Ethical retailer shuts up shop

Nov 29 2007 by Paul Loraine, The Journal

AN ethical retailer with its roots in the North-East is going out of business after a supermarket opened opposite one of its shops.

The Creative Consumer Co-operative Ltd was formed in 1995, its members investing money to establish shops called Out of this World.

They set up four shops across the country including one in Gosforth Shopping Centre, Newcastle, with the intention of providing a challenge to consumerism.

But in August, a new Sainsbury’s store was opened opposite the Gosforth branch and this, combined with a number of other problems, led to a significant drop in sales.

Providing a wide range of ethically-sourced products, Out of This World was a front-runner in the now-mainstream organic and fairtrade goods market when it was established.

Yesterday, Jon Walker, general manager of the Gosforth shop, revealed a combination of factors had caused the decline.

He said: “We have had a very difficult couple of years. There have been lots of problems that all came roughly at the same time.

“Our service charge went up from under £10,000 to £54,000, which was an enormous rise to have to cope with. We had opened a new shop in York and were having to support that.

“As soon as Sainsbury’s opened opposite, we lost 600 customers and thousands of pounds a week. That was pretty much the final nail in the coffin.

“It just came just at the wrong time for us.”

A members’ meeting has been called for Monday to propose the company goes into liquidation after bosses decided that there was no chance of keeping the business afloat.

Mr Walker said that the shops had in part been victims of their own success, having played a large part in bringing ethical goods and organic food to the high street.

He added: “There is very strong competition from everybody at the moment. The whole organic market is booming.

“It has just been several things on top of one another. The losses at York, the escalating costs in Gosforth and finally the new Sainsbury’s, they have all played their part.

“This is a very tragic end for Out of this World, but during the past 12 years we have been pleased to see organic, fairtrade, local and eco-friendly products enter the mainstream and the idea of shopping for a better world become commonplace.

“We like to think we have played a part in this. Ethical goods are now on every high street as we hoped.

“Unfortunately, this is one of the main factors that has driven us into insolvency. The rise of the large supermarkets at the expense of small traders.”

Nobody was available for comment at Sainsbury’s or Gosforth Shopping Centre.