Double Currency Displays in Retail Systems : Dream or Reality ?

 

Arnaud Fausse
 
 

Introduction

EURO introduction requests practical support from equipment used in every day life.

Several factors push the retail industry to look for dual display technical solutions in retail systems. A retail system is for instance: a cash register with customer display, a payment terminals, an automatic delivery machine, a fuel pump. In fact EURO concerns all retail equipment displaying price and printing receipts.

Firstly, the " no obligation, no prohibition " principle leads to the necessity of representations of money amounts in " former currencies ". In itís spirit, this principle leaves the shop manager free to organise the switch to the EURO when he wants during the transitional period. But since not all retailers will switch synchronously, the consumer will face sometimes EURO, sometimes the former unit, sometimes both. Therefore, the ability to display and print a money amount in EURO and former unit is important.

Secondly, we saw many similar or simpler experiences of switch to a new money rate (In France currency was divided by 100 in 1960, in UK Litre replaced Gallons...). Each time, the cultural change is harmful for some segments of people : Senior citizen, disabled people, tourists...Even where there is no regulation on dual display, local weight and measurements organisations as well as consumer associations are very alert about what can be and what should be done. Discussion with industry is taking place in order to find solutions acceptable by consumers and retailers.

Thirdly, it is a strong competitive advantage to make an easy life for consumers. Efficient and ergonomic displays, ability to switch from one unit to the other, ability to print clear and readable receipts, all these features will distinguish top quality service from basic selling. Therefore, market mechanisms and competition between retail systems manufacturers, will help to find a balance between new dual display products and the price that the market is ready to pay.

This article aims at giving an overview of the functional requirements needed for double display, the technical problems that industry faces, and solutions that can be implemented to create required functions in the context of existing installed park.

Finally, the case of retailing fuel pumps will be analysed from a marketing point of view.

 

Double Display :

Functional Requirements

Functions

The first paper which dealt with this issue was the "Green Paper on the practical arrangements for the introduction of the single currency", published in 1995. This document describes the scenario of the currency switchover. However, it does not detail what to do at the level of retailing equipment. It describes guidelines that are supposed to be discussed with all bodies involved in the process (governments, companies, consumers association, banksÖ). The European commission created and pushed creation of working groups which dealt with the practical issues. The Economic and Social Committee of the Commission has worked and published a report (CES 1174/95) giving advice.

From these documents, and published European directives, we came to the functional matrix describing what should be done in the various periods of EURO introduction (See Table 1). It doesnít include possible local requirements decided at the country level. Additionally , conversions from one unit to another must follow strict calculation methods (Directive published) and weight and measurement issues remain mostly local to the country.

 
Table 1.
Retail System Minimum Requirements during EURO Introduction Phases.

 

Management Scenarios

The retailer has two major scenarios for the migration of his system toward the single currency :

the single currency. This scenario can be correct mainly if the ratio between the Single Currency and the former unit is close to one (no need of display and calculation adaptation). Obviously, the retailer limits his ability for payment with EURO scriptural money during the transitional period. He will also face some problems during the exchange period, while two currencies will coexist. As a conclusion, we will probably notice two possible behaviours : Competitive advantage

Flexibility in price display and payment methods, will help the retailer to manage his business and will certainly increase potential consumer sales. However, it is necessary to assess such benefit, business segment per business segment.

We probably underestimate the influence of competition between retailers, and a positive dynamic can emerge when the dual display creates strong added value in the sales process.

As an example, we address the case of retail petroleum market at the end of this paper.

 

Technical Problems and Solutions

Many ideas can be developed in order to create double display and printing systems.

However we must bear in mind:

  Replacement solution

This solution seems easy, but in practice we face the connectivity problem. For instance, consider a cash register which is connected to a back office system as well as to a remote server for banking transactions collection. In this case, the new cash register (having Dual display and EURO capability) must have also the same functionality and connectivity capability as the former one. Since not all equipment of a retail system has the same life time (amortisation time is different from a cash register to a sophisticated back office), the difficult management of system heterogeneity is a key issue. We see that the idea of adding a  simple  function can lead to the replacement of the full system. Therefore, the cost of the function is not limited to the affected equipment but also possibly to the connected equipmentís. This issue must be analysed each time we consider the direct and full replacement of one part of the system.

Internal Retrofit

The idea is to change one part of a device with limited influence on the overall system. For instance, a cash register which has already a multi-currency capability, can be retrofitted with a software upgrade, giving the ability to switch customer display to one currency or the other on request of the customer. This is possible only on fairly modern equipment, which has software upgrade capability.

However, it must be seen that some deep calculation functions are involved :

In practice, such a retrofit program must be carefully specified and each case is a specific technical problem. The heterogeneity of the park of retailing systems, allows us to imagine the potentially tremendous costs of retrofit, with the limited capability to amortise development costs on small number of systems and short time period. We can forecast that manufacturers who have invested in systems flexibility will be greatly rewarded.

External retrofit

Many different solutions can be imagined, for instance a display box connected to the existing customer display of the cash register ; a printer with additional module which calculates and prints receipts with additional information...

Theses solutions face various difficulties :

Therefore, we donít believe in general, that such a path can lead to real gain in the medium to long term.

 

Practical Example : Fuel Pumps Displays in Service Stations

General background

Fuel pumps are generally connected to a cash register placed in the station shop. Fuel pumps display the price of fuel per litre, the volume delivered and the total money amount to be paid. Nowadays, pumps displays are limited to only one currency capability.

According to present regulations, itís not mandatory to propose a dual currency display on pumps. However, we easily guess that car drivers would appreciate some extra functions, for example :

We see that having a double currency display and management will be a key issue to be on the leading edge of customer service.

A fuel pump is made of a hydraulic body (the pump itself) and above is placed the box containing the display. The display is in fact one part of the "Pump Calculator". The calculator is in charge of price calculation, display and communication with the shop.

In the shop is placed one or more cash registers, which communicate with all pumps on the forecourt. The operator can release pumps, read transaction prices, and also program unit price, reset pumps etc.

Market structure

The installed park of fuel pumps is highly heterogeneous, collecting numerous pumps types and different technology steps.

There are also many types of cash registers connected to the pumps, payment terminals and back-office computers. Itís easy to identify almost 50 different manufacturers having sold such systems or terminals to Oil Companies in Europe.

Letís set the objective of a double price display system on a pump and letís analyse the various cases we should cover in Table 2. For instance 10 % of the European park needs to " Replace the pump calculator " and to " Upgrade cash register " to support a double display on the pump.

As shown on Table 2, we face at least 8 different cases to manage. For each of them, software development, installation and service will be necessary. These values are supplied for information only.

 
Replace totally the Pump
Replace Pump Calculator
Retrofit Pump Calculator (software)
Calculator ready for adaptation
Replace cash register
5%
5%
20%
5%
Upgrade cash register
5%
10%
35%
15%
Table 2 
European Service Station Market : Types of Necessary Upgrades for a double display on pumps. (Relative to total automated stations in EURO zone)
 
Cost of solutions

Without detailing costs of all cases, the average cost of a calculator and POS change can be in the order of 15,000 ECUs. A pump and POS change can be around 55,000 ECUs, and a software upgrade of a calculator would be around 4000 ECUs. Multiplying such costs by the proportions of Table 2 and by number of stations per country and by an average of 4 pumps per station, leads to Table 3 which collects as estimation of total costs for the considered European countries.

 

Country
Automated Stations (1997)
Cost ECU
Europe
Benelux
5 000
51 000 000
France
12 000
124 000 000
Austria
2 000
20 000 000
Germany
12 500
129 000 000
Greece
2 000
20 000 000
Ireland
1 800
18 000 000
Italy
8 000
82 000 000
Portugal
1 200
12 000 000
Scandinavia
8 000
82 000 000
Spain
5 500
56 000 000
UK
12 300
127 000 000
European Total
70 300
Table 3. 
European Service Station Market : Estimation of Cost per Country for a full Double Display Capability on pumps.
(Relative to total automated stations in EURO zone)
Conclusion

We analysed various aspects of double display problem:

The complexity of the problem did not allow the emergence of strong regulations for double display. This is a great opportunity for the manufacturers and the market to find the best solution for business and consumers.

 
 
16/07/1998

 

Program Manager in Schlumberger Electronic Transactions Division. fausse@montrouge.ts.slb.com Figures, tables and comments provided for information only.


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