I recently heard about a new initiative from Booths, a supermarket chain based in Preston with stores predominantly in North West England which has implications for both Booths and other shops local to their stores.
Booths operate a loyalty card scheme and have recently changed the offers to include a "free daily regular hot drink from our café or hot food counter" for registered card holders, also offering free newspapers from some stores. There is obviously an appeal to customers with this - it really is a free drink, although not quite a free lunch. Booths have quite probably done this as a response to the similar offer made by Waitrose who have recently opened in Preston and target very similar customers to Booths.
This offer is causing loss of business for some local shops, particularly cafés and newsagents who have lost a lot of business - it is hard to compete with "free" of course. Whilst this may mean Booths are getting more business, in the long term it could be detrimental to them, even if giving away drinks increases profit through customer spend on other items. Why? Some Booths stores are on the edge of small towns which currently have high streets which actually have genuine shops selling a range of products, these high streets in themselves attracting people to the towns, who then also shop in Booths.
As an example, Garstang has a great high street with a wide variety of small businesses, including cafés and newsagents, providing valuable services for people living in and visiting the town. If these shops close there is less reason for people to visit Garstang, so they may go elsewhere, once that happens they won't visit the Booths store there either as there are other supermarkets with wider ranges of products (including larger Booths stores).
So, by trying to compete with larger stores Booths may lose some of their own business. They are an organisation who state "we’ve built our reputation on sourcing great quality, unique local produce" which is great, and a philosophy I fully support. But to really support local produce they also need to consider the other local organisations, some of whom offer some of the products Booths sell, and ensure they survive and flourish. A short term gain can be a long term loss, and supermarkets need the smaller shops to survive.
Details about the Booths cardholder scheme are available here and their sourcing policy is here