The Two Butchers – A Parable About Protectionism, SMEs and Public Procurement

Continuing our best of 2017 round-up; this was originally published in three installments back in May. Reading this again, it might actually be the best thing I wrote all year. 

Once upon a time, there were two small towns out in the countryside, about 5 miles apart, Camborough and Farnberley. Each was home to about 10,000 citizens, and had a reasonable range of shops, pubs, cafes and other amenities clustered around their high streets and picturesque market places. The nearest big city was some 30 miles away.

Then, one day, the news broke; planning permission had been granted for a new supermarket, exactly half way between the towns. Some were excited at the prospect of more choice and part-time jobs for the teenagers of the area; others worried about the future of their local shops, mainly small, independent traders. Two years later, the supermarket opened; and very impressive it was too, with a café, a petrol station, a fresh meat counter …

But it wasn’t long until the effects started to be seen in the two high streets. Sales for some of the shops dropped immediately, and it wasn’t long before the first casualty – a small fruit and vegetable shop in Farnberley – closed its doors forever. It could not compete with the supermarket’s huge range of good quality fresh produce, not to mention the easy car parking for shoppers with heavy bags.

Now it so happened that each town had a butcher’s shop, run by two families who had been in their respective settlements for many generation of butchering – indeed, each had occupied the same premises for at least the last 50 years. Soon, both saw their sales starting to be affected by the supermarket. Family meetings were called.

In Farnberley, Charles Jones, his wife Mary and two sons who also worked in the business sat down. “It’s not fair” said Mary. “The supermarket buys in bulk, we can’t compete”. But after some discussion, the family hatched a plan to protect their business.

The next day, Charles arranged a meeting with the Mayor of the town, who was also leader of the town council, and an old family friend. Charles explained their dilemma. “We are worried that the town will be left without a butcher's shop. You wouldn’t want that, would you? Not everyone can get to the supermarket – how will the old, the infirm get the meat they want to buy if we go”?

The mayor looked worried. Jones has always been a good supporter of the town and indeed of the political party that controlled the council. But, Jones then said, he had an idea. What if the council agreed to give them the contract for all the meat that the council bought for their office canteen, for the two schools in the town, the local cottage hospital and so on? And perhaps councillors and council workers would sign a commitment to spend maybe £5 a week each in Jones’ shop?

“So if we get £50,000 a year guaranteed contract, plus a pledge from 200 people for £5 a week minimum each over the year, that gives us revenues of £100K. Of course we will sell more on top of that, but that would be enough to keep us afloat”.  The idea was put to the council meeting, and it was agreed that this was an excellent and creative way to support local business and make sure Farnberley kept its much-loved butchers.

Over in Camborough, the Wilson family took a different approach. Martin and Pam and their two daughters sat down to discuss the problem. “Right”, said Pam. “This is war, this is survival. It is us versus the supermarket. What do we have to do to make sure we win? What can we do that makes us better than the supermarket”?  Soon, the ideas were coming from all four family members.

“Provenance - we know where every piece of meat we sell comes from – we can name every farmer, and most are local. We should make more of that”.

“We can prepare cuts the way we know our regular customers want them – or get special products in. If someone wants a brace of partridge next week, we can do that”.

“We’re actually cheaper than the supermarket on a lot of items – we need to point that out to customers”.

“We’re nicer people! We can give amazing service  - what about a “joke of the day” that we tell to every customer”?

“Could we open up the back storage room, turn it into a cookery demonstration area – then once a month we put on a free demo for customers?”

“We do supply some caterers, but we could work harder at helping them, perhaps do some preparatory work that they do themselves at the moment”.

At the end of the meeting, the family had an agreed list of ten initiatives that they would start immediately, and ten more in reserve.

“Oh yes, and we should keep bidding for the meat supply contracts to the local councils of course”, added Martin.

The Wilson’s started putting their “supermarket defence” plans into action. One idea on the list was looking to grow their work supplying local schools, council offices and other public sector customers. So, a few weeks later, Martin Wilson called the chief buyer at Farnberley council.

“I just wondered when your meat supply contract was coming up for tender”?

There was a pause and an embarrassed cough.

“Um, we’re not actually putting it out to tender this year. Jones, our local firm of butchers, did a pretty good job last time on the meat supply, so we’ve just given them the work again. For the next three years actually”.

“But I hoped we would at least have the chance to have a go”, said Martin. “We’ve got some great ideas about how we can give you better service and value this time”.

“Sorry. It wasn’t my decision. I’m just the buyer. This came from above”.

Furious, Martin called his own local councillor in Camborough and told him what had happened.

“Right”, said the councillor. “We’ll make sure you get the Camborough council contract anyway, Martin. If that’s the way Farnberley want it… two can play at that game”

Martin was calmer now, and he interrupted.

“Hang on. I know I was complaining – and I still think this is unfair . But when I think about it … no, I don’t want you to do that. I want you to give us a chance, so please run a competition, but we should win it on our own merits. Look, if we can’t win the contract to supply our own town, then we can’t be much good, can we? We’ve got some advantages in terms of transport costs anyway, so really, we should be able to win that”.

Sure enough, that summer Camborough ran a tender and the Wilsons won it comfortably. Meanwhile, over in Farnberley, all was going well too. Jones supplied good quality product to the council, and the 50 or so local people who had committed to the regular scheme were happy.

But it wasn’t long before the Farnberley buyer noticed something. The prices were creeping up – he checked, and yes, chicken breasts were £5 a kilo last month, now it was £5.50. So he decided to leave the office early one day and pop round to see Jones on his way home. When he arrived at the shop at 4pm, he was surprised to see Jones starting to close up the shop.

“Off home already”, he asked?

“Yes, well, it was a pretty quiet day. Sales are still down you know, that supermarket has really hurt us. But thanks to our deal with you we’re staying afloat”.

“You didn’t win the contract to supply Camborough, I see”

“No, we didn’t bother bidding actually. Lots of forms to fill in, all this stuff about health and safety and social value. Couldn’t be bothered really. One of my lads is spending more time with his guitar, writing songs, so we’re a bit short-staffed – but he reckons he might be the next Ed Sheeran, whoever he is”.

“So, I’ve noticed some of the prices you charge us have risen. Why’s that”?

“It’s the market really. Feed prices are up, and oil, so pressure is on the meat producers. They pass it on to us, you know, and we have to pass it on to our customer unfortunately ”.

The buyer frowned. “Well, yes, but couldn’t you look for different sources, keep the pressure on your own suppliers”?

Jones looked blank. “No, we don’t really do that. Anyway, as I said, our sales are down, so we have to spread the overheads over less volume, so we have had to put a couple of percent onto your bills to cover that”.

“Well, we can’t just accept anything you throw at us, you know”.

“Don’t worry, that should be it for the next few months anyway. Now, can I give you a few sausages to take home for dinner…”?

18 months passed and in Farnberley, the mutterings had grown louder and louder, from Councillors and others. Not only were the prices in the Jones’ shop 10% higher than a year before, but service to their institutional and corporate customers like the council had become unreliable.

Some of the 50 individual locals had pulled out from the commitment scheme, complaining that Jones just wasn’t offering a good choice of products any longer. “They’ve got complacent, that’s the problem,” said the buyer at the Council. But still some worried that the town would lose its last butcher if they didn’t keep supporting the business.

Meanwhile, over in Camborough, not all of the Wilson family’s ideas had worked, but the cookery demonstrations had proved a huge hit, as had daughter Victoria’s homemade “eccentric sausages” – including vegetarian varieties. Rhubarb and ginger flavour, anyone? Indeed, after she was featured on the local BBC TV news one night, she had gathered quite a fan-club and even a Twitter following. Her sister joked that clearly she was going to be “the next Nigella”.

Soon after that, when their younger daughter went off to university, the business was doing well enough to take on two apprentices – which was good for local employment as well, as Martin pointed out in an interview with the local (now online) newspaper.

“We realised we weren’t just competing with the supermarket meat counter – we were competing with people buying ready meals or take-aways”, he said.  “And of course firms from all over the place who might want to supply our local hospital, schools and so on. But we can’t just compete on price on everything – we had to think about innovation, how we can be different and win on other things, like our emphasis on service and on the provenance of our products. And the sausages of course”!

Shortly after that, following an unhappy incident of food-poisoning in the local school, the Farnberley council lost patience and announced that they would be putting their meat contract out to tender given the issues they were having with Jones. To no-one’s surprise, Wilsons won the contract, and six months later, Charles Jones put his shop on the market.

Many in Farnberley thought it would become another take-away, but that was not to be. In fact, residents were delighted when two months later, the shop re-opened – Wilson and Daughters, as it was now called, had their second branch, which proved to be just as successful as the first. And as Martin said, “who knows - one day Vicky might be running a business with a family butcher in a hundred towns across the country. And everybody will be eating our rhubarb sausages!”

And the four morals of our story are:

  • Competition is good for citizens, taxpayers and consumers
  • Successful innovation is the only guaranteed way for businesses to survive and thrive
  • Protectionist actions rarely help the consumer or the taxpayer – and often don’t even help the direct beneficiaries in the long-term
  • And if you do have a good local independent business, cherish it!

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First Voice

  1. Jonathan Betts:

    “Reading this again, it might actually be the best thing I wrote all year.”

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