Open all hours, but for how much longer?

Plans by giant store chains to return to the High Street pose the biggest threat yet to traditional corner shops, reports Catherine Pepinster
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The Independent Online
LEWISHAM'S Loampit Vale is a typical run-down south London thoroughfare. The row of shops includes Chinese and Sri Lankan takeaways, video rental stores, hardware shops, off-licences, mini-cab offices - and Omer Kagan's Vital Delicacy.

Like thousands of similar corner grocery shops up and down the country, Vital Delicacy's prices are higher than those of the big supermarkets. Mr Kagan, who lives above the shop with his wife and four children, stays afloat mainly because of his long opening hours (he works 70 hours a week) and the ease with which customers can pop in when they have run out of milk or bread or unexpectedly need a can of soup.

But what if the big supermarkets were to take him on at his own game? What if they were to start their own versions of corner shops, opening for even longer than Mr Kagan? That is exactly what Tesco is planning to do in Lewisham - and already has done in three other areas of the South-east.

It will soon, it hopes, open dozens of similar shops, called Tesco Express. Sainsbury's, too, has plans for 60 new convenience stores called, quite simply, "Shop".

It is likely to be the biggest revolution in British retailing for many years (see page one), and it threatens small shopkeepers such as Mr Kagan with ruin, just when they thought the Government had come to their rescue.

About 60,000 small shops have gone out of business over the past 10 years, mainly because they could not compete with the giant out-of-town superstores. New policy guidelines, however, have emphasised the merits of keeping town centres alive and advised planning authorities to be sparing in giving approval to more superstores.

Last year, Sainsbury won one planning application out of nine, and Tesco one out of 10, whereas previously the stores would have expected a 50 per cent success rate.

But the supermarkets, their thirst for expansion undiminished, are going back to the High Street with the intention of rivalling, and undercutting, those small grocers that still survive.

"It is the first major attempt to get back into neighbourhood corner stores since these firms abandoned them 25 years ago," said Richard Perks, of the retail analysts, Verdict Research.

For Kamalanathan Jeyakumar, another small grocer in Lewisham's Loampit Vale, which forms part of the A20, it is terrible news. "We are very worried indeed," he says.

He and his family open his Welcome Centre convenience store every day from 9am to 11pm. On most days he takes pounds 300. On Sundays, when the giant Tesco supermarket 10 minutes' drive away shuts early, he takes pounds 500. Now that a Tesco Express is planned, open from 6am until midnight seven days a week, he fears the more casual user will cross the road to buy milk at 28p a pint rather than his at 35p.

"How will we manage? I do not know," he says. His main hope is that customers will continue to buy Tamil CDs and videotapes from his shop.

A similar hope sustains Mr Kagan. He believes that the independent corner shop will survive the onslaught of the big chains only if it becomes a speciality store. He has opted to sell produce typical of his homeland, northern Cyprus, and customers now turn to him not only for forgotten essentials but for a wide range of olives, cheese, nuts, halva and fresh dates.

"It's word of mouth that's helped us," he said. "But we can't compete with supermarket prices for items like milk. There are some items I buy at the wholesaler that cost me nearly as much as they cost the customer in Tesco. This new shop is very worrying."

The new Tesco and Sainsbury convenience shops will stock around 200 basic lines, instead of the 15,000 usual in their big stores. These will include the kinds of things people typically need for "top-up" shopping after the main weekly or monthly purchases.

The stores will also stock newspapers, magazines, cigarettes, cards and flowers.

As an additional service, the new corner shops will have petrol pumps attached. Until now, selling petrol has been seen as ancillary to the companies' main supermarket business but, since Sainsbury, Tesco and Asda started taking over pumps, they have secured about 20 per cent of the market.

As the giants of the retail trade, Tesco and Sainsbury will have enormous advantages over the Jeyakumars and Kagans. Bulk buying will enable them to offer the same prices as in their larger superstores.

Both companies have also opted to look for "satellite" sites close to their existing stores, enabling them to use the bigger stores as warehouses. So, if the Tesco Express runs out of milk, a van can be despatched with supplies from the larger stores a few minutes' drive away.

Moving into convenienceshops is seen by the superstores as vital to ensuring expansion since the Government switched the entire planning process against out-of-town retailing after its Eighties boom. David Sainsbury, chairman of the Sainsbury chain, said: "Perhaps we let that belief [that the future lay in out-of-town sites] dominate our thinking too much ... there is still a lot of demand in city centres."

This new-found interest in corner shops is already being noticed by buyers and sellers of such premises. Three years ago, a corner shop making pounds 10,000 a year would have been sold for pounds 80,000. Today, the going rate is more likely to be pounds 130,000.

Garry Craft, managing director of Spar, a voluntary organisation which links 2,500 convenience stores, says that his members are understandably concerned about the move by Tesco and Sainsbury.

"These two companies have purchasing power like nobody else, so of course we think they will have an impact if they move into this market," he said. "It's already difficult for individuals to survive. About 60,000 individual shops have gone out of business in the past 10 years, but there are opportunities because people always need a shop for their top-up shopping.

"We think Spar shops can compete if we stress to people that we are essentially local shops. That means being friendly, being flexible, knowing our customers as well as possible."

Back in Loampit Vale, MrJeyakumar is pondering how much longer his business can survive. The last blow to his store was the opening of an Esso "snack and shop" store alongside the garage a few yards from his business.

His takings went down so markedly that he could no longer afford to employ his brother-in-law, who managed to find himself a job elsewhere ... stacking shelves in a Tesco supermarket.