The economic benefits of small shops
Town & Country Planning, January 2008
“No, you don’t understand! To save retail competition, we have to destroy it!”
That, to paraphrase a little appears to be the latest position of the Competition Commission on the retail market. The solution to the monopolistic dominance of the Big Four supermarkets, so damaging to vulnerable local economies, is to allow them to let rip.
This would be a wholly depression prospect, were it not for the fact that, as the Commission chunters on, there does seem to be a quiet revolution in mood about small shops, local economies and the local impoverishment an dependence brought by the likes of Tesco and Asda.
For one thing, the term ‘clone town’ seems to have entered the language. There appears to be all-party concern that something is very badly wrong. Even the Evening Standard has run their own Save Our Small Shops Campaign for more than a year.
To top it all, the Sustainable Communities Bill, which appears to give local authorities powers to tackle the clone town phenomenon – it isn’t clear yet whether they will dare use them – has now been signed into law.
Beyond all of that, there appears also to be a change of mood happening among the big landlords, and this is particularly significant, because it has been the unsustainable rent rises by landlords which has been the other driver of the clone town phenomenon.
I know this because of one of those small seminars conducted on Chatham House Rules, run in this case by my own New Economics Foundation and the consultancy Urb-ed, which managed to get landlords, retailers and local authorities all in the same room together for a morning, and one rather surprising thing emerged.
It appears that the biggest landlords have become convinced that having small, distinctive local shops nearby tends to add up to five per cent to the value of a property portfolio. This confirms similar recent findings by CABE.
What this means is that landlords which own whole high streets, and the surrounding property, are acting on the findings: hence the shift in policy towards local shops by the Howard de Walden Estate in Marylebone High Street and by the Grosvenor Estate in Mount Street.
The problem is that few high streets to have this uniform ownership, and it is difficult then for a whole gaggle of landlords to agree to do what is necessary: keep the rents of some shops down to make sure there is, for example, a good local butcher or baker.
Worse, local authorities like Islington have been enthusiastically selling off their property portfolios – losing themselves the one lever they needed to create thriving high streets.
Which all seems a great pity. Because landlords find it hard to work together for the common good, their property portfolios will be worth less than they could be.
David Boyle is the author of Authenticity and a fellow of the New Economics Foundation. www.david-boyle.co.uk
