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January 26, 2011

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On average, over half of all businesses go bust within the first five years of operation.  The village shop – so often a mainstay of community life – is particularly vulnerable with 400 closing each year across the UK. But increasing numbers of communities respond by taking over and running these businesses themselves. Since 1990, the community retail sector has seen a seven fold increase.  With a remarkable survival rate of 97%, this is a business model that has many other attractions

The Plunkett Foundation has published a new report containing an overview of the development of the community shop sector in the UK, and of the health and wealth of the sector today. The report is based on an indepth review of community shops undertaken in 2010 by the Plunkett Foundation and Community Retail Advisers with 121 community shops. The report includes new statistics focusing on the success factors of community shops and in particular the reasons why community shops represent better forms of business.

In summary, community shops represent;

1. Better resilience:
• Community shops operate with a 97% success rate, compared with a national UK business survival rate of 46.8%
• Community shops are set to continue their growth  at around 19 new shops per year
• With an estimated  400 commercial village shop closures each year, community shops replace 5% of all village shop closures

2. Better Governance:
• All shops adopt robust structures promoting genuine community ownership and democratic control
• Community shops have an average of 7 directors and 133 members
• 65% of community shops adopt the IPS Bencom structure which significantly boosts member engagement: 155 over 48 for other structures

3. Better Finances
• Turnover for community shops range between £7,000 – £900,000pa
• The collective turnover for community shops in 2010 is estimated to be at £33million or £132,635 per shop
• Average Net profits were recorded to be £3,654 per shop or £1million collectively
• Community Shops were operating at average gross margins of 21%
• Volunteering saves shops an average of £27,752 per year in staff time

4. Better Services
• 98% of community shops sell local produce
• 40% of community shops have cafes
• 58% of community shops host Post Offices
• 59% of community shops take debit/credit cards

5. Better Communities and Lives
• 22% of Net Profits are reallocated to community projects representing £200,000 nationally
• Shops typically employ 1.9 members of staff and create 30 volunteer placements
• 90% of shops use volunteers regularly, in 2010 using 1million hours

The full report is available here.