Research objectives

This element of the research reviews:

• Impact on level of business;
• Comparative data of stores inside and outside the zone (for chain shops only);
• Direct and indirect impact on costs; and
• Direct and indirect benefits.

3.3.2 Overall perceptions of the congestion charging scheme

The research found no convenience store managers with positive views of the scheme. However approximately 40% of the participants in the research held mixed or neutral views whilst 60% were negative.

Figure 3c: Convenience stores proportions of support

3.3.3 Congestion issues before the scheme

Whilst congestion was seen to be an issue, it was not seen to be one that had a significant impact on most of the businesses taking part in the study:

'Not in the business at large . it mainly affected the Victoria delivery service . it's not a major issue.'
Multiple Chain

'(CONGESTION) did not affect us. I have been here for 25 years now in the same establishment.'
Independent

'Congestion was not an issue (IN THE PAST). Regular customers in the mornings, coffee, takeaways, in cars or trucks. Now they can't even stop outside because of new legislation in parking - it is instant tickets out there.'
Independent'No, I was making money. Now the only customers are the ones who want to pay their charge.'
Independent (This retailer takes congestion charge payments in his store)

The research indicates that amongst many of the independent retailers, the trading conditions have been detrimental in the recent past.

'Good living, comfortable living, but now we are struggling.'
Independent

With regard to whether something needed to be done about the congestion, views are divided. The consensus appears to be:

• Congestion was seen to be an issue generally (but with only marginal impact on their business);
• The larger organisations believed that something needed to be done (it should be noted that almost all the smaller companies did not answer when asked if 'something needed to be done'); and
• Almost all the participants were against the scheme prior to its introduction.

Comments include:

'As a company, it is difficult to say. Ultimately, we would probably say we were against it. If it did impact on us it would be more negative than anything else. i.e. it costs us £5,000 a year to keep four vans running.'
Multiple Chain

'A bad idea, it penalises people who need to come into London every single day and those who need to work antisocial hours.' (i.e. those that start just before the 6.30pm cut off time).
Multiple Chain

'Not a good idea. Expensive, we have a lot of charges already.'
Independent

'I wasn't sure. One never knows how one is going to be affected'.
Independent

3.3.4 Positive impacts from congestion charging

The benefits of congestion charging are seen to fall into three categories:

• Direct financial benefits;
• Indirect operational benefits; and
• Social benefits.

Direct financial benefits
Some of the convenience stores acted as payment points for the charge, this was reported to yield 15 pence gross, falling to 10 pence after banking costs. One convenience store claimed this only yielded £35 a week additional turnover.

Indirect operational benefits
A number of participants cited improved transportation as a theoretical benefit. However, evidence to substantiate this on current traffic volumes has not been forthcoming. One of the major sandwich bar operators, who had access to the company's performance data, described their experience as follows:

'I get a daily route planner with set times we deliver to people, and we are not any more efficient than we were before. It's not made a difference at all.'
Multiple Sandwich Retailer

Social benefits
There is recognition from many participants that the scheme will result in less traffic and therefore reduced congestion.

3.3.5 Negative impacts from congestion charging

The negative impacts of the congestion charge can be grouped under three headings:

• Additional costs;
• Administrative burden; and
• Changed customer flows.

Additional costs
The research reveals clear differences between the larger organisations and the smaller operators. The larger companies accept that there have been some increases in direct costs but so far these appear to be relatively small and to date have been absorbed:

'We have an open book system with our suppliers, so small costs are passed on to us. Management and the Logistics department look at what it costs them and work it out from there.'

'We are fortunate that the vast majority of our deliveries are overnight, again, traffic has no impact on us whatsoever.'

'A slight increase in supplier costs . but not that much difference.'

'For the moment, the cost hasn't been passed on to our clients. If it picks up, we will have to look at it again.'
Multiple Operators

It would appear that for the larger companies there have been some additional costs but these are currently seen to be manageable. However, the last quote indicates this issue is still under review.

Small businesses appear to see things more starkly. These companies report that additional costs relate directly to a reduction to their income. As the following quotes illustrate, additional costs are accrued in a number of ways:

'(A CAR AND A VAN ARE NEEDED FOR THE BUSINESS TO FUNCTION)...that's £50 a week.'

'£1,200 a year out of my pocket.'

'For our chicken and fish deliveries - we have to pay the suppliers' congestion charge, otherwise they refuse to deliver.'

'They have started charging us an administration charge for our laundry service and our bread delivery. And another supplier who used to supply us everyday is now only doing it three days a week.'

'Now we collect things ourselves, which puts two hours extra on a days work.'
Independent Operators

It is clear that for these businesses costs have gone up and that these are being minimised wherever possible.

Administrative burden
The additional work in registering and paying the charge is not seen as a significant issue by almost all participating in the study. However, one incidence described by a (very) large sandwich bar operator describes what appears to be an unsatisfactory situation:

'Large amount of paperwork (IT TOOK) three months to process our payments . the system is inefficient, we applied for permits in January and (IT WAS) only at the back end of April that it went through.'

'The vans were registered and we had to cancel six cheques. I think we are taking them to the small claims court. Our Finance Director was telling me as it costs £25 a go to cancel a cheque - that is a direct negative impact.'
Multiple Operator

However, it would appear that once these set up issues have been resolved, the scheme appears to be operating relatively smoothly.

Changed customer flows
There are widely different experiences of the effect on business. Some of the large sandwich bars and coffee shops report a minimal impact, or even a small increase in business:

'(THE IMPACT WAS) not in the business at large.'

'If anything, it might have helped.'
Multiple Operators

However most of the smaller operators and one branch of a major chain reported a negative impact on their customer flows:

'I haven't worked out the exact figures yet, but I think my turnover is down by 33%. That is why I had to let one of my staff go.'
Branch Manager of a major chain

'Everything is down by 30-40%. Less people, therefore less business.'
Independent

However, analysis indicates that the downturn in trade should not automatically be attributed to the congestion charge. The general economic climate and changes to parking regulations / enforcement appear to be at least contributory factors.

3.3.6 Overall Impact of congestion charging - Review

The research indicates that the impact of the charge could have been affected by a range of factors including:

• Business size / managerial perspective;
• Location;
• Brand strength / positioning;
• Cost drivers; and
• Implementation and administration.

Business size / managerial perspective
It is apparent from the analysis that there are clear differences between the perceptions of large multiple operators and the small independent business. However, to some extent this might have been more to do with the differing perceptions that managers from large and small operators have of the economy of Central London as a whole. Whilst those from chains of stores are able to compare data from different stores in the area, independents have information regarding only one store. In addition, because their livelihood depends directly on the income generated from the one store, Independents are likely to view any changes in demand much more personally. As suggested elsewhere, chains of stores are also more likely to be able, due to economies of scale, to absorb the additional costs of the charge than their smaller rivals.

Business location
Store location is an important marketing fundamental. By changing the transport patterns, some businesses have benefited:

'It has impacted our business . if anything it might have even helped because it has probably put a few more people on the trains, and that means a few more people go past our stores.'
Multiple Chain

Whilst others, who have historically been more dependent on customers coming by car, particularly from outside the congestion charging zone, have faced major changes:

'Very bad - less customers by 70%. Basically the oriental stuff is not sellable - not enough local people to buy it. It has dramatically killed the Asian trade, people (USED TO COME FROM) Dulwich, Peckham, Camberwell.'
Independent

In reviewing the location of the interviews, those traders near the boundary, in less desirable areas, or on major arterial roads appear to be the most negatively impacted by the introduction of the charge. The following two quotes illustrate this point, note the contrast between these two retailers (the first one mainly sells sandwiches whilst the second one mainly sells coffee):

'Business used to work at 80% (OF CAPACITY) now it's just 50%. We've reduced staff from five to 2 or 3 as we can't pay the wages.'
Multiple Chain (Manager of branch on an arterial road close to the boundary)

'It's not affected business as we have a lot of regular customers, it's not passing trade.'
Multiple Chain

The interviews with the retail chains probed the trading performance of outlets inside the zone with those operating outside. Whilst the findings are more limited, retail units operating outside the zone are reported to be unaffected.

Market strength / positioning
The very different perceptions of the impact of the charge (described above) lead to the conclusion that different businesses are being impacted in very different ways by the introduction of the charge. One revealing observation by the Chief Executive of a major sandwich chain is that their business model and dispersal of their premises has provided considerable protection in the face of a changed trading environment:

'The impact hasn't been positive, but it hasn't been negative either. Our brand position and our site locations haven't been negative for us.'

Cost drivers
The congestion charge has added to the costs of businesses operating in the zone in a number of ways:

• Direct cost increases: e.g. charge on company vehicles and 'service charges' from suppliers;
• Indirect cost increases: e.g. administration; and
• Additional work, taking on tasks previously done by suppliers, i.e. collecting goods from a cash and carry rather than having delivered by a wholesaler.

The increases described by the multiple operators appear to be relatively minor and to date, at least, have been absorbed by the businesses. Small businesses have faced some changes to distribution frequencies and the imposition of delivery charges in some cases.

Small companies frequently have difficulties dealing with administration and the congestion charge fits this category of 'bureaucratic cost'.

Some small businesses are also undertaking more tasks themselves (going to the cash and carry rather than have goods delivered). This increases their workload.

Implementation and administration
There are few complaints regarding implementation and administration. Those that the research did encounter related to setting up accounts.