Friday, January 1, 1999 Published at 10:41 GMT
Euro case study: Marks & Spencer
Marks and Spencer started planning for the euro well ahead
Of all the companies grappling with the introduction of the euro, retailers will be the most visible if they get things wrong.
Both the sales force and the customers have to make big adjustments at the same time, and companies which manage a smooth transition will have the competitive edge.
The British clothing, food and furniture retailer Marks and Spencer knows all too well about the complexities.
The company has stores or franchises in 10 of the 11 countries joining monetary union on 1 January 1999.
The change-over is made even trickier by the fact that its main business remains in the UK which has yet to decide whether to adopt the single currency.
He has three years to build up to the most visible change. Even though the euro was launched on 1 January 1999 and the value of all national currencies in the eurozone hass been "irrevocably locked", euro notes and coins will not be in circulation before January 2002.
Mr Smith said: "That is going to be when the full impact of the euro becomes apparent to most people."
Of course, people with euro accounts are able to shop at Marks & Spencer stores from 1999 onward, but their credit and debit cards will be charged in whichever currency the goods are priced in - and the company's headquarters will book the profit in pound sterling.
But before the euro is in everybody's pocket, training is the key - both for staff and customers.
"We have produced videos in six different languages to explain to staff about what the euro will mean for them.
"In our continental stores we are also introducing dual pricing, so that people can compare how much something costs in their own currency and in euros."
The first stores to display both prices will be in France and the Netherlands. Once M & S has seen whether this "helps the education process" of customers, the scheme will be expanded to other shops in the eurozone.
UK shoppers will see no changes, insists Mr Smith: "We will continue to price in sterling in the UK, until the government decides if it is embarking on monetary union."
Detailed euro planning for Marks and Spencers began two years ago when senior managers set up a central steering committee.
But it quickly became apparent that devolving responsibility to individual management teams in different countries and business sectors was going to be more effective.
M & S is currently installing 11,000 new tills to cope with both the euro and the millennium bug problem.
Mr Smith said: "Stores in different countries are at different stages. For example, France is most advanced with regards to pricing. They are producing brochures with prices in francs and in euros.
Marks and Spencer's suppliers, which are mainly UK-based, were also concerned about how the euro would affect them.
Mr Smith said: "Some wondered whether they would have to pay or supply invoices in euros.
"We do have a number of European suppliers but the majority are British.
The company took a strategic decision: "As a company we've decided that as 85% of our sale are UK-based sterling will remain the main currency we will deal in. Although obviously that may change in time."
Another issue is the price and size of products. A pair of trousers which may sell for 395 French Franc could cost around 61 euros. Pricing it for 59.99 euros would look more attractive, but would cost the company a lot of money, while a price of 64.99 would still look good but could cost the trust of customers.
For bulk goods like detergents little changes in package size could bring the product down to size and price.
But Paul Smith promises that M & S will not opt for hidden price increases: "Retaining the trust and confidence of our customers is more important than good-looking prices."
Waiting for UK to join euroland
The company is already working on the assumption that the British government will eventually sign up to the single currency and has started to lobby on one crucial issue - the day on which euro coins and bank notes should be introduced.
Mr Smith points out: "The first of January is a nightmare for most retailers because it is the busiest time of the year, the sales are on and there are lots of temporary seasonal staff.
"If the government decides to introduce euro notes and coins then we would rather have them introduced in February which is a far calmer time."
Although the launch of the euro is a bit of a logistical nightmare for retailers - it could be a godsend for Euro shoppers.
If goods are priced in a single currency it is easier to compare prices across different countries.
That means that customers can vote with their feet and companies will be forced to respond with even more competitive prices.