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The new ethical supermarket that wants Sainsbury’s and Tesco’s customers

 
Ethical Supermarkets

Two sisters from Brighton want to recast the supermarket model to launch an ethical, sustainable supermarket with mass appeal. Photograph: Salem Krieger/Corbis

 

Powered by Guardian.co.ukThis article titled “The new ethical supermarket that wants Sainsbury’s and Tesco’s customers” was written by Flemmich Webb, for guardian.co.uk on Tuesday 16th July 2013 17.01 UTC

Supermarkets have not had a great year. The horse meat scandal has revealed a worrying lack of knowledge about where our food comes from and highlighted the baffling inefficiency and complexity of the global food supply chain.

Though supermarkets argue that overall they have been good for consumers by keeping food prices low and increasing choice, critics say this has often been at the expense of suppliers, who complain about ever-shrinking margins, the environment and crop diversity. The impacts of out-of-town supermarket developments on town centres have also come in for criticism.

So is it time to consider an alternative to, as some would see them, the shareholder-beholden, profit-driven, monolithic corporations that are today’s supermarkets? Amy and Ruth Anslow think it is. The Brighton-based sisters, 35 and 38 respectively, have spent the past two years creating a business plan for a new type of supermarket – ethical, sustainable and affordable, yes, but also one with a different corporate structure.

hiSbe (how it Should be), located in the heart of Brighton, is a community interest company (CIC) – a limited company, where profits are used for community benefit rather than private advantage. In hiSbe’s case, its social purpose is to give people access to food that’s more affordable, fairly sourced and more sustainable. “The profits go back into the business rather than make the shareholders rich,” says Amy. “It frees us up to trade in a different way, so we are not having to make a large surplus to support shareholders.”

Funding the supermarket has been innovative, too. The sisters raised £30,820 from online crowd-funding platform Buzzbnk. In return for donating money, supporters received the equivalent amount plus 20% in vouchers that they will be able to redeem in store once it opens in September. The money raised meant work could start this week on renovating the building – futuristic and technology based, apparently.

A further £60,000 has been raised in equity loans and a £15,000 social enterprise assist award. The target is £170,000 – they are trying to raise the rest from private investors and lenders and by selling store discount vouchers.

The store’s offer is based on eight principles: go local, choose seasonal, protect nature, support ethical, think welfare, save fish, end waste and avoid processed. Brands will be stocked as long as they are highly rated by the Ethical Consumer Index, which provides rankings of more than 40,000 companies, brands and products. “If it can be local, we will source it locally,” says Amy. “If it’s not local, then we will make sure it’s British. If we can’t get it from here, then we’ll make sure it’s fairly traded from abroad.”

hiSbe will also pay staff above the living wage and suppliers a fair price. However, an innovative structure and funding mechanism, underpinned by strong ethical principles, doesn’t guarantee customers and sales, which will be the decisive factors in hiSbe’s success or failure.

One of the criticisms of ethical stores is that they are expensive compared to regular supermarkets: the aisles are packed with the middle classes who are can afford to pay for their principles. Will hiSbe be any different?

“Yes,” says Amy. “hiSbe is aimed at everyday people with average incomes and everyday diets. We want to break with the perception that you have to have money to be able to afford good food.”

She says hiSbe will be able to do that because the CIC structure means dividends are low and other income streams – such as in-store food concession “pods” for hire – will be used to keep prices down.

Fraser McKevitt, a retail analyst for Kantar Worldpanel, says keeping prices low is key. “If you look at why people shop where they do, location and price dwarf any other considerations,” he says. “The main challenge is to be price competitive, but if they can be, and are in a specific location and do it well, there’s no reason why they can’t succeed.”

Succeeding is one thing, but whether they can ever operate on a scale to challenge supermarkets is another. As McKevitt points out, independent grocers make up just 2% of the market compared to the 75% of “the big four” and are always, therefore, going to be niche players.

Supermarkets have also themselves been offering “ethical” options to shoppers for a few years now (albeit as part of their offer, not necessarily integral to it). When contacted for comment on hiSbe, Sainsbury’s reeled off a list of its achievements, including that it is the largest retailer of RSPCA Freedom Food and MSC-certified seafood; none of its waste goes to landfill; and that in 1994, it was the first major supermarket to sell Fairtrade food.

But the sisters are ambitious. With a £950,000 turnover predicted for year one, they see the model as replicable, one that can be set up in any community that wants a hiSbe near them, using the same funding model.

“We are very serious about building a chain around this pilot store and creating a model for how supermarkets should be in the 21st century,” says Amy. “But we are realistic – people are still going to need to go to supermarkets to get those other things that they stock apart from food.

“Our intention is to give people an alternative so they can shop less exclusively at supermarkets. As we go over time, we hope that more and more we can become the competition.”

It’s a bold vision and no one can doubt the sisters’ commitment to it. After hiSbe opens in September, we’ll see if its recasting of the supermarket model is popular (and attractively priced) enough to make a business out of it and make a difference to how we shop.

 

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