Independent food retailers account for just 5% of total food sales in Britain. Indie retailers passionately want to grow that share, not least because the dominant and highly centralised supermarket retail model is so intrinsically unsustainable. But how? That was the question up for discussion at an absorbing and candid conversation at last week’s Oxford Real Farming Conference (ORFC).
With the theme Indie Food Retail: Challenges, Learnings and Success Stories, the session brought together three retailers (Phil Haughton, Better Food in Bristol; Dan Monks, Unicorn Grocery in Manchester; Josh Smith, Norfolk-based veg box operator Goodery) to talk candidly and insightfully about the both the challenges and the opportunities for indie food retail.
It’s tough out there
First there was acknowledgement from session chair Julia Kirby-Smith (Better Food Traders) that the climate for all independent retailers remains challenging.
Julia Kirby-Smith (JK): It’s tough for indie retail generally. So, what’s been your own experience?
Phil Haughton (PH): Look, it’s been tougher than ever for independents since the costs of living crisis and economic downturn. We’ve all been hit by rising energy costs. And while you might expect rates and rents to travel in line with an economic downturn, that’s not been the case. Landlords have been pushing them up and councils are seriously strapped for cash. Staff costs are a challenge too. We committed ourselves to being part of the real living wage movement. It took us seven years to get there – because it’s so tough to get the books to add up. We’ve seen probably a 27% increase in the wage bill in just over two years.
“WE’VE SEEN PROBABLY A 27% INCREASE IN THE WAGE BILL IN JUST OVER TWO YEARS. BUT YOU CAN’T JUST ADD THAT TO THE SHELF-EDGE PRICE. YOU’VE GOT TO BE REALLY CREATIVE, AND YOU DO NEED CUT COSTS. BUT YOU ALSO HAVE TO BE CAREFUL THAT YOU DON’T GET INTO A SPIRAL OF CUT, CUT, CUT”
But you can’t just add that to the shelf-edge price. You’ve got to be really creative, and you do need cut costs. But you also have to be careful that you don’t get into a spiral of cut, cut, cut. So we’ve tried to be really smart in the way that we move forward – to be the leaders that we are, and to set the agenda. And that’s not easy because we’re also having to follow what consumers are used to, and that’s an agenda set by supermarkets on everything from price to packaging, on produce – it’s mostly washed, sanitised and plastic-packed – and promotions. I heard recently that Waitrose has 37% of its product range on offer at anyone time. So, our response has been to ask how do we offer value that’s not just about cost. Our theme for 2025 is less as more.
Josh Smith (JS): I’d echo what Phil has said, in that the change has all been one way – upwards. Wages are up, horticultural cost have experienced massive inflation. And while inflation has come down, the prices haven’t come down. So the produce that we’re buying is that much more expensive. What do we do? Shrink the boxes? We already try to offer a range of box sizes at different values.
We also thought we’d done something financially smart, as well more sustainable, when we switched to electric delivery vehicles. But frankly it would be cheaper now to be driving diesels.
Dan Monks (DM): Very saw a very noticeable downturn in 2022, with a peak in inflation in March 2022. We decided to simplify things. We consolidated ranges, let some things go where we weren’t achieving the margins we need. Anything that took extra time – we binned it. Yes, we stripped things back. And we didn’t increase our wages for 18 months, and that was tough – especially as we are at the lower end of the pay scale.
We took some really prudent decisions and now fortunately we’ve now come out the other side. We’ve had three wage increases since then. We’re a co-op and we have a flat rate of pay. We’re currently paid £16 per hour. And as a business, we are pretty careful with their money, almost parsimonious about how we spend it. We don’t really treat it as our own, rather as something we’re custodians of. We’re not tight, we do invest in ourselves in the community! We lost some staff after Covid, but we do have really loyal support and we see our work as part of a whole lifestyle.
Staff retention challenge
JK: Specifically, how much of a challenge is staff retention?
PH: It’s been really quite volatile. In Bristol, we attract a lot of what I would call thinking people, who really like what we do. But it’s not a career job for them – it’s more learning path. And we accept that. But we have lost people, people who have sometimes said we just can’t afford to live in Bristol anymore. But I would say that we now have the best team we’ve ever had now. That applies both at store leadership level and cross-company level.
Post-Covid recovery
JK: Where would you say you are now compared to your pre-covid situation as retailers. How are you numbers looking?
JS: We benefited during Covid from the fact that people couldn’t get out to supermarkets. Personal health was on everybody’s minds, environmental and planetary health too. Our veg boxes were doing incredibly well while the world seemed to be collapsing around us! And then the world opened up again, and we thought we’ll continue to do really well because people love what we do. But it turned out that they also really do like supermarkets.
Our business is also seasonal, but not in the sense that you might be expecting. I mean that we sell less boxes during the summer months. Because, if we’re honest about it, the type of people are able to afford an organic veg box are quite often the same people who can afford to get away for four weeks in the summer. But the numbers did eventually get back to normal, or pre-Covid normal. And since then we’ve been seeing some steady growth.
DS: We’re almost back to the pre-Covid level of spend and football. But we’ve had to maintain a huge focus on affordability – not least because we have a Morrisons, Tesco and Lidl all within walking distance from us.
We really focus on staple ingredients. We want to avoid the trap of being associated with luxury and luxury food, even if some people still do associate us with just that! We make sure we’re really competitive on organic, and we’ll take a hit to do that. That helps to generate trust, which equals long-term loyalty. But it can all be quite nerve racking if the level of margin doesn’t meet overall needs. We put a blackboard up with our pricing on. Supermarkets don’t tell you when they’re about to put up their produce.
Reflections on price…and love
JK: It’s almost possible for indies to win on price. So how should we be thinking about price? What guides you own thinking?
PH: It’s a bit of a movable feast. We play the margins up and down, and we will do price matching or price awareness every week on certain lines. But just to go back to the customer numbers and spend in 2021 and 2022. Psychologically, it’s quite interesting to think what’s happened in this country. When we were coming out of Covid we were taught very well to be fearful, to withdraw. And when the media latched on the frenzy over energy and cost of living crisis, they really had a field day, they loved it. So I think we were then primed to respond to that in quite a fearful way, and to withdraw. And that’s part of the reason why price became king, so hard and so fast. So, I think that as we recover – and I’m not sure that is the right word – we have less headroom for manoeuvre when it comes to price.
I think we have to ask what we trying to achieve with pricing. For a while we were really chasing prices. You know, we were going and buying ten palettes of oat milk, say, to get really low prices. But it leaves you asking, where is the value in that and the other important components of what we stand for – like love. And love is something that we don’t overtly bring into retail all that much, but to me it is actually right at the heart of what we’re about in terms of differential, in terms of value. We’re compassionate, we’re nurturing. We want to give back to farmers, we want to nourish everybody in the food chain. And then if you look at what’s happening in the conglomerate world, they’re absolutely not giving people permission to come to work in a loving sense, it’s ‘I want to screw everything I can out of you’. We live in a society where what I call the conglomerate hoover, is ever more efficient and ever more extractive and more dominant in terms of its power base.
So, I think we need to push all of that ridiculousness back, and inspire people think about living their lives differently. Otherwise you end up in never-ending chase to the bottom.
DS: Food is such an emotive subject. You mentioned love, Phil. We say we want people to experience joy when they shop with us.
Understanding why people shop in independents
JK: What do you think it is that makes independent food retailers appeal to a certain type of shopper?
PH: People shop with us for different reasons – presentation, service, experience. I think you have to be a bit careful about segmenting it. There’s lots of motivating factors. Convenience is one. For some people knowing that they’ll be able to pick milk and bread on way home is enough. Offering a good choice in special diet might be another. And some people just really identify with the environment and the culture. They immediately get the love. You know, ‘I feel better already, I’m with people who care’.
Look and feel is really vital. When we tell you this is a squash that was grown on the community farm 5 miles away – it’s a whole different story, a different proposition.
We’ve learnt to keep our messaging positive now. We get so much mileage from smiling at people and showing them what we’re doing.
DS: Because we don’t want to be seen as a particular type of store, we never use the word vegan to describe Unicorn. But we are a 100% vegan retailer.
Cafés – the great leveller
JK: You have cafés in your stores and cook on the premises. How does that work for you.
Yes we do. When we opened what we call our mothership shop in 2001 we were transitioning from just providing veg boxes into full retail. The store was in a fairly down at heel area. And there was this perception that ‘they are the organic people, they are expensive’. But when we opened the café it attracted people in who, I think, just told themselves ‘I’m just coming in for a coffee’. But when they were in the could see what we were about.
Organic for all?
JK: New research from ORC and UK Organic has shown that organic consumers are not actually the stereotypical ones that we often hear about. The most committed people, those regularly buying organic, are actually more likely to be those on low to middle income, more likely to in rented accommodation or single or have young families. They’re price sensitive, but it’s not their main motivator always. How do you think we can move towards greater accessibility, ‘organic for all’?
DS: Organic doesn’t have to cost that much more. Really, and it’s been said lots of times before, organic is the old conventional. It’s where we’ve come from. There definitely is an organic premium that’s whacked on as a commodified value at the point of exchange which is not necessarily reflective of a higher cost of producing organic. I think there is a moral imperative about access, and who can afford this. And that’s what drives our mission around affordability. We never have special offers. Our whole proposition is that we always try to price as keenly as possible.
I think the idea that organic is elitist or expensive is based on an assumption made by mainly wealthy people, who don’t have to look at the prices of the food that they buy.
JS: We have to be realistic about our prices. We can’t reduce our energy prices, we can’t reduce what we’re paying people for produce – the basic foundational costs are fixed, or going up. So, you either go out of business and everyone you serve loses out. Or you just add 10% on. Which is what we did, but we said with 5% of that we’ll increase the value of what’s going into the box.
But actually when we did put our veg box prices up by 10% we gained some customers. I think that’s because our customers are more concerned about the experience they get – when they open their box. Presentation is really important with veg boxes. You can put a veg box together for £10 and it can look rubbish. But a well designed box, that tells the story of that produce, looks really great. Although it does seem strange though sometimes to realise that you’re in the business of storytelling.
Some final thoughts on the big picture
JK: What do you see as the big picture for independent for retailing. What would you like to see, what policy support would make a real difference?
PH: There is a great opportunity to grow the model that we have developed – small independent retailers that are about love, care and compassion. That’s the common thing. I want to see thousands of stores like ours and yours all around the country – we really need it.
“THERE IS A GREAT OPPORTUNITY TO GROW THE MODEL THAT WE HAVE DEVELOPED – SMALL INDEPENDENT RETAILERS THAT ARE ABOUT LOVE, CARE AND COMPASSION. THAT’S THE COMMON THING. I WANT TO SEE THOUSANDS OF STORES LIKE OURS AND YOURS ALL AROUND THE COUNTRY – WE REALLY NEED IT”
Finding ways of getting younger people onto our high streets is really important. But at the moment that’s a challenge. It’s generally very difficult, very rocky for Indies. It’s difficult to get people to take the risk and join the movement. We need to be in a materially different place and to create a mechanism for real change. Perhaps we should look to Europe for ideas. Look at Biocoop in France (760 stores) for example, which positions itself as ‘organic militants’. They’ve got a lot to say that I could really agree with. Could we do that here?
JS: I think there’s a really big cultural dimension to this. If we were purely transactional with our suppliers, we wouldn’t be here today. if we were purely transactional with our customers, we wouldn’t be here today. We want to make everything we do to be relational. If we can create a culture as a nation to be more relational than transactional, that would bring about massive positive change.
Main image: Hugh Warwick
