Report of the expert working group on the technical and cost aspects of dual display
Report from the Expert Group to the European Commission
(The Secretariat of the Group was provided by DG II Economic and Financial Affairs)
Contents
Key conclusions and recommendations of the working group on dual displays
Summary and conclusions of the working group on dual displays
1. Introduction
2. Dual displays and the changeover to the euro
2.1 dual displays: benefits both for consumers and retailers
2.2 important considerations concerning dual displays, and potential constraints
2.3 possible need for certain common practices on dual displays
3. Technical and cost aspects of dual display
3.1 dual display in the retail sector
3.1.1 determining factors
3.1.2 three scenarios from the retail sector
3.2 cost aspects of dual display, and the question of new investments
3.3 other means of dual display
4. Dual display in the case of certain categories of retailers: some case studies
4.1 the challenge facing small retailers
4.2 the travel and tourist sector
4.3 mail order and distance sales
4.4 the case of petrol stations
5. Dual display in the financial sector
6. Dual display in the public sector and by public utilities
ANNEXES
KEY CONCLUSIONS AND RECOMMENDATIONS OF THE WORKING GROUP ON DUAL DISPLAYS
1. Dual displays will play a key role in facilitating the switchover to the euro for consumers, retailers and providers of services. They are, however, only one of many instruments which will be used in this process, and could form part of a global communications strategy.
2. Given the diversity of pricing systems currently in use, the many factors which influence the technical aspects of dual displays, and the specific needs of certain activities (small shops, travel agents, petrol retailers, mail order and distance sales), it is imperative that there be flexibility in the approach to dual displays. Flexibility will facilitate the development of dual displays which best meet the needs of consumers. It will also allow retailers to develop dual display in a format that best fits the technical characteristics of their existing equipment. It will thus help keep the costs of dual display to a minimum, costs which in part would be passed on to consumers in the form of higher prices.
3. Imposing dual display requirements that necessitate expensive modifications to existing equipment, or the purchase of new equipment, solely for the purpose of dual display, should be avoided. This is particularly the case where existing equipment could function perfectly well in euros after -day. In such cases, other means must be found to ensure that consumers receive the necessary information on prices. Limiting dual display to the final price to be paid by consumers (i.e. not of unit and promotional prices), to the totals on till receipts and bills, and to balances on financial statements, will also minimise the need for hardware and software changes, and hence help to keep costs down.
4. Consistent with this need to minimise costs, the group urges retailers, where possible, to take into account the dual display issue in all existing and planned investment projects. A great deal of equipment in the retail sector is due to be replaced in any event before 2002, either as a result of technological upgrading, or in order to cope with other challenges such as the year 2000 problem.
5. In addition, it is essential that both Community and national authorities clarify the regulatory framework for dual display without delay. Companies urgently require such clarity if they are to finalise their changeover plans and to make the necessary investments. Confusion and/or delay on this matter will impose unnecessary additional costs on private operators.
6. With a view to providing clarity and certainty to citizens, certain basic practices could be followed whenever there are dual displays: first, the fixed conversion rates should be used when calculating the counter-values in dual displays; secondly, a dual display should not place an obligation on the retailer to accept payments in euros during the transitional period as this would de facto breach the "no obligation - no prohibition principle". Retailers should therefore indicate clearly whether they are prepared to accept payment in euros during the transitional period; thirdly, there should be a clear distinction between the reference unit (the unit in which the price or value is denominated) and the counter-value which is displayed for information purposes only; fourthly, dual display may benefit from common formats or design. Given that rigid requirements would again risk imposing excessive costs, voluntary agreements on common formats or design should be encouraged.
Summary and conclusions of the working group on dual displays
General Considerations
(1) There is a considerable coincidence of interests between consumers, retailers and providers of financial services in favour of using dual displays in certain circumstances. Dual displays can assist consumers in adapting to new prices and value structures expressed in the euro, and also help them to monitor price changes. In doing so they can help to provide reassurance to consumers on the fairness of the changeover process. Familiarity with and confidence in the euro are also essential to prevent some consumers from temporarily postponing transactions around -day (1 January 2002), and to maintain the speed of transactions at checkouts – key concerns from a retail point of view. In addition, dual displays can also be of help in familiarising employees with the euro and in helping them in the execution of their tasks and the prevention of errors.
A number of important considerations concerning dual displays, however, should be borne in mind. Dual displays must be consumer friendly, and avoid overloading consumers with excessive and confusing amounts of financial values. They should not serve as an anchor which discourages consumers from making the switch to the euro. The benefits of dual displays must be balanced against other constraints: notably the potential loss of other information of interest to the consumer where limited space is taken up by the extra financial information; the environmental impact; and, not least, the cost of modifying systems which in part would be passed on to consumers in the form of higher prices.
(2) Dual displays represent just one of many communication instruments that need to be employed for educating citizens and employees. The communications strategy of an enterprise should not be limited to dual displays, but should encompass a whole range of communication instruments. Staff training will be a critical element in the successful changeover strategies of companies who deal with the final consumer. Furthermore, ensuring consumer familiarity with the euro is not the responsibility of these economic sectors alone. The information campaigns of national authorities will play a major role, as will education systems.
(3) The group heard evidence that many retailers, utility companies, banks and insurance companies throughout the EU are planning to provide dual displays of prices and financial information even in the absence of an obligation to do so. These developments reflect the commercial benefits that dual display can bring, and the important role competition in encouraging the provision of high quality information to consumers and clients.
(4) Careful consideration needs to be given to the design of dual displays to ensure that they are clear and understandable. It is essential that price displays should not be overloaded with excessive amounts of figures. The group therefore welcomes the suggestion of the Consumer Committee on the euro that where dual pricing occurs, it could be limited to the final price which the consumer has to pay. In addition, given limited space, it will generally be more appropriate to have dual display only of the total on till receipts, rather than of each item.
(5) With a view to providing clarity and certainty to citizens, certain basic practices could be followed whenever there are dual displays. First, the fixed conversion rates should be used when calculating the counter-values in dual displays. Secondly, a dual display should not place an obligation on the retailer to accept payments in euros during the transitional period as this would de facto breach the "no obligation - no prohibition principle". Retailers should therefore indicate clearly whether they are prepared to accept payment in euros during the transitional period. Thirdly, there should be a clear distinction between the reference unit (the unit in which the price or value is denominated) and the counter-value which is displayed for information purposes only. Fourthly, dual display may benefit from common formats or design (c.f. point 9).
(6) A key issue is that of when dual displays should be introduced. The group considers that, where possible, it would be desirable to have dual displays on banks statements and insurance contracts as of January 1999. Dual displays of other benchmark indicators such as bills from utility companies, could also begin early in the transitional phase (1999-2001). A progressive introduction of dual displays could also take place in the retail sector, especially in the months approaching -day. A single rule, however, would be inappropriate. Timing will depend on the pace at which clients and customers wish to make the changeover, on the nature of the retail outlet, and the types of product being sold. After -day, dual displays could continue for several months. Attention should be paid to the risk that dual display for too long in this period may actually slow down the switch-over of consumers to the euro by enabling them to continue to rely on national currency values.
Dual displays in the retail sector: technical and cost considerations
(7) Any consideration of technical and cost aspects of dual display must acknowledge the complexity and variety of the matter. The technical challenge of dual displays will be determined by a number of key factors. These include the point at which prices are displayed in the price chain (till receipt, customer display screen at the till, on the shelf, on the product), the technical characteristics of the pricing system (electronic, electric, mechanical, manual), the type of retailer (large, small, part of a chain or franchise), the type of product (high value or low value), and the importance of the speed of the transaction. Additional factors are whether dual displays are required of the total or on an itemised basis, and finally the space available on the existing display for an additional price.
(8) Given the multitude of factors influencing the technical aspects of dual displays, and given the diversity of pricing systems employed, it is imperative that there be flexibility in the approach to dual displays. Retailers should be able to develop dual displays in accordance with the needs of their clients, and at the location in the price chain and in the format that best suits the technical characteristics of their equipment. Policy makers should therefore avoid standardised solutions or rules on dual displays, as these may substantially raise the cost of having dual displays.
(9) The group considers that in some cases the clarity of dual displays may benefit from common formats or design, e.g. use of the uro symbol, always displaying the value in euros on the left, displaying amounts in euros and national currency units in different colours. Some groups may wish to develop common presentations, especially where a common pricing format is already employed throughout their sector, (e.g. petrol stations), and indeed voluntary agreements on common formats should be encouraged. The imposition of common formats would be unnecessarily restrictive and could lead to substantially higher costs in developing dual display capabilities. Flexibility should be left to the retailer to determine where dual displays should appear in the price chain (shelf, receipt, screen) and the design and format should be (total or itemised, use of euro symbol, large or small font, location on a label). All displays should be clear and easily understandable.
(10) As a general rule, integrated PC-based systems can be modified to have dual displays at some points along the price chain. On till receipts, it is usually feasible to have a dual display of the total. Introducing dual displays on an itemised basis is significantly more complicated and expensive in terms of software changes required. The size and speed of till printers is also a limiting factor. On customer display screens, the critical factor is the number of lines and characters available. Some screens with several lines could be modified to handle dual displays, others are simply too small. Shelf edge labels of such systems can usually be modified to add an additional figure in euros. Care must be exercised, however, to avoid having too many figures appearing on a small label. Having the possibility to introduce dual displays does not imply that it is always easy or cheap, especially for older systems. Nevertheless, given the commercial benefits that they provide, and as a result of competition, it is likely that many retailers with PC based systems will provide some form of dual display.
(11) Many shops still use electronic cash registers where the software is hard-coded or embedded into chips. Modifications are only possible via the introduction of a new chip set made by the equipment producer. In most cases it will be very difficult to make the changes necessary to provide dual displays on till receipts, even for totals, or on customer display screens. If shelf-edge labels are produced with a back office system, retailers may have the possibility to add an additional figure in euros. Space again may be a limiting factor. In brief, the cost of modifying non-programmable electronic cash registers to have dual display capabilities could be high, at least as expensive as purchasing new equipment.
(12) Many very small shops continue to rely on mechanical pricing systems, especially for labels which are attached to products using a price gun. Generally such mechanical systems cannot be modified to have dual display capability.
(13) Specific consideration needs to be given to the technical challenge of having dual displays on certain categories of product. Some products are priced at source by the producer, (e.g. books and clothing) and collaboration and dialogue is required with suppliers as to the possibility of having dual displays. In addition, prices on products of variable weight, (e.g. pre-packed food, products which are weighed in-store such as vegetables) are often encoded on bar codes which currently can only encapsulate one price. Modifying price labels so that the bar code contains two prices may be impractical given the lack of space on a label for bar codes, and given that the software is usually embedded in a chip inserted in the machine.
(14) Dual displays may also give rise to special challenges for retail sectors that rely heavily on brochures such as travel companies and distance sale. It would not be practical from a cost or environmental perspective to duplicate all price information in dual form.
(15) From the above it is evident that introducing dual display capabilities in some equipment is either technically impossible or so expensive that it would be just as economic to purchase new equipment. Requiring expensive modifications to existing equipment or the purchase of new equipment solely for the purpose of dual displays is not a realistic option, especially if that equipment could function perfectly well in euros after -day as will often be the case. It is also clear that in some circumstances (for example, individually priced goods and brochures) dual display of all financial values would not be appropriate. For all such cases, other means must be found to ensure that consumers receive the necessary information on prices.
(16) A number of suggestions for alternative approaches to dual display were made by the group:
(a) conversion tables could be displayed prominently in retail outlets or in publications and brochures;
(b) there could be dual display of those prices which appear most frequently. Although shops may stock many hundreds or possibly thousands of items, prices are usually clustered around a small number of convenient price points. The same may be the case in certain publications and brochures. Hence, consumers need to become familiar in converting a far lower number of prices than the number of individual items they actually purchase.
(c) Similarly, dual display might be more extensive for the prices of those goods which are bought most frequently by consumers and which serve as basic points of reference.
(17) In addition, retailers and equipment manufacturers should be encouraged to collaborate in the development of inexpensive automatic conversion instruments that could act as substitutes for equipment which cannot be modified to handle dual displays. It is desirable that wherever possible, manual conversions be avoided, since these are prone to error. Three instruments warrant particular attention. The first is the single function calculator, where an amount is keyed in in the national currency unit, and which at the touch of a button is displayed in euros (or vice versa). Ideally, each citizen would have one: alternatively, they could be available at points of sale, at convenient locations throughout stores or attached to shopping trolleys. Already, some companies have developed such calculators which are inexpensive, and many businesses and organisations will provide them free of charge to clients and customers. A second instrument which might be developed for very small retailers is a dual display price gun which produces price labels in both euros and national currency units, and which carries out the conversion automatically. Thirdly, in cases where till printers cannot be modified to print the total in dual form, an additional receipt printer might be placed alongside the cashier. This would be akin to a single function calculator with a printer: the cashier would key in the total amount and the printer would issue a receipt showing both amounts.
(18) Small retailers may need assistance in developing dual display capabilities. Given the importance of brand/company image, companies with a distribution network, chain stores and franchise operators should provide technical assistance on dual displays to their retail outlets.
(19) With a view to minimising costs, retailers should take account of the dual display question in all existing and planned investment projects. A great deal of equipment in the retail sector is due to be replaced in any event before 2002, either as a result of technological upgrading, or to cope with other challenges such as the year 2000 problem. In meeting the challenges posed by the introduction of the euro, PC-based systems offer the greatest flexibility. For those retailers who have not yet migrated to PC-based systems, but are planning to change their systems in coming years, this option should be given serious consideration. It must, of course, be recognised that such investments will often be beyond the means of smaller retailers.
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