Saturday, 22 February 2014

Micro vs Macro economics

Phil Mellows has made a very sensible and balanced post (as usual) here about the conversion of pubs to supermarkets. It’s often alleged that the supermarket chains have been deliberately targeting entirely viable pubs. I don’t claim that this has never happened, but locally the three pubs that have undergone such a conversion – the Red Lion in Gatley, the Chapel House in Heaton Chapel and the White Lion in Withington (illustrated) – had all been closed for some time before. I would guess that the vast majority of pub to supermarket conversions have been of pubs that at best were struggling. Indeed, very near to me, the site of the former Four Heatons pub is to become a Morrisons Local more than three years after it closed.

I have made the point before that it’s possible to come up with a plausible narrative for how many supposedly “failed” pubs could have been brought back to life, but it’s much harder to come up with a similar narrative for the pub market as a whole, given all the pressures that have affected it. An appealing offer in one particular pub will make little difference to overall demand, and often it’s a case of one pub succeeding at the expense of another. I know of one large village in Cheshire than in recent years has lost two of its four pubs – and the two that have closed are those that in the past I would have identified as the more attractive and viable. But, if they hadn’t closed, the odds are that the other two would have.

It’s tempting to propose that the conversion of pubs to retail use should be subject to planning consent but, in reality, isn’t that just likely to postpone the evil day and lead to greater cost and bureaucracy? The current planning system, while it requires consent for the conversion of commercial premises to residential use, broadly permits “downgrading” to use classes that are likely to create less impact on the local community. Thus, no planning consent is required for conversion of pubs to retail or office use, but it is needed in the opposite direction. Would it really serve the public good for planning permission to be required for every conversion of a box bar into a wool shop? At the end of the day, the decline of the pub trade is essentially due to a fall-off in demand, not to a failure of the planning system to protect pubs.


  1. I can't think of one example in my area of a viable pub that's been converted into a mini supermarket, and I can't think of one that's not appeared in what used to be a thriving (15+ years ago) estate-type pub. Supermarkets like them because in some cases the owners have kept the premises licence current and in the others they can easily argue the case for a new one. Many are bought up by property speculators and then leased to the highest bidding supermarket chain.

    The argument I have against supermarkets expanding their market share in this way is that they're doing their bit for the decline of pubs by making cheaper alcohol even more readily available to local residents. They also put pressure on existing shops.

  2. Last night an item of news on ITV caught my attention,the last night of the oldest working men's club in England,in Staffordshire
    I think,not sure.Naturally the item had no chance of coverage on Nanny BBC.
    Two regulars were selected for their views and reasons for the decline in custom in recent years. Guess what ? Lack of women membership was their only
    suggestion. Sad old idiots ,scared of stating the obvious,forewarned of avoiding
    "controversial " issues.
    I know,we know, anyone with an 11+
    knows why the working class pubs and clubs are being destroyed but few have the bollocks to say so.

    The Thin Red Line

  3. It's a difficult one because in one way the viability of the pub is unrelated to its trading conditions. The value of the core asset, the building, is subject to more than its use as a pub. Factors in the property market can increase its market value for alternate use. If for reasons of increased demand for housing the asset price of the pub doubles it can appear to trade well but in reality be under performing in terms of return on capital employed.

    Further, what is often not recognized is that pub enthusiasm is a minority sport, and not representative of a wider community. Most people would get more use out of a Sainsburys Local than a pub.

    As for whinges about local shops, these chain stores succeed because they are not as complacent. We can all say we prefer local traders but we really only do when they offer us a better deal than national traders.

  4. One further point to make is one o planning regulations. The current system is not unfair. Some residents will have legitimate concerns regarding a new pub in terms of noise & disturbance late at night. These are not true of a convenience store where objections are more nimby. A store will affect my business, I want to keep the pub despite commercial reality, a poundland brings down the area.

  5. Im not sure if this proves or disproves anything, but the 3 supermarket pub conversions we had locally last year, only 1 Id have said was a truly struggling pub.

    The other 2 maybe werent rolling in customers, but were popular enough locally given their non central locations and 1 of them was a frequent GBG entrant/contender.

    And it was very much a failure of application of the planning rules IMO, the council tried hardest to block the 1st conversion which happened to be the most struggling pub, lost that fight and then pretty much decided it wasnt up for the fight for the rest.

    Also whilst the supermarkets claim they only target the struggling pubs, they manage to ignore a surprisingly wide variety of them if the location clashes with some nearby competition.

  6. I still refuse to believe that there was/is nothing that could be done about the overall decline in demand for pubs.

  7. Well, they could always have not implemented the smoking ban...

  8. or smokers could have had the common decency to understand the importance of the pub and accepted paying £3+ to stand out in the rain or even in the interest of the pub, given up. But they didn't. They decided to stay at home and make dodgy shed DIY bars, being the selfish bastards they are. Makes me sick.


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