Nicholas Goodchild

Historic and Pared Down

Local Capitalism

19 January 2012 by Nicholas in Current Events

Around me there are a lot of takeaways, clothes and cloth shops and jewellers. There used to be lots of green grocers but they went out of business, perhaps because of the high level of competition. There are still a few though. Now, obviously, I don’t particularly understand how retail works. Because, when I see a business doing well in a location, I think “I wonder what would be a complementary business to that or would benefit from the passing trade that business brings” rather than “I must copy their business exactly and open right next door to them.”

It really confuses me. Umpteen cloth shops have gone bust over the past few years and at least as many more have tried opening up without learning their lesson: it is like every potential shopkeeper sees the one shop that has succeeded rather than the six that tried competing with it and failed. I know that, to be an entrepreneur, you have to believe that you have skills, abilities or ideas beyond everyone else’s, but surely you have to realise that there is a saturation point in any market?

The most recent of the cloth shops to go bust is one of the larger ones, presumably with reasonable buying power to go with its overheads. If they can’t make money with higher margins, a small shop probably will struggle even more with its lower margins. In the past few months alone there has been 3 cloth shops gone bust on the same road, and it is under half a mile long. The existing businesses are entrenched and there is precious little to suggest that their customers will all abandon them in the long term. More sensible might be to work out something that works alongside the cloth shops such as a shop selling sewing machines and patterns, specialising in crafting and household supplies or maybe something dedicated to linens and soft furnishings.

It isn’t just the cloth and clothing shops that have this problem. It is massively apparent in the local fast food places. There are premises that open as a fast food shop, go out of business, open as a new fast food place and continue in the same vein indefinitely. It is as if some greater force has designed that that premises must forever be a food establishment, regardless of the fact that it will never turn a profit. Worse still, all of the fast food places sell exactly the same thing at the same price. They all do pizzas and offer the same prices on their burgers. In a race to the bottom the only people who survive are those with the greatest number of sales with the most margin. Which would be the one vendor that forms part of a chain rather than the smaller competitors trying to go it alone. Personally I would try to compete on something like price or diversity, but this concept seems alien.

Although there aren’t many empty businesses local to me, there is precious little diversity. It is not so much a thriving shopping area as a place to find cheap cloth while gambling on an identitically priced burger. And, should I not be successful today, I can repeat the same process in a couple of months where most of the shops have changed but none of the products they sell have.