Are Social Housing Organisations Wholesalers or Retailers?

 
Increasingly I hear Social Housing Organisations refer to the people they serve as customers. The implication is that their customers are ‘consuming their products’ in the same way that customers in the open market purchase and consume goods and services.

This begs a range of questions, but prime among them is the following question: should public goods be thought of in the same terms as marketplace products and services? A question that June Sekara answers brilliantly in the following blog: https://rwer.wordpress.com/2014/07/09/re-thinking-the-definition-of-public-goods/

The essence of Sekara’s argument can be distilled as follows:

1. Whenever goods/service are produced or distributed at scale, they do not come to us directly, but through remote distribution channels, which are often poorly coordinated (or at odds with either’s objectives) and mostly inaccessible to the public.

2. When it comes therefore to Public Goods the more distant the public is from the source of the product/service the less influence they have over it and those who deliver it.

There are many ideological dimensions of her argument which could take us down all kinds of rabbit holes, all of which I wish to avoid. Instead, I want to draw out the point she makes about scale and proximity. In simple terms, she argues the bigger and more remote a producer/provider is, the less democratic oversight citizens have. Put another way when it comes to essential public goods like policing, sanitation, public health, social housing, etc., small local retailers, will tend to democratically outperform big, remote wholesalers.

But here’s the rub: running services in small, bespoke hyper-local ways, while good for democracy, very rarely makes good business sense at scale.

 

Why is retail more democratic than wholesale?

The implication here is that the difference between wholesale and retail approaches to the delivery of public goods is critical to democracy. Read here for a detailed discussion on the difference between the two: http://keydifferences.com/difference-between-wholesale-and-retail.html#ixzz4HDKKLjbI

In wholesale environments, mild competition exists, but in retail, there is intense competition: it is very tough to retain and regain customers unless trust and personal connections are maintained and nourished. Hence, the argument that public goods should be distributed to the public in a non-wholesale fashion, or as a retailer would. To my mind, this is a more fruitful and constructive argument. Going beyond than the point-blank attack on privatisation, we are more likely to reach bi-partisan agreements on much-needed policy change, as well as greater clarity around what practical change we wish to make on the ground.

 

Wholesale and Retail: what’s the difference?

Here are ten of the major differences between wholesale and retail:

1. Wholesale means the sale of goods in voluminous quantity, at a low price. While by contrast. the business of selling goods to end consumers in small lots at a profit is known as retail.
2. Wholesale creates a link between the manufacturer and retailer whereas retail creates a link between the retailer and the customer.
3. Wholesale prices of products are lower than the retail prices.
4. In wholesale business, there is no requirement for the ‘art of selling’ goods, which is a must in the case of retail business.
5. The size of a wholesale business is larger than a retail business.
6. In retail the shopkeeper can choose the goods freely, this is not possible in wholesale business because the goods are purchased in bulk.
7. In wholesale business, the capital requirement is higher than in retail business.
8. The location is of utmost importance in retail but in wholesale, the location does not matter at all.
9. When selling goods retail, the appearance of the shop, the display of goods and the ongoing relationship with the customer are paramount. However, in wholesale, there is no such kind of need.
10. Wholesalers are generalists, their relationships, for the most part, are anonymous, impersonal and voluminous. Retailers, by contrast, tend to pay a lot of attention to context. Retailers are wedded to the culture, environment and overall economic wellbeing of a place, and its people. For retailers, business is personal and environmental. They know when a loyal customer dies and they will often attend their funeral.

To choose the role of the hyper-local retailer is to accept that your economic wellbeing and that of the people who purchase goods and services from you are intertwined; you depend on each other for survival. In that sense, relationships are not just transactional in a vendor/customer sense. When a local retailer goes to a customer’s funeral, they can often be heard referring to the deceased as their neighbour and/or friend and not just as a loyal customer.

 

Are Social Housing Organisations wholesalers or retailers?

It is easy to think about the behaviours of retailers on the main street or high street, like the publican or the grocer, and how they would contrast with wholesalers, it is less clear-cut how this would relate to a police officer or a social landlord. We all know that while a grocer inspects their fruit and vegetables and orders by feel/experience and the personal likes and wants of their customers, a supermarket wholesaler does a stock take. But, when it comes to public goods what is the equivalent of the grocer/supermarket comparison? To answer this, let’s turn our attention to social housing and how they relate to their customers.

To start, the term ‘customer’ has become somewhat of an industry standard among Social Housing Organisations when referring to their tenants: Indeed many organisation make a virtue of using the term, while continuing to behave as would a wholesaler, not a retailer. In other words, the term customer acts as a veil to obscure the more fundamental question: are you a wholesaler or retailer?

To be honest, I’m not taken by the term ‘customer’ when it comes to the provision of public goods to citizens, but that’s for another post, and in the meantime, I understand why they stick with the term. After all, Social Housing Organisations do provide goods and services to their tenants, and so the term customer makes sense in that regard. They are however providing public goods and as such, there isn’t the same level of choice as one with purchase power might expect in the open market. The term customer suggests that there is choice and an element of control, however, for the most part, such options are not yet available to those in receipt of state-funded services.

For Housing Organisations who provide a ‘pubic good’, namely: housing, I believe it is critical that they ask: ‘are we in the wholesale or retail business?’ Those who answer wholesale will invariably put community building to the bottom of their priority list and from this vantage point approaches like Asset-Based Community Development will seem alien to them. Conversely, those who behave like retailers will think beyond bricks and mortar, to see the importance of building community among their tenants and other residents in the neighbourhoods where they have housing stock.

Those who are in the retail end of the Social Housing sector will treat their customers like neighbours and citizens, and those in the wholesale game will treat them like strangers and passive clients. In my opinion, we have far too many wholesalers and far too few retailers.

So perhaps the most pertinent question for a Social Housing Organisations and others who deliver public goods is to ask, not
‘whether the people they serve should be referred to as clients or citizens?’, but rather, ‘whether as an organisation they act like wholesalers or retailers?’

The wholesalers will inevitably adopt a deficit, top-down approach, prescribing standardised goods and services, with the promise of scalability and measurability. And in the long run, they will fail to deliver what you and I really need. But don’t worry it’s not personal. Wholesalers don’t care.

When it comes to creating a sustainable future for everyone, there is a great urgency in the slowness of the local grocer and a great beauty in the smallness of a boutique florist. In a world where our public services have come to emulate the wholesale values and practices of supermarkets, efficiency, measurability and scalability have become the new benchmarks for success. Sadly, as a direct consequence customers are becoming more alienated, employees more burnt out, and citizenship is retreating, like never before, in the face of ever-increasing professionalism and red-tape. In the end size matters, as does sequence. So when it comes to your good life, first ask a neighbour, then a retailer, and as a final resort go to the wholesaler.

Caveat emptor: Buyer Beware……..Citizens take care.

 

Cormac Russell

 

Thank you to Lyra for the title image, taken from https://www.flickr.com/photos/lyza/49545547. Licensed under creative commons https://creativecommons.org/licenses/by-sa/2.0/