Retailers count cost of dual pricing

Date: 08/05/1997

By Tim Jones

CONSUMER protection groups and retailers will lock horns next week in their battle over how shops should price their goods during the transition to a single currency.

While the European consumer lobby BEUC is pressing for the dual pricing of goods in the single and national currencies to begin 12 months before the euro appears, retailers claim that this would add to their costs at a time of increasingly cut-throat competition.

Representatives of each side will argue their case at a round table debate organised by the European Commission next Thursday (15 May).

BEUC is urging the Commission to introduce legislation making it compulsory for retailers to display euro as well as national currency prices on all goods.

“We think this is the only way to make it absolutely clear to consumers what something costs and to ensure that shops do not go in for the kind of rounding-up of prices which occurred at the time of decimalisation in the UK,” said a BEUC official. The UK swapped its complex 'imperial' system for a new decimal regime in 1971.

The consumer organisation says dual pricing should also apply to bank statements, utilities bills and pay slips.

But retailers are firmly opposed to the idea.

“This would be very costly for retailers,” said a Eurocommerce spokesman. “Think of all the small shops where they nevertheless sell thousands of items which would all require a double label.”

Since supermarkets only attach price labels to shelves below the goods on sale and since the euro rate against a national currency will always be the same, supporters of dual pricing argue that using a small machine to print tags with two prices should not be too difficult.

But Eurocommerce disagrees. “Is there enough space on the shelves for a double tag?” asked the spokesman, who claimed it would be “even more expensive” to get such a machine.

Instead, the shops' organisation believes that chambers of commerce and governments can be relied upon to produce leaflets and videos for their consumers to help them cope with the transition.

Delegates to the round table will also discuss the question of 'psychological pricing' - that is, how to translate a price such as 1.99 deutschemark into an equally attractive tariff even though the direct conversion at current rates would be 1.05 euro.

Commission officials are studying whether retailers are more likely to lower the new price to 99 euro-cents and so squeeze their profits, or aim for a new psychologically important sum.

Even though this could lead to price rises, the Commission believes competitive pressures from other shops would keep this under control.

“The overall level of prices they want to charge is up to their commercial judgement,” said a Commission official. “What is vital is to make sure the pricing is transparent and any increases are visible to consumers.”

Next week's meeting will concentrate on two key issues: the practical effects of introducing euro notes and coins in January 2002, and how to get people used to the new currency.