[SÉRIE] ECONOMIC CHRONICLE #1: The State at the service of big business

The number of shops in Belgium fell from 369,787 on December 31, 1947 to 191,269 on December 1, 2015, a loss of 178,518 shops or 48%.

According to economists, the number of shops declined because they were too numerous, too small and too unproductive.

Throughout the process, it’s the smallest cells that have closed and businesses have disappeared, especially at the margins of shopping areas, where footfall is lowest.

In Western countries, legislators are at the service of large capital owners (privileged tax regimes). The complexity of legal and tax regimes makes the task easier for large owners and more difficult for small entrepreneurs. It encourages capital concentration, eliminating competition.

The evolution of the small retailer’s trade through a few dates:

In the 1950s, the vast majority of retailers were self-employed, owned their own buildings and lived in them. They ran their business as a family, without salaried staff, helping themselves in their store when they needed an item they were selling; accounting was simple, based on supplier invoices and the daily cash register statement. In those days, there was hardly any separation between professional and domestic life: the shopkeeper divided his time between commercial and domestic tasks, depending on the fluctuating presence of customers. Since then, the retailer’s life has become much more complex.

From the 1950s onwards, retailers were obliged to keep accounts, and access to the profession was regulated. At the end of the decade, the first supermarkets appeared, followed by the first hypermarkets (see Chart 12). Even if these types of stores were not the first to lower prices (department stores from 1860, popular stores from 1928), they clearly mark the start of a competitive strategy based on the quest for the lowest prices, reducing profit margins.

During the 1960s, shopkeepers, like other citizens, moved their homes to the outskirts and drove to work. Vacant living space may be used to expand the business, or may be rented out, used for storage or simply abandoned. At the end of the 1960s, merchants were required to have a postal or bank account.

In 1971, VAT was introduced, driving many small businesses out of business or into the hands of accountants. In 1976, the barcode began to be used in the retail sector in Europe. It involves scanning at the checkout and simplifies inventory management. It would not be adopted until much later in the small business sector. In 1979, Bancontact and Mister Cash were launched, and later merged. This is one of the first paid services, which will gradually become indispensable, but will also eat into profits.

In the 1980s, franchising became an increasingly popular form of management. More and more location studies are being carried out, mainly based on the number of shoppers passing through. Demand is growing for the best locations in this respect. Real estate brokers are playing an increasingly important role as intermediaries between retailers and homeowners. They are also becoming more professional: a growing proportion of the best commercial sites are now owned by real estate companies, often linked to insurance companies. Rents increase, up to 10% of sales and more. In the best streets, rising rents are driving out many types of retail and increasing the share of personal goods, which have high profit margins and can therefore pay high rents. In Rue Neuve, for example, cinemas, ice-cream parlors, pastry shops, stationers and baggage handlers are disappearing. The share of chains has risen from 37% in 1984 to 95% in 2011. Micro-central retailers, those seeking central locations in commercial cores, accounted for 75–80% of shops on Rue Neuve between 1967 and 1987; by 1996, this proportion had risen to 98%. The same trend can be seen in the main streets of major cities, but also in the central parts of other major commercial centers.

In 1986, the European Economic Community adopted the EDIFACT/UN standard for electronic data interchange (EDI), which enabled direct dialogue between the computers of major distributors and their suppliers, and thus deliveries controlled directly by stock levels (just-in-time management).

The imposition of double tanks on service stations from 1999 onwards symbolizes growing environmental concerns and their consequences in the form of constraints for retailers. In 2002, the changeover to the euro was a major concern for small retailers, so much so that some decided to close down their businesses, while others still cite this event as one of the bad times they’d experienced. In the same year, the creation of the Federal Agency for the Safety of the Food Chain (FASFC) in the wake of the mad cow crisis symbolized the increasing controls of all kinds to which retailers are subject.

Although it’s not possible to date the transition, staff recruitment and management have also become more complex, to the point where many small businesses are using a social secretariat (which is an additional paid service). The imposition of an anti-fraud cash register model in the catering industry is part of the same trend. And the rise of e‑commerce is becoming a further cause for concern for retailers.

The consequence of these developments is that the sales needed to be profitable have increased, and so has the surface area required.