Case study: re-opening
the Little Shop at Winchelsea
Why the old business closed
The Little Shop is the village general store
in Winchelsea in East Sussex. It is the only shop in Winchelsea.
Like many other village shops, it went through a prolonged
period of decline driven by the usual external forces - changing
shopping patterns, competition from supermarkets and increasing
red tape - as well as problems peculiar to the Little Shop
and other small shops - poor management, lack of retailing
skills and very small size (the shop floor is just under 200
square foot).
Falling turnover led to under-investment
in stock. Under-investment in stock in turn reduced turnover,
which in turn reduced investment and so on. This vicious circle
was compounded by the failure of the then freeholder to maintain
the fabric of the building, which became dingy and depressing
for both customers and shopkeepers.
In 1997, the last resident shopkeeper gave
up the struggle. Fortunately, the lease was taken up by a
retired resident, Mr Tony Jasper, who kept the shop open,
but for mornings only. However, in September 2001, a fire
closed the shop and it seemed unlikely that it would re-open.
Taking up the challenge
Shortly before the fire in the shop, the
freeholder died and the freehold on the building passed to
the National Trust, which decided to sell the building. The
first challenge facing Winchelsea was therefore to persuade
the Trust to sell the building to someone willing to keep
the shop open rather than to go for the highest offer, possibly
from a developer or someone looking for a second home in Winchelsea.
Residents led by the late Miss Mary Culwick succeeded in coming
up with a solution acceptable to the Trust, who sold the freehold
to Mr Jasper with a covenant attached to the sale aimed at
reducing the financial incentive of future freeholders to
resell the premises for residential use.
When fire closed the shop in September 2001,
the challenge became one of re-opening the business as soon
as possible. In order to maintain some business continuity
and customer loyalty in the interim, a group of residents
volunteered to sell bread, milk and newspapers from alternative
premises. As it turned out, this action kept open the shop’s
account with the local newspaper wholesaler. Once closed,
it would have been difficult to re-open, which would have
been a major problem: newspapers and magazines are essential
to the business, both in terms of turnover and getting customers
into the shop. The interim sales also generated money which
covered some of the initial costs of re-opening the shop.
While the shop was closed, an ad hoc committee
of residents was formed and a decision made to re-open the
shop as a community-owned business. Contact was made with
the Retail Adviser at Action
in Rural Sussex (AiRS), Alan Wyle, who put residents in
touch with the Village Retail
Services Alliance (ViRSA).
ViRSA provided a comparison of the alternative
ways of constituting a community-owned business. It was decided
to opt for an Industrial and Provident Society (IPS), which
is a not-for-profit, limited liability company, in which each
investor may hold one share and exercise one vote at its AGM.
ViRSA was also able to provide a model set of rules accepted
by the Financial Services Authority (FSA), which is the regulatory
authority for IPS’s. ViRSA also assisted in the actual
registration. This accelerated the process and avoided the
cost of a solicitor.
It was only at this stage that a public
meeting was called. At this meeting, the idea of an IPS was
proposed. The social and business cases for re-opening the
shop were put to the meeting. The social case argued the importance
of the shop to the community. On the business side, it was
impossible to offer realistic financial projections for the
new business given the dramatic change in the circumstances
following the fire. Instead, a break-even level for turnover
was estimated in order to assess the viability of the business.
Residents were then asked to make a commitment
in principle to become shareholders and to also consider making
loans or donations. Application forms were circulated after
the meeting in which residents were asked to indicate how
much they would be willing to lend or donate. A Management
Committee was elected at the meeting.
Holding the public meeting until a firm
proposal could be made about the legal structure of the business
proved to be the best course of action as it gave confidence
to residents that the problem was being addressed in a professional
manner. The quality of the financial presentation was also
vital. There is no doubt that some residents who were fundamentally
sceptical about the viability of the shop were persuaded to
support the project as a gesture of support for the serious
effort being out into it.
It was only after commitments had been gathered
that a prospectus was produced. Given the cost of printing
the prospectus, copies were distributed only to those residents
who had made commitments. The professional content of the
prospectus did much to reassure residents and played a large
part in encouraging a generous response. In due course, capital
of almost £15,000 was committed by residents
Having achieved such an encouraging response
from residents, an application was made to the Countryside
Agency for a grant of £18,600 under the Vital Villages
scheme. This was successful. The prospectus was a key element
of the application to the Countryside Agency.
Regrettably, an approach for support to
Icklesham Parish Council was ignored, reflecting the problem
of having a Parish composed of four separate villages and
the personal antagonism of some Parish Councillors to one
of the organisers.
In January 2002, the Winchelsea Little Shop
Association Ltd was registered with the FSA.
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