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Community Shop in Lambeth is no ordinary supermarket. A little more than a year old, it has signed up 650 local residents, who can shop for branded cupboard staples at bargain-basement prices. The shop is the brainchild of John Marren, founder of the equally unimaginatively named Company Shop, a small Barnsley-based private company and the UK’s largest distributor of surplus food.
The Lambeth store, which opened in December 2014, will soon hit its membership target of 750 south Londoners struggling with food bills. If all goes to plan, in time there will be 20 more “social supermarkets” in deprived areas of the UK — five in London — delivering more than 20m meals and supporting 10,000 hard-pressed families.
Community Shop is not like other discount retailers, such as the easyFoodstore in north London that was launched in February by Sir Stelios Haji-Ioannou, founder of easyJet. Easyfoodstore is selling everything from packets of biscuits to tins of tuna and tomatoes for 25p. Whatever profits it makes go to its owners. Community Shop, by contrast, channels its profits into social and environmental benefits.
The idea, piloted in Barnsley in the north of England three years ago, is to sell surplus food and products from the likes of Marks and Spencer and manufacturers such as Nestlé at discounts of up to 70 per cent, to a capped number of members in receipt of welfare benefits. It is not just about preventing edible food from going to waste, but also making sure food goes to people who need it most.
Member-customers attend advice sessions on employment and how to lift themselves out of food poverty. That includes lessons on managing debt, household budgeting, writing CVs or simply ways to boost self-confidence.
The model is an attempt to shift from the straightforward capitalism of the 20th century to “caring capitalism” and “social enterprise” in the 21st. It is perhaps the modern equivalent of the philanthropic and paternalistic ideals on which 19th-century UK companies, such as Cadbury, Rowntree’s, Unilever and Colman’s, were grafted.
Community Shop is a subsidiary of Company Shop, a business whose environmental credentials go back 40 years. The parent company was founded in the 1970s by Marren, then aged about 20 and working in the food delivery industry.
He set up the first factory-based staff shop selling workers goods that would have otherwise been binned. Either packaging was torn, the product was mis-labelled or it had been over-ordered. Any damage was cosmetic — too few cherries on top of a cake, for example — rather than substantive, and products were clearly marked.
For suppliers, the benefits were twofold. Not only were they paid for stock that they would otherwise have had to write off, but also the customer base — in-house personnel and factory workers — was limited by membership. There was little risk of Company Shops rivaling their main business.
Today, retailers and producers are comfortable selling their products through Company Shops for the same reasons. The model has made it possible for Marren to extend his reach, setting up shops for nurses, police, ambulance drivers and firemen in Corby, Grimsby and Wentworth in the north of England, and stocking outlets with goods from other manufacturers.
Now the group, still owned and run by the Marren family, employs close to 600 staff in a chain of 18 staff shops, 17 click-and-collect sites and four superstores across the UK. The fourth superstore was opened in November last year in an 8,000 sq ft site in Manchester, with a goal to save about 4,000 tonnes of food from the dump and sell it instead to members who either work in emergency services or the food manufacturing sector.
The London Stock Exchange this year included Company Shop in its annual list of the 1,000 “Companies to inspire Britain” for the second year in a row. In October, it was presented with the Queen’s Award for Enterprise.
Company Shop also joined the LSE’s Elite class of 2015. The programme was set up with Imperial College Business School in 2012 to identify a few small businesses every year that are turning over £5m-£10m annually and are likely to need capital for expansion. Not that an initial public offering for Company Shop is on the cards any time soon.
But the LSE is playing the long game. It will wait until the members of its Elite programmes are ready to list, if they ever are. And in the meantime, it will hothouse Company Shop’s classmates, providing them with a network of advisers and contacts to help them on issues such as structure and expansion.
The programme may also have something useful to say to Company Shop on succession. Marren, who is sole shareholder and chairman, is now 63. His wife Jane, aged 49, has recently been installed as the company’s managing director.
Opportunities for businesses focused on food redistribution have increased in recent years, with consumers and retailers becoming pickier, food regulators imposing sell-by and use-by dates, and new rules on dumping waste. Between 350,000 and 450,000 tonnes of food waste is anaerobically digested rather than distributed every year in the UK and at least a tenth of that is fit for human consumption, according to John Marren.
Company Shop compounded strong growth with revenues rising 13 per cent in the year to September 2014, to £31m, according to its filings. However, rising costs and expansion took their toll on profits, which after tax and expenses, fell 10 per cent to £2m. It is a sign that Company Shop, having existed happily for 30 years as a cash-generative and self-funding family business, has reached a new stage. It continues to expand — in the next three-to-five years Marren hopes to double the 30,000 tonnes of food that he stops from going to waste and landfill sites every year. But that growth needs new and outside sources of capital. Late last year, the group secured a little more than £7.5m in bank debt from Lloyds Bank to fund the Manchester outlet and four more store openings by 2017.