EFT and Cost savings – Goodbye to Customer service? – Market Matters

Running any sort of retail business isn’t that difficult – buy something cheap, add value by tarting it up, then sell it on as expensively as you can whilst keeping your costs down. What is difficult is to increase sales turnover i.e. attract more customers and stop your existing ones from drifting off to the competition. So it amazes me that so few market businesses have kept up with high street retailers and adopted EFT (Electronic Funds Transfer – i.e. accepting debit and credit cards). Most markets continue to rely on a cash economy, which strangles their turnover. 

I know there are plenty of problems associated with EFT – setting-up a merchant account with the card companies and agreeing the percentage charge etc, but credit cards can’t be uninvented and customers expect to pay by plastic. Several companies advertise ‘Chip and PIN’ solutions by mobile phone so even casuals can now offer EFT. Although there might be a charge per transaction and connection speeds are slow, the technology is improving. Not offering to take plastic deselects plenty of customers. How many times have you had to say: “Sorry love but I don’t take cards – the cashpoint is just round the corner” and never seen them again? Once lost – always lost.

I can’t help thinking that reluctance to adopt EFT is a combination of resentment at paying the percentage and reluctance to evidence a turnover exceeding the VAT threshold. That might be understandable for a casual but for a kiosk in a market hall there is precious little alternative if you want to remain viable. Forget about calling yourself a ‘market trader’– you’re an independent retailer with fixed overheads of rent, service charge and staffing and if you’re taking a living wage without turning over enough to be VAT registered, then you’re a genius. For everyone, else going electronic is the easiest way to increase turnover and secure a higher value per sale.

There is a cost to this of course – buying or renting a PDQ terminal and the transaction charge from card companies. More importantly, sales by card tend to be less price-sensitive than cash as customers never see the cost until next month, which is never more important than now in the run-up to Christmas. You may have to argue with your landlords about who pays for EFT cabling or the WiFi network, but that is what your competitors are doing. There is precious little room for sentiment in retailing.

And talking of technology… Did you see that our cost-driven friends at Tesco have opened their new Express convenience store at Kingsley in Northampton without any checkout staff at all? All five checkouts are overseen by one staff member but are otherwise fully self-service i.e. scan it, bag it and pay for it by touchpad ‘to provide a better service and free-up staff to be on the shop floor with customers’. No mention of saving the staff costs of course but shopworkers union USDAW isn’t buying that story. Their warnings about the loss of checkout jobs will fall on deaf ears at Tesco but Asda have put a different spin on it by stating they have no plans to go self-service because helpful customer service at the checkout will always be their priority.

Senior citizens might, though, remember how the high street banks said the same about cashpoints when they were introduced in the ‘70’s. HSBC Bank has now taken this one stage further with fully-unmanned (is that the right word?) branches. They, like Tesco, are no slouches when it comes to driving down costs by offering people a choice (and getting them to pay for it in the case of RyanAir). My local branch now charges non-HSBC customers £5 per transaction between 12.00am and 2.00pm to ‘improve the quality of service to HSBC account holders’ and doesn’t have a cashier to give you change for the pay and display.

EFT technology is the writing on the wall for all retailers – market traders included. I can think of at least two Markets where traditional ‘serve-over’ counters have been ditched in favour of self-service baskets, staffed checkouts and EFT. Hopefully the traders now enjoy cost savings and increased profits and as technology evolves they might even introduce self-service checkouts. In the meantime, would-be thieves should be aware that supermarket systems know the weight of every item in the store and compare the weight of the bag with the number of items scanned. But I don’t think the systems can, as yet, recognise blondes and stop them from reciting their PIN number to everyone within earshot and putting their handbags into the shopping bag.

So much for customer satisfaction. Self-service tills are probably the final nail in the coffin of enjoyable shopping. The challenge for markets is to find the compromise between cost-efficient self-service and the friendly personal touch that shoppers enjoy. When I was a lad, I couldn’t work out why Dad preferred filling-up at the garage on the other side of town until I saw the pump attendants were girls in hotpants. They had a queue down the street and although wet T- shirts might be a bit impractical on your stall this winter, do try to keep cheerful. A smile goes a long way.

Jonathan Owen is a director of Quarterbridge Project Management – a specialist consultancy providing business advice and design services to market owners and trade associations. He has a keen interest in the politics of retailing, growing vegetables and eating well.

Market Matters, published in Market Trade News magazine