Retail: Local loyalty pays off

Independent retailers are collaborating to get shoppers back on the high street
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The Independent Online

One third of the local economic infrastructure of the UK – the corner shops, post offices, pubs and bank branches – is predicted to disappear between 1990 and 2010. That is more than 100,000 independent businesses and local branches of national companies that are going bust or giving up.

The result, in the words of the New Economic Foundation that made the prediction, is both ghost town Britain – with large numbers of shops boarded up – and clone town Britain – because every shopping mall looks much the same. A symptom and cause of the problem is the domination of the major supermarket brands, the subject of the continuing Competition Commission inquiry.

Now independent retailers are fighting back. Across much of the country local loyalty schemes are springing up, which aim to get consumers to come back to local shops time and again. Some of these are issued for individual towns and villages, while many shops have started their own schemes.

The most ambitious project is the Wedge Card. It was established by Big Issue founder John Bird and his daughter Diana. "It's going very well," says Diana Bird. "We launched in December and it's been a really interesting time." Initially Wedge is operating in London, but there are now four pilot projects to assess its expansion into other localities.

Within London there are already 23,000 individuals who have bought Wedge Cards at £10 a time, with about 500 retailers signed-up. Holders of the cards obtain discounts on purchases – for example, 20 per cent off a meal at an upmarket restaurant – and at least a quarter of the joining fees goes to local charities. Unlike loyalty cards used by supermarkets, shoppers' buying habits are not recorded and there is no use of information through database marketing.

Traders are promoted as members of the Wedge network, through the card's website (www.wedgecard.co.uk) and e-mails to members. One new restaurant member told Wedge it had one hundred reservations in the first month from its Wedge membership. The scheme also binds local retailers together within the network, encouraging them to promote each other. Future developments include the possibility of either using Wedge as a prepaid payment card or integrating it with mobile technology as a payment method.

Matthew Knowles of the Federation of Small Businesses believes other local loyalty card schemes are "in germination". "They are probably working well in some areas," he says. But, he suggests, retailers can achieve similar benefits without the need to formally join a scheme. Knowles points to the trading advantage obtained by the big supermarkets because of their large, free, car parks and says that town centre retailers can join together to repay car parking fees when shoppers spend a lot of money.

Another option, the FSB suggests, is discounts for repeat business. This can be done by printing an offer on the back of a receipt. But the FSB would also like stronger regulatory action to prevent supermarkets abusing their dominant position. The FSB is lobbying for the supermarkets to be banned, as is the case in France, from offering loss leaders, and questions whether they should be allowed to offer free car parking.

The New Economics Foundation is itself involved in an initiative that intervenes to challenge ghost town Britain by encouraging a rebirth of entrepreneurial spirit in those areas of sharpest local economic decline. Together with the Civic Trust it has set-up BizFizz, which coaches individuals to help them set-up their own businesses. In Clownes, Derbyshire, the project achieved its objective to get all the high street shop units let and used, where previously a third were empty. BizFizz has worked in 30 local areas in the last six years, with almost 5,000 clients – many of whom have gone on to set-up their own businesses.

Natalia Fernandez of the New Economics Foundation, who is national co-ordinator of BizFizz, says: "We have a clear intention of trying to promote enterprise within communities, to regenerate communities. Local businesses are more likely to recruit local people and this can reduce unemployment. They can provide services within those communities and improve local communities. It circulates wealth within that local economy."

While BizFizz concentrates on supporting new businesses, it also works with established small firms in deprived areas, stimulating greater mutual trading and networking – assisting with business support services such as marketing and public relations. Mutual support networks can, like loyalty cards, offer real benefit to independent traders battling against the might of the massive multiples. In truth, independent entrepreneurs need all the help they can get.

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