Ethical partners intend to foil supermarkets

May 18 2009 by Chris Knox, The Journal

AN online ethical retailer has joined forces with a rival and believes it can increase its combined turnover from £6m to £8m as more people turn to the internet for competitive prices.

Gateshead company Ethical Superstore has merged with Bath-based firm Green Dot Guides, which trades as Natural Collection, and believes it is now better equipped to come through the recession unscathed.

The deal involves a number of Natural Collection’s staff moving north to work at Ethical’s warehouse in Team Valley, with the combined workforce now standing at about 50, up from the Gateshead firm’s 35. Ethical Superstore, established by Vic Morgan and Andy Redfern in 2003, is now the UK’s largest online ethical store, having increased turnover 50% every year for three years.

The two businesses, which will both retain their names, complement each other in that the North East firm specialises in ethically sourced foods and electronic gadgets, while Natural Collection sells ethical organic clothing.

Ethical Superstore, which trades from www.ethicalsuperstore.com , has also received £400,000 of funding from investors led by Newcastle’s NorthStar Equity Investors and including Rathbone Greenbank and a syndicate of business angels, which it plans to use to add more jobs and help with the production of a catalogue.

Muckle LLP provided legal advice on the investment, which is the fourth round of funding for Ethical Superstore from NSEI since 2006.

The firm is also looking to expand its range of food products significantly by the end of the summer from 2,000 to 5,000 and believes it is now big enough to draw people away from big high street supermarkets and on to the internet with its competitive pricing.

Mr Morgan said: “During a time of such uncertainty in the economy, it seemed silly that two companies that fitted each other so perfectly were trading independently. So, in that respect, the need to reduce risk was certainly a factor. However, integrating our resources will allow the combined business to further broaden our product range and customer base, making us more efficient and in a position to target new markets in the long term.”

He also believes the combined business will return to its 50% growth pattern once the recession ends, and highlighted the continuing demand for ethical products – now with a market value of £35bn.

“It’s good to see that the recession has not dented consumer confidence when it comes to ethical shopping,” Mr Morgan said. “Some of our electronic products, such as solar chargers and home energy meters, are also helping our customers tackle the downturn, so there is that element to the business as well.”

PAGE TWO: Business tips from Ethical Superstore boss Andy Redfern.