The Real Costa Coffee: Stroud's economy and character will be hit

This week Costa Coffee opened in Stroud High Street in an area noted for it's unique character. Greens and other local businesses on the High Street had protested loudly - there was even a Citizen front page story with a picture of me and other protesters - but the development was approved by Stroud District Council.

It is clearly good news for shoppers and retailers that Stroud Town Centre is booming - but not every development should be welcomed with open arms. Costa Coffee falls into this category. There are several reasons why I and others believe this development is not good.

In economic terms developments like Costa threaten the long-term vitality of the Town. Costa is positioned right in the middle of four independently owned cafés that derive a significant portion of their business from the sale of coffee and snacks. Exactly the same market that Costa Coffee addresses. It is quite implausible that Stroud can support so many coffee shops in such a small area. As one letter writer said in the Stroud News and Journal: "The question is, once the froth has gone what will we be left with?"

A vibrant retail sector for a market town like Stroud will be a mix of locally owned businesses and national chains. However within this mix there must be both diversity and choice. Overloading a single sector, in this case, coffee shops, does nobody any favours and leads to some of the businesses failing. Indeed many would argue that Stroud's attraction is this area particularly is that it is different from other places and doesn't have a High Street the same as everywhere else.

Those in favour of deregulated commerce and free trade may see Costa opening as a good thing because the least efficient businesses are the ones that go bust. However the competition is far from fair.

Green party member, Dave Cockcroft writes:

"In the case of Costa Coffee the current phase of company growth is the creation of shareholder value by opening more branches. At present they are pushing into busy market towns. The profitability of individual outlets is, for the time being, less of a concern. In renting a large retail site in a prime location Costa Coffee is burdened with a very high rent. There is a limit to the amount of coffee Stroud shoppers can drink and with such high overheads it’s hard to see how this establishment can make a profit. No matter for the moment as they’ll be supported from company funds. Longer term however, depending on economic factors beyond any of our control, Costa Coffee is likely to trim the least profitable branches. National chains have no loyalty to Stroud only duty to their shareholders, they exist only to make money.

"So it’s hooray for now, we’ll be able to try unusually flavoured coffees and eat overpriced muffins. But imagine in a couple of years from now… two of the local cafés have gone out of business and a national retail downturn causes Costa Coffee to contract to its more profitable core business. Stroud is left with just two coffee shops where previously we had four. In the mean time most of the money spent at Costa has been sucked out of the local community into corporate coffers. Had that money been spent with independent local businesses it would have circulated within the local economy creating more value at every turn."

Much research supports this: local businesses are good for local jobs and local economies. Studies show that 50% of turnover from local retailers is returned to the local economy whereas large retail chains return as little as 5% to the local economy (i). Research also shows that if every person, tourist and business switched just 1 per cent of their current spending to local goods and services, local economies would net, on average an extra £52 million annually (ii).

Some on Stroud District Council seemed to half understand this - and have recently launched a 'Shop Local' campaign. This is excellent and there is also money to support independent retailers (iii) and a pioneering scheme for local painters and decorators to work in partnership to paint council homes. More good news.

Yet they still give planning permission to the Costa Coffee in Stroud and have pursued a supermarket for Dursley for over 15 years which has blighted other opportunities for regeneration there. Ironically it was the same week they launched the 'Shop Local' that they finally signed a deal with Sainsburys for the Dursley site. We know only too well that supermarkets lead to closures of local shops and take money out of communities. Waitrose in Stroud even goes to the length of forbidding customers to use their car park and shop in the town. Far from encouraging these dinosaurs, Stroud District Council should be more consistent in using its power to support our excellent independent retailers.

Today Costa was busy, but what alerted me to the fact that it was open was three separate Costa Coffee take-away cups lying in the car park, outside Sunshine and on the side of the road near the police station. It was refreshing to over hear several people in the street complaining loudly about this "red monster" that has landed in our midst - one woman even trying to explain to her children why they wouldn't be going there.

I also heard last week that they were already trying to put chairs and tables out in the Shambles market area. Cllr. John Marjoram was quick to make them remove them - reminding them of their planning permission which I understand specifically prevented them from using this area for their tables. We will need to keep an eye on them!

Enough writing for now - it is such a beautiful sunny day that I should really be outside.

Notes:

(i) All Party Parliamentary Small Shops Group report February 2006 (ii) New Economics Foundation
(iii) Independent retailers in Stroud can sign up for a 12-month business support package worth more than £1,000 - for only £100. It includes one-to-one mentoring and advice covering a host of essentials for running a successful enterprise. Many of the 15 local retailers who have already joined have praised the scheme for giving them the confidence and skills they needed to make their businesses more successful and for the practical and professional support offered. Contact: Rob Thomas 01242 863863 The Council also offers independent town centre retailers grants to improve the appearance of their premises, or to restore the building’s original historic features. Contact: Tina Emsley 754301