Talk of composite markets has drummed up lively debate across the UK. But the discussion is as complex and varied as the markets themselves, with considerations for the customer base and concerns over competition underlined by legislation and funding issues.
“The key ingredient of a successful market is understanding what the customer actually wants,” says David Smith, director of markets at the City of London. “They are the only reason a market exists.”
Graham Wallace, group manager of markets at Glasgow City Council, and vice-president of the World Union of Wholesale Markets (WUWM), says the evolution of traditional wholesale markets into composite ventures would make the sector more sustainable. “But there will never be a one-size-fits-all composite market,” he says. “Each existing wholesale market must ensure that it satisfies the four ‘As’ for its existing and future customers - access, availability, affordability and awareness. These are also the main issues to consider when developing as a composite site.”
The move towards a composite status has reached markets across the world, according to a 2004 WUWM report. And the trend for diversification has since picked up momentum. The survey showed that the majority of wholesalers were in favour of diversification - with delicatessen, frozen foods, grocery, bread and wine widely distributed in 75 per cent of wholesale markets, and flowers and associated products now sold in more than half the sites.
The process involved in establishing a composite market includes finding a suitable site, working through parliamentary legislation, sourcing funds, developing a design, obtaining planning permission and undergoing public enquiries, as well as the actual construction phase - a to-do list that could span more than 10 years. And the costs involved are substantial.
The allocation of funds where they are most needed is essential for operating a successful market, according to Wolf Rohde, managing director of Hamburg Market. “Local and regional authorities have to realise that two cost factors must be taken into account when a new composite market is established: one is the cost of the composite market alone, whether privately or publicly operated, and the other is the cost of the transport infrastructure.”
The creation of markets on one site is likely to be a long drawn-out process in which existing markets come together, Smith says. “The site must be geographically convenient for market customers, with a good transport set-up near major arterial roads so that buyers can come from near and far.”
Traditional wholesale markets are built on fundamental structures, and these can, in many cases, be improved to facilitate the creation of composite ventures, says Wallace. “Design is an envelope that you can develop,” he adds. “But the layout must allow different types of businesses to support each other.”
The need to find a suitable space affects development of composite markets, according to Rohde. “The trading of meat, fish and dairy is subject to more regulations than that of fruit and vegetables, and a site that hosts a full range of products would have to be specifically designed to accommodate them all,” says Smith.
He adds that a composite site could have the scope to be more upmarket than a traditional wholesale environment, including retail, restaurants and a bank, as well as a catering college or starter kitchens, to encourage more people to visit. “Some imaginative thinking would encourage more buyers to visit a composite market,” he adds.
But opposition from retail trade customers would make it difficult to mix wholesale and retail. “The wholesale customer should always have primacy,” says Smith. “But there are so many possibilities to consider when it comes to combining markets and, at present in London, there is not yet agreement among some stakeholders about the definition of a ‘composite’ market, or of its potential value to the customer.”
So, who really stands to benefit from composite developments? The customer is granted the convenience of one-stop shopping with quick price comparison, according to Rohde. “The buyer gains a saving in time, as there is no need for a purchasing tour, as well as a wider range of products, easier comparison of prices and a very good service network,” he says. Traders also stand to profit from sharing logistics to save on transport and distribution costs, adds Wallace. He claims composite markets would allow separate firms to share transport and make single deliveries. “This would depend on trust and co-operation,” says Wallace. “But it could cut back on half-empty lorries and make UK distribution more effective.”
Paris-based composite site Rungis International Market is widely considered the jewel in the crown of European wholesale markets. The market turned over €7.1 billion in 2005 - and consistently has the highest annual turnover for any wholesale market in the world. A total of 1.5 million tonnes of food pass through the market each year.
The development, which covers 232 hectares and is larger than the other 17 French wholesale markets put together, trades meat, fish, fruit and vegetables, horticultural products and decoration, dairy and delicatessen.
“Rungis is made up of a number of markets on one site, with different products housed in separate areas,” says David Bourganel, the market’s director of marketing and communication. “The customers can wander through with the option of buying any of the products, but most do not visit every hall and focus on specific sections.”
The site hosts 1,600 firms, including 700 wholesalers, as well as importers and exporters, and caterers. And more than 40 per cent of the total turnover is made from auxiliary services.
Rungis is the only wholesale market in Paris so the competition is kept within the market, according to Bourganel. “This gives the customer huge bargaining power and keeps prices down,” he says.
From independent retailers and caterers to supermarkets and hypermarkets, as well as a range of auxiliary businesses, Rungis has a wide customer base attracted by the variety of products on offer. And the market has developed its own brand, complete with a distinctive logo and slogan, to promote products.
Bourganel says the market is keeping its eye on the catering trade as the sector makes up half its trade. “The foodservice sector really needs composite markets so that buyers can find everything they need on one site,” he explains. “The market for foodservice is booming and, as catering companies make up half of our customer base, we have to fulfil their needs and offer convenience, as well as excellent products.” The market has forged strong links with UK caterers including New Covent Garden Market-based French Garden which supplies produce from Rungis across the UK.
The market, which supplies 18m consumers across Europe, including 12m within a 150km radius around Paris, is situated just 6km from the French capital. “The site needs to be very near buyers, particularly when supplying caterers and small retailers,” says Bourganel. “This makes the market convenient for them to visit, reduces delivery costs and makes for fresher food.”
Rungis tops the list of composite markets, according to Rohde. “What impresses me most is the large site that leaves room for efficient handling of traffic,” he says. “And at the same time it offers great potential for future development.”
The highly-developed distribution system accessed by the Parisian market is an investment in its future, according to Bourganel. The advanced transport infrastructure, including four highways, seven railway lines direct to the market, with links to the south of France and Spain, and an airport 4km away, puts the market at a strong advantage when it comes to supplying products across France and Europe.
“The market is in an optimum position in central Europe with extensive transport links,” says Bourganel. “This system has enabled traders to take their products further afield and develop their businesses.”
Bourganel says that, although the physical expansion of the market is limited due to shortages of space, Rungis will continue to develop through its export and distribution system. Exports generated €700m last year and this is a priority area for development.
Bourganel sees investment as key to a successful composite market. Rungis has re-invested €160m in the market over the last 10 years. “The investment is an on-going programme and a further €20m- €30m is invested each year towards improvements,” Bourganel says.
There have been some moves to combine markets and diversify products across the UK. But the London wholesale scene, with a number of separately-owned markets dotted around the capital to supply massive demand, has complicated the issue of developing a composite market. Nicholas Saphir recommended the development of three composite markets in London in his 2002 report on the wholesale sector in the capital - one at Western International, another servicing north, east, and south London, and the wider area of East Anglia and the south east, from New Spitalfields, and a third at NCG to concentrate on the city centre. He saw composite markets as the way forward for the London wholesale sector and proposed markets should be allowed to deal in any products that its traders want to sell.
Jan Lloyd, chief executive of the Covent Garden Market Authority, supports Saphir’s call for three London-based composite markets and says the need for composite ventures has been at the forefront of thinking across London markets since the publication of the report in 2002. But it will not be easy to achieve the theoretical future set out in the study, according to Smith. “The Saphir analysis avoided the crucial funding aspect and dealt with the money issue in a very superficial way,” he says.
The development of a single composite site could not support the London market, according to Lloyd. “The size of the capital, both in geographic terms and population, alongside the scale of logistics, is virtually unprecedented,” she says. “The composite markets in Paris and Barcelona operate on a completely different scale which cannot compare to the situation in London.”
Smith agrees that the scale of the London marketplace would require a number of composite sites. “The distance between Spitalfields in east London and Western International on the other side of the city is more than 20 miles, and more if you are going around the M25,” he says. “There would be sufficient demand for more than one composite market in London to service the extended catchment area, if the policy decisions were made and sufficient funding could be made available.”
The presence of composite markets in London will not be as a result of an overnight switch but after a long period of development, according to Lloyd. Face-to-face trade of meat and fish alongside fruit and vegetables has recently been approved at NCG market. “Our existing tenants can now make a broader offer to their customers,” says Lloyd. “The horticultural trade will continue to be our priority, although the decision to allow face-to-face selling of other products will allow for some development within businesses. Some of the traders at Covent Garden are already handling meat and fish alongside fruit and vegetables, and this trend will gradually spread and develop.”
But the gathering of markets on one site could be at the expense of the remaining separate wholesale traders, Smith adds. “Buyers will go to the place that offers them the most opportunities,” he says. “But the whole essence of wholesale markets is competition - from within the market, as well as from the outside, and of supplying customers with what they want, when and where they want it.”
The beginnings of a composite market at Glasgow have developed over the last 10 years. “This has been achieved without losing sight of wholesale as a priority,” says Wallace. “But the market will also continue to branch out and diversify.”
The 30-acre Glasgow Market includes a 225,000 square foot pavilion for fruit, vegetables and flowers - which now also houses cheese, meat and poultry traders - as well as foodservice and gourmet food suppliers, and an increasing number of small food-processing companies. A separate 16,000 sqft hall on the same site is dedicated to fish, poultry and game. Other facilities include a Chiquita banana ripening and distribution warehouse, and a cash and carry.
Glasgow Market does not face competition within the wholesale sector as it is the only market of its kind in Scotland. “The debates encountered in London are specific to the area and the scale of available business to be transacted is not matched throughout the rest of the UK,” says Wallace. “The development of a composite market in Glasgow would not step on anyone else’s toes, and it would increase recognition and business opportunities for wholesalers on the site and the market as a whole.”
Progress is also a talking point throughout Europe. “To my mind, a composite market is an important step towards a ‘food logistics centre’,” says Rohde. “The requirement for this is a sufficiently large site that can also accommodate enterprises associated with the market - companies that do not trade themselves but are indispensable for the trade, including banana-ripening facilities, packaging firms, delivery services, and modern warehouses with refrigeration and hygiene control.”
Hamburg hosts three separate wholesale markets - for fish, meat, and fruit, vegetables and flowers - at a distance of 3km from each other.
But the trend for composite markets is spreading and diversification is a priority across the wholesale sector. “When I started my job at the end of 1993, I enlarged the range of fruit, vegetables and flowers that could be sold at that time to include all foods and flowers,” says Rohde. “The companies were grateful for this wider offer. All firms that take us closer to becoming a composite market are given priority when it comes to allocating space at our wholesale market.”
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