Totally Locally Versus the Supermarkets

The Question

Totally Locally Chris did a recent radio interview in which he was asked, and I paraphrase, What about the X amount of ASDA jobs in the area. Won’t going Totally Locally mean people losing their jobs?

 

TL-V-SupersThis was a very interesting question which we put out to our Facebook community and it caused a bit of consternation with a fair few people…however it was something we were still talking about at Totally Locally Towers for the next couple of days and we all felt that it was a bit too easy and glib to say “You’re joking aren’t you”… as there would be an impact if shopping habit change. I wanted to explore this in a bit more detail.

Now some of the figures below is Google based research as we don’t have the resources to mount a full on research project…I guess that is the bastion of Universities, MBA students and well funded think tanks!

However this is my take on it…as the question brought up ASDA I decided to use the Big Four supermarkets only in my equation in terms of financial figures..even though Totally Locally is not just about food shopping or retail this is what I decided to base my financial figures on. Totally Locally is a much more than retail and it is as much about raising the bar for a whole town and area as it is about getting people to spend their money locally or businesses to use local suppliers.

As a side note: I will make the assumption that if we took into account all national chains, franchises, supermarkets,etc then the total revenue figures for retail would be higher and the percentage “Totally Locally” effect across these businesses would be less.

The Figures 

So here are my figures for discussion:

The revenues for Asda (UK not Walmart), Tesco, Morrisons and Sainsburys for the last year were approx: £130bn

The government projection for the adult population (over 16) of the UK last year is approx: 50m people

Therefore if each adult reapportioned £5 per week locally then it would be worth £13.06bn

This equate to just 10% of the revenue of just the big four supermarkets (I am sure that the other chain stores in the UK – Lidl, Aldi, Waitrose, etc will also reduce this percentage figure).

The Effect

So the effect would be to reduce revenue of national supermarkets and chain stores in the UK by 10% (see side note above it is probably much less but this is back of a beer mat stuff).

Whilst this doesn’t sound too onerous there will undoubtedly be some impact on jobs as it is unlikely that market forces, shareholders, investors, etc will sit still for a 10% reduction to the top line revenues of big name companies…so pressure to cut costs, streamline will come into effect and this will invariably mean some job losses rather than across the board pay decrease or smaller dividends per share.

Not all bad

But what about the new £13bn going into our local areas? These figures are purely based on retail and the growth in local shops and this would undoubtedly create new jobs so that the shop can meet the new increased demand. (I would always advocate longer opening hours, so this will need more cover and staff. We have plenty to say on this in another article I am sure)…also there will be a need for more local services to support the increased revenue in the retail sector. Accountants, Legal services, training, IT, Graphic Design, Building services, Window Cleaning, and so on will be required in more numbers.

It is fact that local businesses tend to use far more local supply chains than national brands and supermarkets…this is basically down to economies of scale….e.g. a large company can aggregate marketing services for several shops and get more bang for their buck (as management would be prudent to entertain and shareholders would expect) so they are likely to spend money out of a region or all in one place to achieve this…local companies don’t have the luxury of being able to gain the economies of scale so tend to source locally and at a higher notional cost.

It is this local Money-go-round that makes the difference to the local economy and is what Totally Locally is all about. It is not just shops, it is not just about the public spending £5 per week locally, it is about the number of local suppliers a business or shop has, it is about making local shops and businesses better in terms of choice, service and quality…it is about giving the whole town a boost.

The great thing is that if a town receives this sort of economic boost then this encourages new shops…reduces the empty shop facades on the high street, creates a buzz about the area and everything becomes that little bit nicer. Then another knock on effect happens and local causes, communities and charities tend to benefit more as well…local sports teams get sponsored, hospices become supported and companies give their time to education and social projects.

This tends to have a much more personal affect on our doorsteps and starts to create a sense of community again which ultimately sustain the heartbeat of a successful town, village or area.

Choice

Totally Locally is not about making people shop locally, it is and has always been about choice. We will always have a need for Supermarkets, Internet Shopping, Chainstores, Shopping Malls and independent shops…the great thing about the independents is just as their name dictates – it is their choice of what is stocked and how it is sold that differentiates them from others. This choice is usually down to the passion of the owner, as their shop and business is normally their passion in life,  be it bottles of wine, toys, cheese, mountain bikes,etc. The other choice, which people do want, is how a large organisation with a central buying point needs to operate…they need to flex their larger buying power with suppliers to create cheaper prices for consumers and higher margins for shareholders. This tends to mean that only the larger suppliers that have the capacity, technology and processes are able to compete for contracts…therefore a local smaller independent can often support and stock a supplier that would never be able to get their goods into a larger national…so by that reasoning the independents + national chains give us the broadest choice.

My point is that we need everything to have a healthy balance…and is 10% too much to ask for a vibrant local high street that provides a different choice to the larger supermarkets and chains that we have a need for as well?

I have a theory that there will be a new “class” divide in the future but it will be based on time…those willing to contribute to their community, environment and local area…and those who are not. Perhaps this will be the difference between living in a town filled with independent shops, locally produced food, active communities and education or living in a supermarket village….but that is a topic for a later article methinks.

As always I welcome your comments…and as always I try and be balanced.

Totally Locally Nigel