RETAILING IN THE UK

Shopkeeping through the ages

History tells us that Britain has always been regarded as a nation of shopkeepers. According to Europe 1450 to 1789: Encyclopedia of the Early Modern World,1 ‘[i]n the late 17th...century there were about 40,000 shopkeepers in England and Wales’. Today, this figure has risen close to a staggering 200,000. In the ancient world trade flourished simply because some folk had a surplus of one item and coveted other goods they did not have or could not produce. The Cretans and Phoenicians of the Mediterranean were among the earliest traders and they influenced other later and greater trading civilizations. The Romans followed, establishing a sophisticated form of retailing. Archaeological digs and ruins have indicated that, amazingly, the world’s first department store was in ancient Rome.

After the fall of the Roman Empire, pedlars hawked their wares by carrying their stores on their backs. They travelled from village to village selling their goods but quite often passed off inferior goods to the gullible. The streets of London rang with the cries of women selling oysters, rabbits, gingerbread, apples, watercress and dozens of other offerings. In the 12th century, tradesmen and artisans organised themselves into guilds and opened small shops. Until then, permanent buildings were quite rare. By the 13th century, fairs and markets flourished. Many had a religious foundation where people gathered at their churches on feast days and exchanged goods.

The origins of shopkeeping are lost in the mists of time. According to Dewald’s authoritative Encyclopedia, the first shopkeepers to sell from permanent structures competed with markets and fairs selling their merchandise from the windows of their workshops between market and fair days. Shops tended to cluster in particular neighbourhoods, leaving traces in the architecture and in such street names as Fish Lane, Baker Street and Tanners Alley.

1 Dewald, Jonathan (ed.) # Gale, a part of Cengage Learning, Inc.

TRADING THEIR WARES

The Encyclopedia notes that there was a growth in tension that stoked ‘conflict in [most] towns and cities in the Middle Ages, as well as in the early modern period... between shops and marketplaces on the one hand, and between specialised and non-specialised shops on the other... [They] offered a variety of goods to a variety of customers. Some sold necessities of limited value, catering to the needs of a poorer clientele. It is thought that the well-to-do of medieval cities visited local markets to purchase from foreign merchants, who could supply higher-quality goods in larger quantities over longer periods of time. Some shopkeepers, however, imported wares of various sorts: spices, wax, metalwares, [pottery] and silks. Their shops tended to be general stores that offered luxury commodities to wealthier patrons...[These shops were] more profitable than their common counterparts, trading in daily or popular items.’

DEVELOPING ECONOMIES

In the late 15th century and early 16th century, there was a move towards specialisation in certain forms of merchandise, but most of the early modern shopkeepers were happy to sell whatever they could. Dewald’s Encyclopedia points out that shops and shopkeeping expanded significantly during this period as economies developed with an increase in production, distribution and consumption of goods that led to the retail revolution of early modern Europe. It was not difficult to set up in business as a shopkeeper.Wholesalers were usually willing to supply credit and this brought about a multiplication in shops. By 1789, there were more than 141,000 retail outlets in Britain. All except 21,600 were established in London.

AN EXPANDING MARKET

Throughout the 1800s, and even up until a few decades ago, food shopping formany people in the UK was a daily chore involving trips to the butcher, the fishmonger, the baker and the grocer. In the 19th century, department stores developed. Shopkeepers diversified fromtheir main trade into other areas, which they thought would prove to be profitable. At the end of the century, one street in London would consist of a confectioner, grocer, tobacconist, pub, dairyman, tripe seller and cheesemonger.

For most of the 1800s and until the 1950s, shop assistants would serve individual customers directly. The idea of customers helping themselves was unheard of. The self-service approach where everything is on display for consumers to choose their own goods is relatively new to shopkeeping. Customers used to go in and ask to see a certain item and the assistant would get out examples from the wooden drawers and boxes behind the counter. Many ingredients, such as sugar, butter and flour, had to be weighed and bagged individually by the shop assistant before being sold to the customer. Butter was sent from the farms in barrels and whole cheeses came wrapped in muslin. Produce needed on a daily basis, such as bread, milk, fish, fruit and vegetables, was often delivered to customers’ homes by horse and cart, a boy on a bike, or by van.

Until the early 19th century most people could not read so there was no point in displaying written notices over shops. Instead, metal or wood objects were hung above doorways indicating the type of merchandise sold in each particular store. Slowly, as literacy became more widespread, shops began to invest in written signs and advertisements were placed in newspapers, trade directories, and on bill boards. Logos appeared on shops and delivery vans, on carrier bags, leaflets and sale notices as part of the drive to create high profile businesses. Many merchants produced catalogues showing the range of goods they had to offer and over the years many different ways of advertising shops developed and spread.

THE RISE OF THE SUPERMARKET

In the 1920s, chain stores began to spread across the UK. Once a shop proved successful, the owner would open another branch nearby. Growing success saw the opening of branches all over the country. The first supermarket opened in the United States in 1937, laying the foundations for a revolution in shopping. Customers entered the store through turnstiles and walked through a narrow maze of shelves containing groceries. They selected their goods as they continued through the maze to a cashier. Instantly, brands and packaging became important to companies and consumers. By 1956, there were 3,000 self-service stores in operation in the UK and as these shops grew in size they became known as supermarkets.

For the modern supermarket customer the experience of shopping is not comparable with shopping in the past. Rather than shopping everyday from a selection of specialist shops, supermarket customers tend to visit the store, often by car, and stock up with a week’s worth of supplies in one go. Today, 75% of Britain’s total grocery market is controlled by its four largest supermarkets.

SHOPPING IN THE FUTURE

In years to come, visits to a supermarket may become a thing of the past. Today, there is the added advantage of food consumers being able to shop online in virtual stores and arrange delivery to their homes. However, interest in food miles, the growth of farmer’s markets and organic delivery schemes shows that some customers avoid buying food from supermarkets altogether.

For many consumers, modern food retailing and particularly the supermarket is a sign of progress that saves consumers time and money and offers exceptional choice. For others, the supermarket groups are blamed for the disappearance of smaller grocery shops, the increase in the use of motor cars, and suggestions that unfair dealings often target farmers and food manufacturers.

Definition of 'retail'

Middle English, from Anglo-Norman, variant of Old French; retaille, piece cut off, from retaillier, to cut.

Today's world

One tenth of the UK population works in the retail sector in a range of diverse businesses, from large chains to small individual shops. According to the British Retail Consortium (BRC), 9% of all VAT-registered businesses in the UK are retailers, with the total number currently at 197,990. Retail is the largest sector employer in the UK with 3 million employees (11% of the total UK workforce). The sector’s sales are worth £278 billion, a third of consumer spending, generating almost 8% of the gross domestic product in the UK.

Around half a million people take the plunge and start up their own business each year and there are more than 4.3 million small businesses in the UK. Of these, 2.72 million are sole proprietors. Small and medium-sized enterprises (SMEs) employ 12 million people, 58% of the private sector workforce, and turnover totals £1.2 billion, some 50% of the UK gross domestic product.

The number of start-up businesses is increasing. There are always opportunities, even in more challenging times, and really there is no such thing as a good time or bad time to start a small business. If you consider certain basic factors and you follow good practice, any time can be the right time to start up. The golden rule of the right item, at the right time, in the right place, at the right price is the foundation of good retailing.

Before starting up, some factors to consider include the following.
- There is scope for niche enterprises, but you must meet and deliver what is needed.
- Selling capability is a priority and knowing exactly how you are going to sell to your market is a must.
- Research everything you need to know about the sector you’re entering, including your competitors, whether your prices are right, whether you’re compliant with all regulations, and have uncovered all the hidden costs involved in starting up.
- You will need sufficient start-up and ongoing working capital in place to get you up and running and make sure the repayments don’t choke you within the first six months.
- Run a market test to confirm that your target market is willing to pay for your intended product or service.
- Focus on offering quality, both in goods and service.
- Make sure you are good at and enjoy your chosen field so that you end up excelling at it.

The UK is currently listed as the sixth easiest country in the world in which to do business. Yet many still complain that the volume of regulation is too high, too complex and presents too many conflicting demands. The Department for Business, Innovation and Skills (BIS, www.bis.gov.uk) broadly rates the following as obstacles to business success:

- competition in the market 15%;
- regulations 14%;
- taxation, VAT, PAYE, National Insurance, business rates 12%;
- the economy 10%;
- cash flow 10%;
- recruiting 6%;
- shortage of skills generally 4%;
- availability/cost of suitable premises 4%;
- obtaining finance 3%;
- no obstacles 2%;
- shortage of managerial skills/expertise 1%.

It is interesting to note that, contrary to what you might expect, raising the necessary cash is far from being the major obstacle you will face. That role is reserved for competition in the marketplace.

The government launched the Enterprise Strategy in March 2008, with the aim of making the UK the most enterprising economy in the world and the best place to start and grow a business. It is designed to unlock the nation’s entrepreneurial talents, boost enterprise skills and knowledge, help new and existing businesses to get funding to start up and grow, and ease the burden of regulation – particularly on small firms which feel its impacts most. The strategy sets out five key enablers as listed below.

- A culture of enterprise – where everyone with entrepreneurial talent is inspired and not afraid to take up the challenge of turning ideas into wealth.
- Knowledge and skills – equipping employees and owners with the tools to unlock their entrepreneurial talent.
- Access to finance – ensuring that entrepreneurs and small business owners have the knowledge, skills and opportunity to access the finance they need to make their enterprising ideas a reality.
- Regulatory framework – keeping legislation to a minimum, reducing the burdens of regulation, inspection and enforcement, without removing essential protections, and clearly communicating any changes.
- Business innovation – ensuring that UK businesses are in a position to capitalise on global trends, by helping them to develop and successfully commercialise innovative products, process and services.

For more information on how this strategy may help you, contact BIS.

Familiarising yourself with retail terminology

Barcode
A series of vertical or horizontal parallel lines forming a code that is read using photoelectric devices and software and interpreted by a barcode scanner.

Chargebacks
The retailer’s invoice for claims against a supplier resulting from items such as damaged goods, adjustments and the recovery of transportation charges for improperly routed merchandise.

Consumer sentiment
Consumer sentiment is a measurement of consumers’ attitudes regarding their own financial situation, and their feelings about the overall economy in the present and the future.

Cost completement
The average relationship existing between the cost of merchandise and the retail value of the items handled during an accounting period.

Customer loyalty programme
A structured, long-term marketing exercise that provides incentives to repeat customers who demonstrate loyalty in buying goods.

Layaway
A method of deferring payments where goods are kept by the store until the customer has completed payments for them.

Markdown
A reduction of an original or previous retail price.

Mark-up
The difference between the cost price of goods and their retail price. Also referred to as mark-on or gross margin.

Mark-up cancellations
A reduction in the price of an item after it has been subject to an additional mark-up.

Markdown cancellations
The increase in the retail price of an item that has been reduced.

Merchandising
A practice that contributes to the sale of products to a retail consumer.

Promotional markdowns
A lowering of the retail price hoping to encourage greater store traffic.

Retail price
The price at which goods are offered for sale.

Shrinkage
The gradual loss of stock over time due to damage, misplacement or theft.

Speciality stores
Retail outlets that maintain a large selection in a limited line of merchandise.

Stock book
A book where additions to stock are entered in the form of goods received from suppliers and merchandise deductions, which represent sales to customers.

Trade discount
A deduction from the agreed price to encourage prompt payment of bills.

Universal Product Code (UPC)
A categorisation where each item is given a ten-digit number, pre-marked on the package in the form of a barcode over ten corresponding numbers.

Visual merchandising
The display of products that makes them appealing, attractive, accessible, engaging and enticing to shoppers in a retail store. Visual merchandising uses colour, lighting, displays, smells, sounds, digital technology and interactive elements to catch customers’ attention and persuade them to make purchases.

Advantages of being an olderpreneur

Older people bring their whole life experience to a business. Companies started by older people have a 70% chance of surviving the crucial first five years, compared to 28% for those started by younger people, according to Hilary Farnworth of the London Metropolitan University. Senior entrepreneurs contribute £24.4 billion to the UK economy. There is a massive saving to the public purse. It costs £7,000 a year to keep someone aged over 50 on benefits.

Laurie South, Chief Executive of the Prince’s Initiative for Mature Enterprise (PRIME), says:

'Many older people are better placed to go into business than their younger counterparts. Older people have better personal skills and usually have an established support network around them. They may have fewer problems with work-life balance; their children have grown up, and there’s less pressure to perform. They are more likely to be realistic and understand that there is a lot of luck involved in running a successful business. But the desire to succeed must still be strong.'

According to Professor David Storey of Warwick Business School:

'The number of olderpreneurs has been rising. Thirty years ago the majority of self-employed were in the 30–44 age range. In 1977, 11% of men aged 45–64 were self-employed, compared with 13% of those aged 30–44; by 2000 it was 15% of the 45–64 group, but still 13% of the younger age range. The two groups are likely to have different motivations. Those in their twenties or thirties are likely to be generating money for themselves and their families, and will go through intense pain and hardship if they think they are going to strike it big in a few years.
The time horizon of someone in their late fifties is very different. They need more instant gratification. If you are going to grow a business substantially there are two necessary conditions: a strong motivational element and a strong element of luck. It’s clear that businesses run by more mature people have higher survival rates but lower growth rates. In a time of huge economic uncertainty, many olderpreneurs may be forced into self-employment by dwindling pensions or age discrimination in the job market.'

The chance of finding employment if you are made redundant over the age of 45 is only one in ten, according to research from PRIME. Self-employment may be the only option. You may not make millions but you can earn a living or top up an inadequate pension.