Island retailers face particular challenges, but these have helped them to head off the mainland multiples

T here is one reason above all others why Britain has repelled would-be invaders since the Norman army landed in Pevensey in 1066 - water. Since time immemorial the Channel has been our island’s first line of defence against foreign raiders.

If water has helped Britain maintain its independence for nigh on a millennium, it has also helped island retailers resist the march of high street brands into their communities. Tony O’Neill, chief executive of SandpiperCI, the Channel Islands’ largest retailer, sums up the logistical challenges facing prospective new entrants to the islands.

“We’re 90 miles away from the south coast. That means any freight has to come on an eight-hour overnight journey and, because the roads here aren’t wide enough, all freight has to be decanted off 40ft articulated lorries at Portsmouth before it can be shipped, so the amount of double and triple handling that goes on is significant.”

Waitrose excepted, the multiple grocery retailers - the UK’s foremost empire-builders - have no presence on the Channel Islands. Indeed, the unique challenges posed by island retailing make communities such as Jersey and the Isle of Man arguably the last bastions of the local operator.

Despite the recent sale of five supermarkets to Waitrose, SandpiperCI remains the major retail presence on the Channel Islands with a host of franchised stores, including Marks & Spencer and Iceland, supplementing its own Checkers Express, Wine Warehouse and Island Shopper fascias. O’Neill acknowledges that the high barriers to entry help keep mainland rivals at bay, but the key to Sandpiper’s dominant position, he suggests, is its peerless local knowledge.

“We understand retail; we understand this market because we’re here on the ground. We have all the infrastructure in place and all the logistics and supply chain aspects covered.

“We have local contact with property agents, so we understand when each unit is coming onto the market and we have the contacts and channels of communication into government that help us establish new offerings when they’re appropriate.”

Likewise, over in the Irish Sea, understanding the vicissitudes of the local marketplace has helped Shoprite maintain a strong presence on the Isle of Man for 37 years. Its motto, ‘Manx to the Max’, informs everything the 12-strong supermarket chain does. “It is the David factor in the struggle with the multiple Goliaths” the retailer - which is listed on smaller companies exchange PLUS Markets - trumpets on its website. Shoprite sells more Manx produce on the island than all other supermarkets combined. It supports island charities and pledges that money spent at Shoprite stays within the island community. But it also recognises that customers like household name brands and has exclusive partnerships in place with Waitrose, Iceland and Peacocks to stock their branded products.

Not all plain sailing

However, its latest financial results, for the year to January 2, 2010 show that it is not all plain sailing. Shoprite Group reported a small loss of £54,000 in the period, off sales of £70.5m, and also incurred an exceptional charge of £3.58m, which chairman Deryck Nicholson said in his statement was to cover a “worst-case scenario” in relation to several leases which have been deemed onerous. But Nicholson also says the board is pursuing opportunities it expects will allow it to reduce this provision in subsequent years.

David Elliott, managing director of Jersey-based department store Voisins, believes striking this balance between staying loyal to the island’s heritage and embracing mainland trends has helped the family-owned business survive and prosper for more than 150 years.

“Tradition and heritage is definitely a unique selling point,” says Elliott. “People trust you more the longer you’ve been around but we are certainly influenced by UK trends.”

The marriage of island and mainland was recently in evidence when Voisins went into partnership with a local retailer, selling his fashion brands alongside well known high street concessions such as Miss Selfridge and Superdry. Voisins also boasts a “massive” HMV concession - the only one on the island.

Elliott’s track record with mainland department stores, including Selfridges and Bentalls, has given him a strong affinity with the UK retail scene, something that has informed Voisins’ development. “Because of my background, I’m very oriented towards fashion, so I’ve tried to make us very much a fashion store for the young-at-heart,” says Elliott, whose recent innovations include a new beauty department and a brand new fashion floor with a lingerie section.

The fundamentals of retailing on Jersey are not, in Elliott’s view, “as different as you might think” from operating on the mainland. Voisins, he says, has the same issues around “being competitive, how we present the store and customer service”. Where Jersey does remain somewhat idiosyncratic is in its trading hours. Voisins does not open on Sundays and, says Elliott: “We don’t really have any late nights. People living here on the island shop with us when it’s appropriate. We tried Sundays and late evenings but they just don’t work.”

Voisins is the only independent department store left on Jersey after rival De Gruchy was bought by Ulster Stores in 2006. Indeed, acquisition is arguably the easiest means of market entry for retailers, who have many hurdles to overcome before establishing themselves on the Channel Islands.

“Barriers to entry are very high,” says O’Neill. “Property is extremely rare. Finding units above 5,000 sq ft takes some doing; they are in seriously limited supply.”

When you consider that the average home sells for £505,000, compared with about £170,000 in mainland Britain, you begin to appreciate the costs of property in Jersey.

Wages are also comparatively high - about 15% above London rates. But, before you even open a till there is the challenge of obtaining the many licences from the government that businesses must acquire before they can begin trading. “There’s a great desire on the part of both states [Jersey and Guernsey] to ensure that employment of locals is maximised and local jobs are protected,” says O’Neill. “When you combine all of this with the finite market, you can understand why operators ask themselves whether its is worthwhile.”

While the Channel Islands’ unique form of governance makes it hard for mainland retailers to gain a foothold, the Isle of Wight, under British administration, has less defensive capabilities. Nevertheless a strong independent scene exists on the island, particularly outside of the county town, Newport, but staving off the advance of high street brands is becoming difficult as councils welcome the increase in revenue generated by chain stores.

Squeezed out

“The independent scene is definitely diminishing,” says David Bowley, managing director of W Hurst & Sons, a chain of six homeware and hardware stores on the island. “There’s a fixation by the local authorities with high streets and getting national chains in, which means smaller stores are getting squeezed out. Councils are scared of the big boys. They’ve let them do what they like.”

Bowley, who joined the family-owned business straight from school in the 1960s, says W Hurst & Sons has survived because it never stands still. “We’re competitive on price. We’ve got two very good buyers. Obviously there are times when the customer can go to B&Q and buy a product cheaper than what we can buy it for but our unique selling point is our customer service.”

The retailer operates a policy of ‘If we haven’t got it, we’ll try and get it for you,’ and prides itself on the detailed product knowledge of its staff. “People say we employ a lot of staff, which we do, but without the staff we’d be a shed-type operation, which we don’t want to be,” says Bowley.

There was talk back in the 1970s of opening a store on the mainland, but it was decided that the logistical challenges involved would be too great. Nowadays, the focus is on ensuring the six stores remain as competitive as possible on the Isle of Wight.

The chamber of commerce aims to help local retailers stay in business by hosting workshops and networking opportunities. It also has a unique support mechanism in the Isle Of Wight Lottery, run by the chamber of commerce, the funding from which goes towards providing interest-free loans to local businesses.

Over on the Isle of Man, another initiative aimed at supporting local independent retailers has recently been launched. is a new online shopping portal that promotes island retailers and encourages consumers to shop locally. To date, more than 100 local businesses have signed up to the website.

These schemes, and others like them, suggest that island retailers are far from ready to surrender to the advance of mainland retail chains. On the contrary, they have every intention of defending their waters for some years to come.

Mainland Brands: Is franchising the future?

The barriers to entry for high street retailers looking to set up shop on island communities make franchising an increasingly attractive option. Channel Islands retailer SandpiperCI has introduced household name brands including Marks & Spencer, Iceland, Costa Coffee and most recently Hotel Chocolat to the islands on a franchise basis.

“What we’ are offering to all intents and purposes is a solution to UK retailers,” says Tony O’Neill, chief executive of SandpiperCI. “We’ve done a lot of analysis to understand the marketplace and we also have a clear understanding of the brands we want to work with. All of our directors have worked at board level. We understand the market because we’re here on the ground.”

SandpiperCI recently sold its five large Checkers and Safeway supermarkets to Waitrose as part of a strategy to home in on the franchise side of the business. “What we’re trying to do is to focus on working with franchise partners and we’re very conscious of not spreading ourselves too thinly,” says O’Neill. SandpiperCI began a push for new franchisees nine months ago and is currently engaged in talks with a number of UK retailers. “I’d be very disappointed if we hadn’t tripled our franchise partners by the end of next year,” he says.

The deal gives Waitrose control of the five largest supermarkets on the Channel Islands, building on its agreement to supply Sandpiper stores with over 3,000 Waitrose own-label products. “The move is part of our strategy to make the Waitrose brand accessible to more people in more places,” says Waitrose managing director Mark Price.

O’Neill believes that, given the tight planning controls in the Channel Islands and the scarcity of available sites, there could be little appetite for rivals to follow Waitrose’s lead. “Waitrose has bought the five premier supermarkets on the islands so the appeal for other majors will have lessened.”