London and the South East should be served by three composite wholesale markets, rather than the existing five. Smithfield and Billingsgate markets should close and the remaining three markets – Western International, New Spitalfields and New Covent Garden – should be designated west, east and central respectively.
This is the principle recommendation of the eagerly awaited review of London's wholesale markets, which was published today and presented to stakeholders and then press at London's Guildhall by report author Nicholas Saphir.
The recommendations arising from the review of the £1.6 billion wholesale market structure in the capital are among the most far-reaching in history. 'London has five markets and it doesn't need all of them,' said Saphir. 'One market would not work logisitically and the review recommends that the meat and fish markets are closed to leave three composite markets. The eastern and western markets, we would envisage, will be directed at suburban and rural retail and catering trade, while the central market, at Nine Elms, would be a more specialised central distribution and processing unit for the white table cloth hotels and restaurants of central London.' While household expenditure on food has dropped by 1.8 per cent in the last six years, expenditure on catering has increased by 13.7 per cent. Around 35 per cent of all food and non-alcoholic drink spend in London is channeled through the catering sector, three quarters of that is supplied by the wholesale sector and half of that through one of the five wholesale markets now in place. Borough market was omitted from the review, described as a 'highly successful hybrid,' by Saphir.
Despite massive investment in its markets, the Corporation of London is sitting on two potential goldmines in the land-locked and largely congested Billingsgate and Smithfield sites, which would be prime targets for real estate investment. Nine Elms is not perfect in terms of access, the report concludes, but the 22.5 acre site has plenty of room for development.
The cost of converting NCG into a viable central distribution site was put at an estimated £80 million, interestingly the same figure that the Corporation of London has plunged into redevelopment of Smithfield in the last few years.
The six-and-two-third-mile regulation that precludes the markets from competing with each other on face-to-face wholesaling, leaving each site to rely on just one source of income, is 'archaic' and 'should be removed', said Saphir.
'Any market should be able to sell any products that its tenants wants to sell. It is not sensible in the long term to continue with markets that are not composite,' he said. 'If you went to Smithfield this morning for instance, you would have seen a number of Chinese traders consolidating loads on the pavement, having visited two or three different markets to buy their fruit, vegetables, meat and fish. This will not continue.
'The major customers are looking for increases supply chain efficiency and added value from within the markets,' he added. 'Added value composite sites will therefore become the norm, very much like Rungis in Paris.' Western International and New Spitalfields markets should not be disadvantaged in any way, he added. Saphir said: 'I would expect to see tenants at both sites, along with Billingsgate and Smithfield, to look at the options they have to take advantage of these changes. I think we will see some tenants open up sites in other markets. We will also undoubtedly see mergers and acquisitions. Those who were unsure whether they would continue for much longer will probably seek a buyer. The removal of archaic restrictions on trade should free up the real entrepreneurs in the markets to move forward.' The publication of the report marked the beginning of a three-month consultation process, during which both Defra and the Corporation of London will debate and negotiate with all stakeholders to reach some sort of action plan.
Saphir expressed a desire that by the end of this process, an implementation plan should be in place. 'If not, after six months I would like to see government begin to institute change anyway. We have a very wasteful situation at the moment and now is the time to act,' he said.
To contribute to the discussion on the future of London's markets, contact us. For more information on the report, visit freshinfo on Monday and see next week's Journal.
