should have made Christmas 2010 easy to beat.

Debenhams, JD Sports and Next all reported flat sales with some retailers like Blacks Leisure never even making it through the festive period. Tesco issued a profits warning which wiped the odd billion or two off their share price, but Sainsbury announced “their best Christmas ever”. Ocado and online sales were the big winners – up 20% or so. You know online marketing makes sense. Mainstream fashion retailers were stuck with furry coats in an Indian summer which prompted pre-Christmas sales earlier than ever with 25-50% discounts the norm. Buying departments were left with faces redder than Santa because you just can’t rely on the weather anymore, can you? 

Amidst all this uncertainty December seemed like a good time for some research, courtesy of Wizzair. OK, the hotel was above a lap dancing club in Prague but what more can you expect from a cheap weekend package?

There are two good reasons for visiting the Czech Republic – it’s outside the Euro and everyone speaks English. Prague doesn’t have Budapest’s amazing market halls but since it became part of the EU in 2004 the Czechs have been quietly sorting out their economy whilst steering clear of the Euro. The City puts a lot of effort into the all-year general market on Havelske and the wonderful Christmas markets on Old Town Square and Wenceslas Square. One of the few good aspects of being behind the Iron Curtain was to preserve their historic buildings.

The quality and variety of goods was excellent with toys and decorations handmade on the stall with a healthy disregard for the excesses of Health & Safety. I’ve never seen a working blacksmith or glass blower on a market before.

But the Eurozone crisis reaches everywhere. Stallholders confirmed how visitor numbers had dropped off as German tourists and British Stag weekenders stayed at home. The markets were staying open in January hoping for a post- Christmas influx of Russians celebrating the Orthodox New Year. Despite lingering memories of the Prague Spring of 1968 they were more than willing to empty their wallets. Sadly, the same weekend the death was announced of the inspirational Czech president Vaclav Havel who led the so-called Velvet Revolution of 1989.

Tom Campbell - cultural advisor: A career-changing confession

Yes, life can be tough at Christmas – ask Celebrity Chef Anthony Worrall Thompson, cautioned for alleged shoplifting offences at Henley Tesco. This gave rise to a string of jokes such as “Why did the chicken cross the road? – Because it was under Anthony’s jacket” etc. but he was in good company with Peaches Geldof, Winona Ryder and Tom Campbell – former advisor to Boris Johnson. Tom came up with a wonderful, career-ending confession whilst cultural strategy advisor to the Mayor of London: “When I go into a chain place for lunch I have to steal so they don’t make a profit out of me” he announced. “I always steal the pudding or the soup or something. When you’re like, 40 they don’t grab you or anything – they just say “Sir, I think you’ve made a mistake…” and then let you go. If I could I’d ban Tesco Metro’s, burn Nando’s and all Pret a Mangers would be wiped out. It’s what’s strangling the creativity of this city.”

Well, Tom you do have a point but I wouldn’t try that at Mudford-on-Sea Market. Stallholders there have spotted the marketing potential of a “Celebrity Shoplifting” competition. The winner will be selected for the most imaginative excuse: “But I do a lot of work for charity / I’m always being picked-on for being ginger” etc. and the winner really will get out of there. Losers will have to work as shelf-stackers in the Mudford Tesco. Let the punishment fit the crime.

Jonathan Owen is a director of Quarterbridge Project Management – a specialist consultancy providing business advice and design services to Market owners and trade associations. He has a keen interest in the politics of retailing, growing vegetables and eating well.

Market Matters, published in Market Trade News magazine

The Portas Report – an uncomfortable read for many retailers

“Expectations have been raised in terms of value and service which the average high street has simply failed to deliver. During the boom years many extremely mediocre businesses survived and flourished – Woolworths is a prime example”.  Ouch.

She goes on to criticise unimaginative retailers who might know their product inside-out but are simply no good at running a business.

“There are thousands of businesses in Britain who once managed to make a living out of retail but have simply failed to adapt. Hard-working, committed and professional people, frequently real experts in their fields who haven’t adapted their retail offer to meet the increasingly-demanding expectations of todays consumer.  In a world where the sheer sophistication, speed and scale of the web and major supermarkets will always be pushing new boundaries you’ll never be able to compete with the range and diversity of the major multiples”.

Empty High Street shops – apparent even before the recession

At this point a few of us might start to feel a bit uncomfortable but I have to say she’s on the right track – there’s very little room for sentiment in retailing where you either Do or Die. I also agree there’s no point in going head to head with a supermarket chain – better to box clever and specialise. She points out the phenomenal growth of online sales is as great a threat to multiple retailers as independents so demand for High Street shops was already drying-up before the recession hit. As Sir Philip Green of Arcadia Group says: Why carry the burden of a High Street rent when you can increase profits by selling online? Although rents are (believe it or not) still cheap on markets there are still too few businesses promoting themselves via the web and treating their stall as a “showcase” while making core profits on the internet. Online sales are growing at 10% per annum and set to increase.

MP also has a good poke at landlords and local government for allowing charity shops to take over High Streets and withholding business rates concessions that encourage occupancy. She advocates “Town Teams” comprised of local stakeholders – retailers, landlords and residents, who would run the High Street as a business (just like their out-of-town and shopping centre competitors). She is dismissive of existing Town Centre Managers who have “varying powers and responsibilities with little retail or consumer knowledge” – well maybe, but whether the town Teams are intended to replace or be piggy-backed onto existing Business Improvement Districts is unclear, as is how they are financed.

The report is a good read but some of her ideas ring a loud alarm bell in my head – relaxation of the Use Classes regulations for instance. The need to obtain planning consent to change from one retail use to another was introduced to give local Councils control over the type of shops on their High Street. A Council, like a good market manager knows how important it is to encourage competition and variety but a manager can apply his own informal version: “Sorry mate but we’re full up with mobile phones already”. Removing use classes control on the High Street would simply see the remaining few independents displaced by multiple-owned convenience stores fighting for market share – or fast food takeaways or charity shops. The problem is not the system but the lack of determination with which it is enforced.  Maybe the Town Team can do that.

The Portas report is a great contrast to another long-awaited published in December – Lord Turner’s report into the managerial ineptitude of the Financial Services Authority which allowed the Royal Bank of Scotland to collapse. After all, it only cost the British taxpayer some £45 billion of bail-out. Hardly worth mentioning really…

Hector Sants: Formerly of the FSA – now the Bank of England. Nice one, H

In 500 pages of technical explanation of how and where it all went wrong I didn’t see anyone say “I’m sorry – we screwed up “ or better still – “We did screw up but the people responsible have been sacked and prosecuted.” Instead the former Chief Executive, Hector Sants is now deputy governor of the bank of England. Thanks heavens for that – we’re finally safe from the Eurozone crisis. Negligent directors of private companies get sued and barred from further office but government bodies use the Charge of the Light Brigade excuse coined by Sir Humphrey in Yes, Minister: “This was a most unfortunate clerical error…”

One that didn’t get away...

On an equally sad note I’m sorry to bid farewell this month to Peter Naylor – long-suffering editor of “Market Trade News”. Widely-respected throughout the publishing industry for his ruthless determination to stamp out split infinitives and incorrectly-placed commas his editorial talents are only matched by his story-telling skills. His tales of monster salmon which have eluded him on the North Esk may get taller each year but I have to admit he is a bloody good fisherman. Tight lines in your retirement Peter!

Jonathan Owen is a director of Quarterbridge Project Management – a specialist consultancy providing business advice and design services to Market owners and trade associations. He has a keen interest in the politics of retailing, growing vegetables and eating well.

Market Matters, published in Market Trade News magazine

-

Chancellor, George Osborne

“People know that promises of quick fixes and more spending this country can’t afford, at times like this, are like the promises of a quack doctor selling a miracle cure.

We do not offer that today. What we offer is a government that has a plan to deal with our nation’s debts to keep rates low; a government determined to support businesses and support jobs; a government committed to take Britain safely through the storm.

Leadership for tough times – that’s what we offer.”

-

Yesterday public sector workers expressed their dismay

On Tuesday, Chancellor George Osborne announced his eagerly awaited Autumn Statement. The Autumn Statement was published alongside the most recent forecasts from the Office for Budget Responsibility (OBR), the independent research subsidiary, which revealed a significantly gloomier picture than that painted in its previous report in March. Headline figures were the £111bn increase in government borrowing on top of what we will already be borrowing over the next five years, public debt to peak at 78% of GDP by 2014-2015, slashed growth forecasts with the economy flat-lining, and the controversial 1% pay cap on public sector wages for two years following the current pay freeze. The Autumn Statement was not all bad news though; the government announced it will underwrite £40bn worth of loans to small businesses with the aim to create jobs in the private sector (with public sector job losses forecasted at 710,000), the governments will increase state pension and basic working age benefits in line with inflation, and the government pledges to invest £5bn into infrastructure projects, to the delight of the Keynesians.

When I watched Osborne’s statement, I felt some sympathy towards the Chancellor as he attempted to put a rose-tint on the dismal figures. Every positive in his announcement had a shadow of public debt looming over it, the increase in infrastructure expenditure totally merely 4.55% of the £110bn increase in forecasted borrowing. Just in case the markets drew positives from the Autumn Statement, Shadow Chancellor Ed Balls hammered the final nail in the coffin with his response:

“If after eighteen months his plan is leading to falling growth, rising unemployment and £158bn more in borrowing, the country either needs a new chancellor or it needs a new plan.

A balanced and credible plan, on jobs, growth and the deficit. Protecting our economy, businesses, jobs and family finances is more important than trying to protect a failed plan.

For his sake, for his party’s sake and in the national interest, the chancellor needs to change course and he needs to do so now.”

Whilst the Shadow Chancellor’s comments were undoubtedly compelling, the OBR report does not sit too pretty for Labour either. As the Stephanie Flanders of the BBC pointed out in her article “Bad news for Labour in OBR”, yesterday’s findings show that the independent authority tend to side with George Osborne on the austerity v spending debate that has engulfed politics over the past 12 months. Indeed, they focus on the external inflationary pressures and the weak Eurozone as the main obstacles impeding growth, all of this in light of the fact that Osborne’s £42bn of fiscal consolidation will only reduce our structural budget deficit by 0.7% instead of the projected 2.4% in 2010-2011. The OBR neither shines brightly on Labour nor the Tories; Tuesday’s statement revealed that the government’s train of draconian austerity remains on track, but in typical fashion is delayed due to technical faults, who then, are the winners out of the Autumn Statement?

Living in a winter wonderland

Maybe the beacon of light shines on the private sector, undoubtedly Gideon’s pièce-de-résistance. The Chancellor has announced a series of sensible measures to help the private sector fill the void vacated by the government and also create much needed jobs. The main announcement was the government’s credit easing programme, a programme that has received a positive response from both the Lib-Dems and Labour with Mr Balls describing it as a “good thing”. Under this initiative, the government vouch to underwrite up to £40bn worth of loans to small businesses, reducing the interest rates on those loans by 1%. Firms turning over <£50m and have fewer than 50 employees could benefit greatly from the scheme, saving up to £50,000 per annum on a £500,000 loan. I have two reservations with the scheme. Firstly, in my eyes a firm with 49 employees generating £49,999,999 per annum is not a small business by any stretch, I feel the government’s proposal should have helped the real small businesses: the sole traders, the start-up enterprises. A market trader requiring a loan will not suddenly have an increased propensity to invest through a 1% decrease in interest payments, this may amount to a negligible sum come the end of the year. Secondly (this is not a criticism of the credit easing scheme), is the fatal issue of confidence. The issue of confidence in the banking sector to extend loans to small companies has been resolved through the government’s underwriting, but business confidence will be the determinant of whether the scheme will succeed or not.

The government has gone further in helping the private sector through extending the business rate holiday relief for small firms until April 2013 as well has £1bn extra funding in regeneration schemes- these should both benefit the market industry. Since the introduction of business rates for each individual unit within market halls, costs for traders have soared. This has hindered the demand for units and the business rate holiday should eliminate or dramatically reduce these costs up until 2013, in the short-run this will prove beneficial. Conjointly, the addition in regeneration funding should heighten the appeal of market halls and could potentially result in redevelopments such as that in Southport, whilst supporting the government’s push towards strong independent small businesses.

In the short snippet of the Autumn Statement I watched, I found it very amusing when a large globule of spittle left George Osborne’s mouth and landed on his tie and on his speech in front of him, I could just imagine the headlines : “Osborne spits on his own policies” etc. However, it was unsurprising that the press overlooked this embarrassing moment as overall the announcements were as expected. Much to the dismay of the public worker strikers, their wages were never realistically going to rise by 5% next year, nor was growth ever going to be astronomical. Personally, I saw some compromise in Osborne’s Statement- Plan big A little b. Plan Ab will spend in investing in infrastructure, it will try and free up much needed credit and it will endeavour to create jobs. No policies were ever going to greatly influence the market industry, that’s down to the overriding economic conditions which in turn, as the OBR pointed out, are so intertwined with what’s happening on the other side of the channel; the Eurozone is where our economic and political interests lie.

Standard kilogram: Disappearing mystery

This is particularly irritating to the French authorities as the 99% platinum / 10% iridium cylinder was made in Britain and is the “base constant” of the metric weights and measures system. The International System of Units (SI) depends upon it remaining constant to provide a precise measurement standard for engineers, scientists and merchants. If a kilo of spuds is no longer the same as a kilo of spuds a hundred years ago that is an oddity, but if a kilo of diamonds in Paris is now different to a kilo of diamonds in Africa then that is a problem.

This opens up the possibilities for some good arguments with your local Trading Standards department: “Don’t blame me – my scales are calibrated against the French” etc. but it’s also a reminder to have your scales recalibrated and PAT-tested from time to time. Your supplier will do this for you at modest cost.

Unlike its six “base unit” standards in the SI system – the metre, second, ampere, kelvin, mole and candela – from which all other measurements are derived the kilo is the last unit still defined by a physical object. It will now go the same way as the platinum ruler which used to represent the world’s standard metre. That was replaced by a “fundamental constant” – the time light takes to travel 100 centimetres. The kilo will now become a fixed value of the “Planck Constant” which in turn corresponds to the smallest packet of energy two particles can exchange.

Grainger Market Weigh House: Replaced by the Planck Constant

What a shame – I like to see something for my money, not some weird mathematics devised by scientists. The platinum ruler and standard kilo will be placed on display in Paris, but only as historical curiosities. They have gone the same way as the purpose-built weigh house which often remains the most impressive building on a market square. Grainger Market, Newcastle contains a fine weigh house which used to house the weights and measures officers and measuring equipment.

Surveyors quickly learn that measurement is not an exact science – it depends on the accuracy of your technique and the precision of your tape measure. Ask a Surveyor, a Stallholder and the District Valuer to measure the floor area of a stall and you’ll be lucky if their figures agree to within 5%. This causes all sorts of fun when calculating rents, rates and service charges by floor area and I can think of one case when I realised the District Valuer had forgotten to include the entire basement in his business rates calculations. Needless to say his proposal was accepted very quickly and he either never realised his mistake or was too embarrassed to admit it. A good result.

Meanwhile in the real world the Euro crisis staggers on. A couple of Eurozone prime ministers have been pushed out and replaced by accountants and they’ll not be much but soup and bread at Christmas lunch for government workers and pensioners.

Christmas lunch in Greece: By courtesy of the German taxpayer

The Germans invented a word for taking enjoyment from the troubles of others: Schadenfreude. Officials in the Bank of England might be displaying this as they watch the Greek economy dodge default at the expense of the Germany taxpayer. But they’d better not be too smug. It’s true there are plenty of investment funds still sloshing around the world financial market looking for a home and UK plc looks like a safe haven thanks to our austerity measures BUT the German economy shows every sign of growing whilst we still bounce along the bottom. HM Government wants it’s biggest trading partner – the Eurozone – to sort itself out and start buying UK goods again but not too quickly please. Devaluation has been painful but is giving UK exports to Asia an edge over the euro whilst our financial services attract their investment funds. No-one wants to see Frankfurt – the City’s big rival – get well too quickly.    

But we can all do something to help. I will be supporting those European economies sensible enough to stay out of the Euro with a Christmas treat of weekend shopping on their markets. Budapest or Prague are great value thanks to WizzAir and Ibis but I’ve done this once too often and been rumbled by HMRC. I’ll not be able to claim this trip against tax as a research trip. Schadenfreude.

Jonathan Owen is a director of Quarterbridge Project Management – a specialist consultancy providing business advice and design services to market owners and trade associations. He has a keen interest in the politics of retailing, growing vegetables and eating well.

Market Matters, published in Market Trade News magazine

Lettings for the sought after units remain well ahead of schedule and enquiries remain very strong for the last remaining stalls. There seems to be a buzz around Southport market as designs become reality going from 2d to 3d and within the community there is support and excitement- this has been epitomized in a very positive article in the Southport Visitor.

“It’s always nice seeing a development progress from plans on paper into something tangible; this project has all the hallmarks of something special”- Hayden Ferriby

Southport market is building up momentum towards a grand finale, surely to become Britain’s best market.

Large windows are being put into the market hall to increase natural light and create a nicer shopping experience

Tiles are unique to each unit giving the market a traditional yet modern feel

Units within the market are taking shape as the structure is near completion

With the economy flat-lining and a lack of confidence throughout both domestic and foreign markets, supermarkets have helped the everyday consumer by initiating a series of price guarantees: Tesco’s Big Price Drop, Asda’s Rollback, Sainsbury’s Brand Match, Morrisons’ Price Crunch and Waitrose’s Brand Price Match. These supermarkets are jostling for market share as their sales volume decrease for the first term in a decade. How have supermarkets financed these price drops? Have their costs of production decreased or have they reduced their supernormal profit margin? The first observation to make is that since the start of the month the price of Brent crude has increased; furthermore, one would have thought that regardless of their monopsony power, supermarkets would not have significantly decreased their costs to suppliers within the space of a month. Whilst other costs, such as the energy price hike, will play a role in the price of supermarket goods they are more minor and they would put inflationary pressure onto the price of goods rather than deflationary. If the cost of production hasn’t decreased, and if anything gone up, then it would seem as if the supermarkets have sacrificed their holy profit margins… Gasp.

Having looked at the intricacies of the price drop, let’s contextualize things to see how the consumer and the supermarkets stand. “Sainsbury’s annual profits rise by 12.8%”. “Morrisons’ profit rises”. “Tougher times- but profits up for Tesco”. These headlines were all first page hits after a quick Google search; so how is it that despite this month’s price war, quarterly and yearly profits seem to grow? I must tread carefully so I don’t generalize too much; a Guardian article written at the start of October reads “Asda profits hit by price war”, the article then proceeds to say how Asda’s revenue has increased to a paltry £20.5bn and that its operating margin increased to 4.9%. Furthermore, whilst the headline pins the £93m decrease in profits on the price war, the article seems to give far more weighting on “one-off costs” such as a £137m increase in royalties. Indeed, price war is only mentioned once in the article, so how much the price war is to blame for the drop in profits is dubious.

Where do the supermarkets stand? As the headlines show they are still making abnormal profits and despite this month’s price war antics but I suspect the profits will remain relatively untouched, the reason is threefold. Firstly, food and drink inflation dropped from 6.4% to 5%; in effect prices are going up at the same rate as other prices in the economy from a previously elevated level, so it’s not as if the prices of food and drink are falling in real terms. Secondly, this week’s data only represents the price changes of the past month whilst profits are published quarterly and with the festive season closing in supermarkets can expect an increase in footfall and average transaction cost. Thirdly, the price guarantees simply aren’t all they seem: supermarkets accused of hiking up prices to make the savings seem larger, supermarkets state to be eligible for the guarantees customers must spend a minimum amount and certain price matches apply to certain supermarkets only.

Where do the consumers stand? Same old: incomes stagnant, general price level rising, savings dipped into and the outlook is bleak. Fear not, food and drink is only rising at 5% so things are better than before, despite 19.9% increases in energy bills just as the weather takes a turn for the worse. Whilst consumers are shopping around, using discounters such as Aldi and Lidl, visiting their local market and using price comparison websites, supermarkets remain every shopper’s failsafe. Unfortunately, a side effect of the market structure in supermarkets is for prices to be rigid and stay high as firms collude covertly and tacitly. The five major players in the supermarket industry are reported to have 75% of the grocery market, such a high five-firm concentration ratio breeds collusion which is so hard to prove for the OFT, so often goes unpunished. Even a ‘price war’ is limited at some stage, if it were a true price war firms would undercut each other until the point where revenue is the same as their costs (limit pricing), is this realistically going to happen? “Tesco report yearly pre-tax profits of £0, down £3.4bn from 2010”… “Oh, and pigs fly!”

George Buckley’s words have been repeated today by Sir Mervyn King, predicting that inflation will undershoot the target of 2% in 2012. Worryingly, this situation seems may be more dire than the current stagflation. The current inflation hike sadly isn’t a result of economic prosperity, consumption, investment or strong exports; it’s a result of inflated commodity prices causing supply side problems. Whilst supply side shocks are very severe, see 1973 oil crisis, they tend to be more short term than demand related depressions; consumers will inevitably rejoice the fact that they can buy more for their buck, but it is a worrying thought that inflation will free-fall to near zero levels and could potentially result in a lost decade. Yes, this is a very gloomy picture but the worries have been echoed all across the world, the fact that the Bank of England are considering more quantitative easing when we are currently at 5% CPI sums this up very neatly. Instead of hypothesizing on potential Armageddon I’ll take a more objective view on recent events. Yes, inflation is down. Yes, in real terms we are slightly better off than a month ago. Yes, supermarkets are continuing their price guarantees. And yes, inflation is due to come down even more in the next few months. Let’s try and put some (blind) faith in the people at the top to restore growth, rein in inflation and get the ball (not bubble) rolling!

Now for a final word on what this means for those in the market industry: does this bode well for outdoor markets or is the net effect negligible? As discussed, consumers are scouting around for the best deals, in this sense markets should prosper particularly with regards to fresh food. This phenomenon is clear to see, over recent years Quarterbridge has witnessed rejuvenation in interest of markets. Another crucial change in shopping habits, spurred on by bargain deals, is the bulk buying culture. This would seemingly spell bad news for the markets, the pragmatic element of supermarkets seems to trump all independent retailers, however to make such a statement the basket of goods that have deals attached to them should be considered. Products with the highest value-added (tinned goods, dry goods and utilities) are the goods that are mostly bought in bulk and being not such popular market buys, I would argue that bulk buying culture shouldn’t affect markets too negatively at all, particularly since markets such as Queensgate and Kirkgate now facilitate bulk buying through the availability of trolleys and ‘pay now, pick up later’ facilities. The net effect on markets then seems to be the same as before with a growing awareness of all the benefits of buying from knowledgeable, independent traders. While markets offer genuine value for money, support for local retailers and inject life into the local economy, look at what supermarkets actually offer with a more objective eye. Peel back the façade of price guarantees and price crashes and a different picture emerges. This is what Quarterbridge have seen for some time and a picture that everyone should be aware of.