Saturday 10 January 2009

Small towns and the loss of big players

In the withering economic and trading climate on the High Street it is worth stopping to consider the impact that the closure of key national brands will have upon small market towns and other secondary shopping streets in the UK.

Certainly there is evidence that the most notable of the recent closures, Woolworths, will have a measurable impact in these places; what is less certain is whether on balance the effect will be for good or ill upon the SME retailer population. On the face of it there is good reason to believe that the disappearance of the likes of Woolies from rural market town settings would be a nail in the coffin of the retail offer in those towns - where else can locals get their music and their computer games, or perhaps schoolwear or haberdashery? The logic of this position is that Woolies, and firms in the same position (often Boots are in a similar role as a national brand in an otherwise purely local retail offer) will drive footfall and attract numbers of residents within the hinterland of that particular town to shop locally, rather than embark on an expedition to the more distant regional hub.

There is, of course, a counter-argument; this being that the very presence of large purchasing firms directly suppress the development of certain local markets, because they were using loss-leaders and other means of exercising their relatively strong purchasing power. This has certainly been an oft used argument when describing the activities of the main players in the food retailing sector. The removal, therefore, of the offending large retailer thus frees up the local market for the entrepreneur.

There is clearly a large space between these two contradictory positions and neither may turn out to be entirely correct nor entirely wrong. It will be interesting to measure how these towns progress from this point. If I were advising the local planning authority I would strongly advise that they based their planning opinion on the basis of a loss of footfall with the attendant need to bolster local regulation and planning to mitigate the worst effects of the current downturn with every tool and weapon available to that local authority.

Smaller businesses in these areas need to be reflecting upon the fast changing markets that are open to them; in these times of 'downturn' there may be useful opportunities to refocus the business and to gain new markets previously denied them.

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