Londis demand 'could force closure of small rural stores'

Click to follow
The Independent Online

Londis, the convenience store group, piled the pressure on its franchisees yesterday, telling them to increase their minimum stock orders by 50 per cent.

Some local independent retailers, already battling for survival as the supermarkets move into their sector, warned that the increase could force them to close.

Londis, which is owned by the private Irish retail group Musgrave, is understood to have told its 2,100 franchisees that from 26 February they would have to spend a minimum of £3,000 a week on Londis goods - an increase of £1,000. Londis shopkeepers own their own stores and can buy in from a range of other suppliers as long as they keep to the minimum order spend of the company's goods.

A number of store managers, particularly those in rural areas, feel the jump is unsustainable and will force them to close.

"Very small shopkeepers won't be able to manage at that level," one said.

In a letter seen by The Independent, Garry Craft, the sales director at Londis, wrote to members: "Following a company-wide review of the conditions, the MBL board have decided that in order for the business to remain competitive and to continue to provide an enhanced service to all our retailers the minimum case order and the minimum spend order requirements are to be changed."

The news has been met with dismay, not least because Musgrave calls itself "the number one supporter of independent retailers".

Matt Hardman, from the Forum of Private Business, an organisation representing small businesses, said this kind of action was "becoming all too common".

"It is a case of passing on the inadequacy of the main business," he said. "It is passing the buck. This will be extremely difficult for these managers and owners of franchises to deliver."

The arrival of the letter came a day after the Competition Commission published its interim report on the supermarket sector, which is under investigation following claims their growth was killing off local stores and the character of the high street. Tesco, in particular, has been the focus of criticism. As market leader, it takes £1 in every £8 spent on groceries in the UK and its move into the convenience store space has been relentless. It now has 1,000 small stores across the country.

David Croissant, the founder of The Shoppers Bible, a website that is campaigning to save the local shop, said: "This is another example of turning the screw on the people who are keeping your organisation afloat. It is putting further pressure on local shopkeepers. How does this benefit anyone?"

Londis was set up in 1959 by a group of independent retail grocers who wished to establish a wholesale company owned by the retailers it served. It was sold to the Irish firm for £60m in July 2004. Each shareholder pocketed a £30,000 bonus, but many expressed a desire to retain a certain amount of ownership.

Londis was contacted about the letters, but failed to respond.