Small businesses need all the help they can get, and they certainly shouldn't be afraid to capitalise on others' misfortunes. The horsemeat scandal, argues the Federation of Small Businesses, represents a real opportunity for independent retailers to win back customers from the giant supermarkets that have done them so much damage.
The FSB is right. Although this is not a scandal that has left smaller businesses untouched – many of the firms in the supermarkets' supply chain are small and medium-sized enterprises – there is an open goal for independents here. Consumers' anxiety about this affair is closely connected to their concerns about the anonymity and lack of accountability of big business, which is perceived, rightly or wrongly, as obsessed with cost at the expense of quality (or even safety).
However, independent retailers shouldn't expect to automatically feel the benefit of people's dissatisfaction with their larger rivals. The hostility many people feel towards the supermarkets is hardly a new phenomenon – consumer surveys and market research invariably suggest that shoppers would rather buy from small independent shops on the high street than the large out-of-town supermarkets. But people don't always practise what they preach, particularly when their time is short and their budget is stretched.
That disconnect between shoppers' good intentions and their behaviour is one reason why independent retailers have suffered most grievously during the economic downturn. The Independent Retailers Association says almost 13,000 of its members shut up shop in 2011. Almost 15 per cent of high street shops now stand empty.
The FSB's argument is that by supporting their high streets, people are also supporting their local economies. Its newly launched Keep Trade Local campaign highlights figures showing that for every £1 spent with local suppliers, the local economy benefits by £1.76, compared with only 36p if the money is spent elsewhere. Those figures are compelling, but it's not going to be enough simply to appeal to people's better instincts. The horsemeat scandal gives shoppers a reason to think twice about buying their food from the supermarkets. Now the independent sector has to offer active reasons for those shoppers to turn to it instead.
That might mean embracing the aggressive marketing tactics that big supermarkets have never been shy about. If you're a small butcher who can explain the provenance of every piece of meat on sale, shout about it – and about the fact the supermarket down the road can do no such thing. If your supply chain consists of other local businesses, let potential customers know about it, preferably by contrasting your operation with the hugely complex and opaque arrangements made by your larger rivals.
There's plenty more independent retailers can do. The FSB points to an initiative in Bristol, the Bristol Pound, which can only be spent in local shops. Other communities are trialling similar initiatives.
The internet also represents an opportunity. Initiatives such as openhighstreet.com and myhigh.st enable small independent retailers to come together in order to market their wares to local and national audiences. A pop-up shop movement is being supported by the Government-backed StartUp Britain campaign to boost entrepreneurship. It enables small retailers to try ideas and test markets without committing to expensive leases or fit-outs.
All small retailers, not just butchers, have a chance to make some noise about the quality and value for money they offer. And if shoppers return to one corner of the high street, everyone else will see more visitors too.
£106m deal points to Aim M&A revival
The £106m takeover of Alternative Investment Market-listed FfastFill announced on Friday may not be on the scale of Warren Buffett's $28bn (£19bn) swoop for Heinz, but it is more likely to be typical of M&A deals to come in the year ahead. Privately owned Pattington's offer was pitched at a 32 per cent premium to the closing price on Thursday.
Aim M&A has been in the doldrums but there have been some signs that a recovery is possible, as companies that have paid down debt consider what to do with balance-sheet cash.
A report from analyst Morningstar reckons 2013 will be the year M&A makes a return, particularly at the smaller end of the market. "We think 2013 will bring an uptick of deal activity," Morningstar says. "While we don't see the potential for huge blockbuster deals in the near term, there's no shortage of companies with available capital on their balance sheets and high operating margins, fewer organic growth opportunities, and candidates with attractive valuations."
Lombard's stent makes key breakthrough in the US
Lombard Medical first came to the attention of Small Talk last April, when we highlighted the healthcare business's hopes for its flagship product, the Aorfix, for which it was seeking approval from the Food and Drugs Administration (FDA) to begin selling in the US.
Now, 10 months later, the FDA has finally given the business a positive answer. The Aorfix is a stent that can be inserted into the arteries of patients with aneurysms – weaknesses in the artery wall – and Lombard's device is designed to be suitable for a wider range of patients than any existing product.
The company will launch the product in the US in the second half of the year, targeting a $600m (£387m) market. When Small Talk spotted Lombard last year, its stock was trading at 144p – on Friday, the shares closed at 232p, having spiked 30 per cent higher on the FDA approval.
In the longer term, however, Canaccord Genuity thinks there's plenty more to go for – its price target for the stock is 332p.
Small businessman of the week: Matthew Sanders, chief executive, de Poel
We launched de Poel in 2001 – I'd worked in recruitment and made a fair amount of money for the businesses, and I wanted to do something for myself. We wanted to start a business in a new sector, but in the end we realised it was the area where we knew everything there was to know.
We realised very quickly that recruitment agencies are terrible at invoicing. We've built a technology that automates payments to temporary workers, hugely simplifying the administration for companies and producing 100 per cent accuracy.
We're now the UK's number one procurer of temporary agency labour – we sit between companies that need labour and the agencies providing it, working to manage the relationship. But our success – we now turnover £500m a year and have more than 100 staff – hasn't come overnight. In the beginning, we were penniless – I remember running up £60,000 of credit-card debt while building the business and then we landed Sainsbury's and TNT as new clients in the same week.
Our next move is international expansion – we expect to have European and US operations up and running by the end of the year.Reuse content