Sunday, October 18, 2009

The need for a party of small businesses

In the last couple of weeks, I've had a problem buying a couple of fairly ordinary things. Specifically, a very standard part that would fit on any car and a very standard external door for my house.

In both cases, I asked people who knew where I'd be likely to get them, and in both cases I was told that - until recently - there were one or two local shops where I'd have found what I wanted.

In both cases, I now had a simple choice - with the car part, the only shop within miles was the Halfords on a local retail park about two miles away. I go. The thing I need is out of stock. I make a few phone calls to people who know where to go and my only other option is another Halfords on another retail park about five miles away - somewhere I'd never been before. I go there (this is now approaching three hours to buy a very standard car-part) and luckily, they are in stock and - admittedly - it is very keenly priced.

We used to have a really good friendly and helpful local small retailer, but they closed down in the last year leaving Halfords with total control of this retail market.

With the door, it's a similar choice. Either B&Q or Wickes. And the standard model that Wickes provide for this door had something about it I didn't want (opaque rather than clear glass). So B&Q it is then - no option. After all, you can't go into Wickes and say 'take that glass out and replace it with the other type for me, will you?'

I call numbers in the catalogue for local shops and don't get answers. Then I call the head office number and they tell me the door I want is in stock at one of the local shops. I go to that store and they tell me they've never stocked it. So I go to a few other local branches of B&Q armed with a catalogue. In both cases, the items are out of stock - though in both cases, it took ages to find this out because no-one who worked in these shops had much of a clue about anything that they sold.

At the moment, I'm struggling to work out how I'm actually going to get this door without spending a day driving around on the probably futile task of looking on the shelves of each branch in a 15 mile radius myself. I live in one of the most built-up areas of the country. I'd understand if I lived in Little Piddling and had to go all the way to the big town to get it.

All of this is anecdotal, I know. But the ability of these companies to keenly price objects has enabled them to shut down all of their smaller competitors. They do this and then drive down every other element of their service to the minimum offering low staff numbers and expertise, milking out the profits for their shareholders.

Now I'm no economist, and I'm not a regulator either. But it seems to me that both of these examples reveal a clear monopoly situation. I'm told that we regulate to prevent monopoly situations from arising, and I wonder why the small business lobby are so quiet about this?

I suspect that it's a combination of two things:
  1. An outdated political cleavage in which small businesses haven't adapted and looked for a party that is more likely to represent their interests. For some reason, my limited experience of small business people is that they imagine that the Tories are their party.
  2. The importance of pressure group politics and the need to ensure that well-funded lobbies aren't the only voices at the table. The Federation of Small Businesses don't seem to be using their website to complain about the free reign large retailers are given and I wonder if this is because they're badly funded or managed?
It's a sign of how political parties have failed. They now almost exclusively organise themselves to meet the needs of established well-funded lobbies rather than those that are underrepresented in the national debate.

As far as I can see, though, there is a gap in the market for a political party to promote itself as the party of small business.


David Duff said...

As it happens I am something of an expert on doors! Not, mind you, that I would necessarily hang one the right way up - I use the blunt end of screw-drivers to hammer in nails! When I first joined my amateur theatre group, about 30 years ago in the, er, 'golden age' of small shops, we owned 4 doors for use in our sets. These same doors appeared year after year in different colours because it was simply too expensive to replace them. Then I came to direct a play myself and I really wanted something different. At that point I discovered B&Q - it was love at first sight! I simply could not believe how 'give away' cheap doors had become. And smart, glazed, panelled doors, too.

The 'problem' you describe has occurred across all fields of commerce. Because, happily, we live in a mostly free economic market place, we the people (to quote a phrase) used our liberty to choose, and overwhelmingly we chose the likes of B&Q and their fantastic prices.

There's a lesson in there somewhere . . .

Paulie said...

Sure. But there's only one company able to meet a need. They are exploiting a monopoly position to provide a level of service below that which they would do if they had competition.

Back in the day when you discovered B&Q you had the option - service v price. Now you don't.

You also had the option of being able to walk to a retailer. Today you don't - a big issue for some people.

As it happens, I have an almost faith-based notion that we may not be far away from the point at which the Internet solves this problem with a paradigm-shift similar to the one that 'Web 2.0' is wreaking on the notion of intellectual property.

But it's a bit of a tragedy, isn't it, that setting up a small business - low level entrepreneurial activity - is more of a fool's errand than it ever has been?

Mikeovswinton said...

When I needed a particular size of screw I went to a B&Q. They didn't stock it, but a guy helpfully pointed out that there was a small, old fashioned iron mongers a few streets away. So I went and they were more than happy to sell me the screws at a very keen price. But there are very few iron mongers left in Manchester. Funnily enough that saturday mroning, the one I went to was heaving with punters.

Dorothea said...

Interesting post, and very good points. Our political parties have failed, and the corporations have got ever stronger. A Unitarian Universalist magazine explains the history of one of the major drivers (corporate personhood) underpinning their power in the US, and it's not so very different in the UK, stm.

"Just how powerful have corporations become? Scale is a telling measure. The biggest ones are so big that in 2001 fifty-three of the world's hundred largest economies were corporations and only forty-seven were nations. For example, the annual sales of Wal-Mart that year exceeded the gross domestic product of Sweden. And corporations are growing: Five years earlier, only fifty-one of the planet's biggest economies were corporations; since then corporate expansion crowded two more nations out of the Top 100 ..."

"Corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed." Abraham Lincoln.