What do you do when the only grocery shop in your village closes? Some people resign themselves to travelling to the next town to shop while others take to the streets in protest. But for the villagers of Sulgrave, whose nearest town of Banbury is nine miles away, neither proved an attractive option.

Instead, they banded together to form the Sulgrave Village Shop Association. Then, with the help of their local parish council, two years on from the closure they set up their own grocery store - the Sulgrave Village Shop.

"When we lost our grocery store a group of us got together to sound out the community and found that there was still demand for a shop," says Robin Prior, treasurer of SVSA. "So we thought we should establish one of our own."

Sulgrave Village Shop is co-owned by 165 shareholders, each of whom have one share, and any profits are pumped back into the business. The store occupies a small building previously owned by the parish council that cost £100,000 to buy and renovate using money raised through a combination of donations, shares, a public works loan, a bank overdraft and government grants.

Four years on from its opening, and with a turnover of £135,000, the store is proof that community-run enterprises can work, Prior says. Last year it returned a profit for the first time and future growth is now on the cards, he adds.

Prior puts the store's success down to it being a true community project, run by locals for locals. It employs 50 volunteers who help behind the till and visit the local cash & carry, as well as a full-time manager, who is elected by the volunteers. "The benefit of a community-owned shop is that we have a commitment to the people using it," he says. "We know what people want from the shop because they tell us. That's the purpose of the store - to give people what they want."

The store does not go head-to-head with larger grocery stores, but instead focuses its attention on selling local produce and providing items not generally available in supermarkets. It uses 30 different local suppliers, bakes its own bread during the week, has a large deli counter and an extensive wine selection unlike that found in larger shops. "There is no value in trying to be a mini supermarket," says Prior.

But even though it doesn't pitch itself against the larger players, SVSA has lofty aspirations. Sulgrave has a population of just 400, but Prior says the store is now targeting people from nearby villages for extra sales. There are also plans to expand the business. Prior says the current 300 sq ft store does not provide enough space for it to grow significantly, and SVSA is on the lookout for a larger site.

There are even plans to work with the multiples. "We want to create buying arrangements to be more competitive and possibly develop a selling group of local suppliers to sell food to the supermarkets," says Prior. And that's not all. "We could even go into online shopping and home delivery. Also, we know other communities want to pursue a scheme like ours. We've got to build scale and make it viable. If you create the business opportunity the money will follow. I remain bullish that we can do it."

If progress so far is anything to go by, the sky's the limit.n