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Thursday, 16 August, 2001, 11:22 GMT 12:22 UK
Retailers face the euro challenge
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.
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.
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
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".
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.
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.
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.
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," 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.
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
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.
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?
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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