OPERATIONS

Most Canadian retailers ready for penny phase-out

BY Alaric Dearment

Toronto — Most retailers in Canada are ready for a phase-out of one-cent coins, a national retailing trade group said Wednesday.

The Retail Council of Canada said the majority of the country’s retail businesses were prepared for the disappearance of the penny and will follow the government’s proposals for determining prices.

The Canadian Mint stopped producing pennies last spring and will begin phasing them out of circulation starting on Feb. 4. At that point, retailers are encouraged to round prices up and down to the nearest five cents when exact change is not available. For example, an item that costs $1.01 or $1.02 will be rounded down to $1, while an item costing $1.06 or $1.07 will be rounded to $1.05; an item costing $1.03 to $1.04 will be rounded to $1.05, while an item costing $1.08 or $1.09 will be rounded to $1.10. Rounding will not be needed when payment is made by check or electronically.

"On Feb. 4, most of Canada’s retailers will be ready at the cash register to handle the phase out of the penny," RCC president and CEO Diane Brisebois said. "While we have been supportive of this initiative all along, we are grateful that the government delayed implementing the changes until this point, as retailers have needed the extra time to prepare."

According to an RCC survey, 55% of retailers are prepared for the phase-out, while 74% of small retailers and 75% of large retailers will round manually at the cash register. At the same time, 63% of large businesses will change their point-of-sale systems, which could cost them more than $100,000.

"While smaller businesses will do the rounding manually and then determine the appropriate course of action, both in relation to cost and customer service, it is not a practical approach for retailers 0with thousands of employees," Brisebois said. "This of course represents a substantial cost for retailers to enable them to maintain standardization and meet consumers’ needs and expectations."

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FINANCE

NRF: Retailers unlikely to surcharge for credit card use

BY Staff Writer

Washington — Despite some groups’ claims, the National Retail Federation said that few, if any, merchants are expected to surcharge customers for using a credit card as theoretically allowed under a controversial proposed lawsuit settlement with Visa and MasterCard being debated in the courts.


“The ridiculous concept that merchants will start surcharging on any widespread basis is propaganda being spread by the card industry in an attempt to divert attention from their skyrocketing swipe fees,” NRF SVP and general counsel Mallory Duncan said. “The lawsuit sought to bring down swipe fees and the prices paid by consumers, not to increase prices. The card companies’ new surcharging proposal runs 180 degrees counter to the intent of the lawsuit.”

“While there conceivably could be exceptions, merchants in general have no intention of surcharging,” Duncan went on. “We have discussed the settlement with many of our members and other merchants, and not a single one has said they will surcharge.”

While the settlement would allow retailers to surcharge, a number of obstacles would prevent most merchants from actually doing so even if they wanted to:

Ten states representing 40% of all U.S. credit card transactions – California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas – prohibit surcharges by law.

Visa and MasterCard require a retailer to have the same card acceptance policies in all its stores. It is therefore questionable whether national chains or regional chains with stores in the 10 states above would be able to surcharge in the 40 other states.

“National and regional chains don’t want to surcharge and probably couldn’t,” Duncan said. “Small retailers are too busy running their stores to jump through the hoops required by Visa and MasterCard and could not afford the expense. The bottom line is that very few retailers would be able to surcharge, and the vast majority don’t want to surcharge even if they could.”

The surcharge provision is part of a proposed settlement announced in July in a federal antitrust lawsuit brought by merchants against Visa and MasterCard’s swipe fees. Averaging about 2%, swipe fees are a percentage of the transaction taken by banks each time a consumer swipes a credit card to pay for a purchase, and total about $30 billion a year nationwide. The fees have tripled over the past decade, but the settlement failed to take steps to bring them under control. The majority of the plaintiffs who brought the lawsuit have repudiated the settlement and have gone to court to block it from receiving final approval.

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STORE SPACES

Ikea goes live with South Florida’s largest solar energy system

BY Marianne Wilson

Sunrise, Fla. — Ikea on Wednesday officially plugged-in the solar energy system installed at its store in City of Sunrise, Fla. It is the largest solar installation in South Florida and, when combined with Ikea projects already completed atop stores in Orlando and Tampa, will make Ikea the state’s largest non-utility solar owner.

Ikea contracted with REC Solar for the development, design and installation of the Sunrise store’s customized solar power system. The 101,774-sq.-ft. PV array consists of a 1,057-kW system, built with 4,368 panels. Ikea Sunrise’s program will produce approximately 1,554,600 kWh of clean electricity annually, the equivalent of reducing 1,181 tons of carbon dioxide.

This installation represents the 35th completed solar project for Ikea in the U.S., with four more locations underway, making the eventual U.S. solar presence of Ikea nearly 90% of its U.S. locations with a total generation of 38 MW.

Ikea owns and operates each of its solar PV energy systems atop its buildings – as opposed to a solar lease or PPA (power purchase agreement) – and globally has allocated $1.8 billion to invest in renewable energy through 2015. Consistent with the company’s goal of being energy independent by 2020, Ikea has installed more than 250,000 solar panels on buildings across the world and owns/operates approximately 110 wind turbines in Europe.

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