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Thursday, 16 August, 2001, 11:22 GMT 12:22 UK
Retailers face the euro challenge
Sports shoe with euro and Deutschmark price tag
Dual pricing in the run-up to e-day, 1 January 2002
Retailers in the 12-country eurozone have just over 90 days to get ready for the launch of euro notes and coins. But are they up to the task? BBC News Online's Tim Weber visited a small town in Germany to find out.

For Guenther Bartosch, the euro talk has turned into euro reality.

Mr Bartosch works for a small delicatessen and catering business in the Bavarian town of Weiden.

Bread in Baeckerei Brunner, with dual pricing
So how much is that loaf of bread in euros?
A few weeks ago he tried to order several bags of his favourite coffee from Illy, an Italian company based in Trieste.

But ordering was not as straightforward as it used to be. The new price lists are all in euros. The Deutschmark has disappeared.

Ursula Sonna knows the feeling. She owns a small shop selling fine china and crystals. A few days ago she received her first bill in euros, and now has to fit it in with her accounts.

The euro challenge

Soon, though, the euro will prove to be a much more unsettling experience.

From 1 January 2002, retailers will be obliged to give change in euro notes and coins, while over two months the Deutschmark will be phased out.

It will be a challenge, both for customers and retailers.

In the early hours of New Year's Day 2002, bleary-eyed revellers trying to pay for the next bottle of champagne in Deutschmarks will have to count their change in euros.

Staff in petrol stations, railway ticket offices and some bakeries are next in the euro frontline.

Installation of new computer system at Sporthaus Fehr
Retailers are getting their computer systems euro-ready
On Wednesday, 2 January, the fun begins. The first week of January sees the start of the sales season and traditionally is the busiest time of the year for most shops.

But record turnover means record cash in the tills ... cash in two currencies, one of which is unfamiliar to both staff and customers.

Depending on the size of the business, the challenge to guarantee a smooth changeover can be enormous.

The euro checklist

Getting euro-ready
change price tags,
upgrade tills
update computer systems
train staff
recalculate business accounts
revalue stock
change salaries
order enough euro cash from bank to last through January
sort out safety arrangements and insurance for extra cash
The checklist for getting euro-ready is long, and affects every part of the business, says Wolfgang Eck, the man in charge of IHK Weiden, the local chamber of commerce.

Shop managers will have to re-label their goods in euros, upgrade tills, train staff, update computer systems, recalculate their accounts, stock and salaries, and order enough euro cash to see them through the first weeks of January.

Eurocommerce, the trade association representing small retailers, estimates that shop keepers will have to distribute "five times the weight of the Titanic in coins".

Gearing up

Christian Fehr believes he will be euro-ready by December. He manages his parents' sports gear shop, and is currently putting the finishing touches on his euro preparations.

Sales person at old cash register
New tills linked to a new logistics system will replace old cash registers at Sporthaus Fehr
With the help of Intersport, a purchasing co-operative for sports retailers, he has just installed a new computer system that makes him both euro-ready and gives him better control over his own warehousing, logistics and goods ordering.

While the new system is installed, newly delivered sports gear is rapidly piling up, and Mr Fehr estimates it will take five days and nights of printing new price tags to cope with the backlog.

Products already on the shelves will keep their old Deutschmark prices, and Mr Fehr hopes to have shifted them by the end of the year.

"I would have had to invest in a new IT system regardless of the euro launch," says Mr Fehr, who hopes it will help him to boost stock turnover significantly.

Business upgrade

Stefan Brunner has a similar strategy. He manages his family's bakery, with 400 employees and a chain of 74 shops in and around Weiden.

Stefan Brunner, manager of Baeckerei Brunner
Stefan Brunner: There could be chaos in the first weeks after the euro cash launch
As part of the euro preparations all shops will soon be online. This will allow him to fine-tune the product mix in each of his shops, and allow him to order the right amount of ingredients used in his firm's large bakery in Weiden.

However, not everybody is that well prepared.

Wolfgang Eck at the Weiden Chamber of Commerce has held briefings for companies across the region, and believes that "the majority of people does not realise what will hit them".


The more rural you get, the less prepared people are

Wolfgang Eck, Weiden Chamber of Commerce
And it's not just retailers and restaurants that are not euro-ready. Many small regional banks have failed to sort out their euro logistics as well, says Mr Eck, "and if they aren't ready, they can't support local businesses who bank with them".

"The more rural you get, the less prepared people are," warns Mr Eck.

Spreading the euro gospel

Banks play a key role in preparing retailers for the euro cash launch.

Whether it's Mr Bartosch in his small delicatessen or Mr Brunner and his 74 shops, they all rely on banks to train staff and give advice on cash requirements.

Weiden,
Shoppers in Weiden have to say good bye to their beloved Deutschmark
Mr Fehr employs 23 sales people and has already arranged for his bank to train them.

Staff at the Brunner bakery are scheduled to attend in-house training courses three times a year anyway, and the euro will now be added to the schedule, says Mr Brunner.

For smaller firms, both chambers of commerce and craft guilds offer manuals on how to prepare for the euro.

The price is right


Whoever uses the euro cash launch to push up prices will be pilloried in the press, and nobody can afford that

Stefan Brunner, bakery owner
But getting ready for e-day involves more than being able to recognise the new coins and bank notes.

First of all, retailers must get the price right. Should a pair of socks, now costing 7.99 Deutschmarks (DM) be priced at 4.08 euros - or should the retailer cut the profit margin and call it 3.99 euros?

And what about the CD for DM25 - will it cost 12.78 euro or can the shop (or record company) rip off consumers and price it at 13 euros?

Christian Fehr says that some sports manufacturers have been pushing up Deutschmark prices steadily since spring, to avoid being accused of pumping prices at the euro launch.

Ursula Sonna, though, has seen some prices come down: "The manufacturer didn't want to see a particular product priced above 50 euros, so they cut the old recommended retail price."

Stefan Brunner rules out any price rises in his bakery: "Whoever uses the euro cash launch to push up prices will be pilloried in the press, and nobody can afford that."

Cash as cash can

Come e-day, shops in the eurozone will have to sit on a pile of cash.

The IHK's Mr Eck estimates that some shops will need up to 10 times as many coins as normal, while others may get away with three or four times the normal amount of change.

Big item retailers like Mr Fehr have a huge advantage. About 70% of his customers pay using Germany's ubiquitous Eurocheque debit card system.

With an estimated daily turnover of DM80,000 during the first week of the year, having to handle just 30% in cash "makes things a lot easier", he says.

Supermarkets, butchers and bakers will find it more difficult.


There will be a few stumbles during the first two or three weeks, but no major disruptions

Wolfgang Eck, Chamber of Commerce
Stefan Brunner predicts that shops like his will be the "euro money changers of Germany". His shops serve about 750,000 customers a month, each spending on average DM4.50 (2.30 euros) per transaction.

Chances are, says Mr Brunner, that some of his shops will run out of cent coins to give change. They will be able to use Deutschmarks as back-up currency, but that is bound to add to the confusion.

The euro verdict

So will the changeover work, and will everybody be ready?

price labels on socks
Which price sounds better: 5 euros or 9.78 Deutschmarks?
Wolfgang Eck believes that a small business can prepare for the changeover in one month, although leaving it to December might be a bit late because of the Christmas rush.

He predicts "a few stumbles during the first two or three weeks", but does not expect major disruptions.

Stefan Brunner is less sanguine: "I believe there will be chaos during the first few weeks - the system will be strained."

But Mr Eck argues that Germany has a big advantage. One euro is roughly equivalent to two Deutschmarks. Other eurozone countries have to cope with much more awkward exchange rates, adding to the confusion among customer and sales staff.

The general bewilderment has already begun. Says Ursula Sonna: "When I look at some price tags in my shop I think 'Oh, that's cheap' - until I realise that I am looking at the euro price."

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Catherine Piana, Euro Vending Association
"Our main concern is security"

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