Pricing has now become a key weapon as the speciality food sector changes its tactics. On the eve of the Speciality & Fine Food Fair, Carolyn Wilson reports

They have a lot on their exquisite plates: soaring business rates, a spending slowdown, online competition, unsympathetic bank managers and supermarkets creaming off the premium they might have expected. Fine food retailing should be in a mess... but it isn't. Why?

Because, according to an exclusive poll commissioned by The Grocer, the speciality and fine food sector delis, food halls, specialist bakers, farm shops and health food stores is fighting back, using all the weapons at its disposal, including the bluntest and least expected price.

"They have had to change their tactics," agrees Bob Farrand, director of the Guild of Fine Food. "Quality remains crucial, but you'd have to be blind not to notice that money talks more than it used to."

The poll of 352 speciality and fine food shops, conducted ahead of the eighth Speciality & Fine Food Fair opening at Olympia tomorrow (5 September), showed turnover, based on the first five months of this year, growing or remaining constant for 87% of them.

Two thirds (66%) described their prospects for the next 12 months as good or excellent. "Everyone worked themselves into a lather over the recession and you still get some retailers that bleat but the good ones really are doing very well," says Farrand.

Eighty-three per cent use tastings as a tactic for luring the foodies. No surprise there, perhaps, but what might raise eyebrows is the fact almost half (49%) use price promotions and more than a third (35%) rely on discount or loyalty schemes.

"The speciality food shops used to shy away from promoting the fact that their prices are about the same as the supermarkets' premium brands," says Farrand.

In fact, price is considered to be more important than local or ethical sourcing.

Nevertheless the reality is the average basket value among those polled, at £17.88, is nothing to write home about. It's a far cry from the carefree days when Lucy Morgan, former owner of Butternut Deli in Bristol, had "people happily spending £30 just on quiches".

Tom Delaney, owner of the Best of British Delicatessen in Bath, is quick to point out greater promotional activity doesn't necessarily mean "bargain basement bins, bogofs or rollbacks". Rather, he says, price cutting in the speciality sector is more a celebration of the fact it is still possible to sell better quality food at an affordable ask if the right products are selected.

While the David and Goliath battle with supermarkets intensified during the recession, some clearly pose more of a threat to the speciality sector than others. Sixty per cent admitted they had lost customers to the multiples over the past 18 months, but only 41% see them as being their main competitor in normal trading conditions.

"If the poll had asked how they viewed Waitrose not supermarkets in general I imagine a lot more than 41% would say they feel threatened," says Farrand. "Any deli or farm shop worth their salt knows that if a Waitrose opens up the road, you've really got to work your socks off."

And working them off they are, by ruthlessly delisting bigger brands that are bread and butter to the multiples and replacing them with less well-known products that pull in shoppers. According to the poll, 56% want to increase the number of small brands they sell and 32% are looking to cut back on the number of big brands.

Georgie Mason, owner of Gonalston Farm Shop in Nottinghamshire, welcomes the change as a "redressing of the balance". "It makes sense to get your hands on any USP going, but only if it stacks up in sales," she says.

"Those cutting back on big brands have learned to refine their range so it includes only the really profitable names. This then frees resources for additional smaller brands. But a switched-on shop won't stock 20 similar lines from one small producer. And neither will they make life difficult by delisting sound performers that fit in well with their range. "I wouldn't dream of delisting Tyrrells. We sell 15 flavours and truckloads of them. I'd be mad to exchange it for a smaller one."

Pertwood Organic Farm cereals and Dorset Cereals did get the chop. "We stopped stocking both as soon as customers could buy them at a fraction of the cost in the supermarket. With Tyrrells, I only have to charge 5p more than the multiples and I make a decent margin. Getting the right price has always been important but it's moved even higher up the list during the past 18 months," says Mason.

This enforced belt-tightening could help to explain why Fairtrade and organic appear now more often as supporting acts than the stars of the show. Only 18% considered Fairtrade important to their business and although 43% said organic was still the most popular request, sales figures suggest it's not quite the priority it was.

Delaney was forced to lose "organic" from the title of his Bath-based deli when prices of organic meat soared. Far from being a deal-breaker, the deli is heaving.

"People still ask for it and we do still sell lots of organic products but we've discovered customers are often just looking for reassurance the meat is free-range. It's highly likely that 43% of shops get requests, but I bet they're not losing that much custom by offering a good quality alternative."

Windmill Organics launched a range of organic snacks late last year, called Raw Health, that use raw as their main selling point rather than the organic message.

The ambivalent attitude towards Fairtrade comes as no surprise to the chocolatiers who, along with coffee brands, led the initial ethical trading charge. Joel Bernstein, owner of Cocomaya chocolate shop and bakery in the West End of London, ­dismisses the label as adding nothing of value to the speciality retailer.

"Eighty per cent of our customers are regulars," he says. "They trust us completely and rightly assume that we trade ethically and don't have any of the nasties you'd find in some of the more commercial, cheaper types of chocolate. Fairtrade just isn't something that comes up," he says.

The recession seems to have seeded a smarter breed of fine food retailer, says Marcus Carter, founder of the Virtual Farmers Market (VFMUK). "It's only the serious, ambitious retailers that have stuck around. They're being careful not to overstretch themselves and are committed to the long game," he says. "The couple who wanted to stock all their favourite foods and then kick back and relax is a thing of the past. Pre-recession, lots of shops were built on this sort of pipe dream. Not any more."

With overheads on their bricks and mortar business skyrocketing, it's not surprising that virtual marketplaces like VFMUK and Big Barn are increasingly popular, and e-commerce is now used by 36%of the retailers in the survey. Since opening seven months ago, VFMUK has 110 fine food businesses, receives 200 hits a day, and processes 15 to 20 orders a week, while the numbers using Big Barn's virtual marketplace rose nearly a third last year.

"We know that between £5bn and £6bn is spent online on food every year," says Carter. "I'm not saying it's possible to convince the die-hards to swap from online supermarket to high-street deli, but they are slowly being persuaded to use both."

A quarter of retailers (23%) are considering social networking to help speed up the transition, but most, like Georgie Mason at Gonalston Farm Shop, remain wary. She is among the 45% of speciality retailers in the survey who prefer to communicate with customers by mail. She sends 5,000 personalised newsletters every quarter costing £5,000 a year, and says: "We do not want to risk twittering away a reputation we've worked so hard to establish."

The main event
The Speciality & Fine Food Fair is the definitive trade event for local, regional and artisan food and drink
Where: Kensington Olympia, London
When: 5-7 September
What: Aattractions include the Fine Food Forum, Small Business Forum, one-to-one Expert Business Advice and Speciality Chocolate Fair Visit: for more information and to register:

Focus On Speciality & Fine Foods