The case for community stores

High bank charges for lodgements encouraged many retailers to install ATMs in-store
High bank charges for lodgements encouraged many retailers to install ATMs in-store

CSNA chief executive Vincent Jennings submits a letter to Joe Duffy of RTE on the subject of community stores in rural Ireland



13 March 2012

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“Dear Joe, 

I am aware that you have always been well disposed to the plight of small businesses trying to keep their doors open and their communities serviced.
This was given a further airing recently with your pieces on the removal of ATM machines from locations around the country.
A further indication of the difficulties of remaining viable is the attitude of An Post, Dublin Bus, Bord Gais, the ESB and the National Roads Authority, as well as many of the local authorities through the appallingly low and unsustainable schedule of fees and commissions paid to retailers for acting as revenue collectors for these bodies, processing a wide variety of payments in our stores 364 days a year, 16 hours each day.
When a customer pays their utility bill, obtains a postage stamp, pays their road toll, gets a refuse tag for their waste disposal, gets a Leap card or makes an advance payment to the ESB they are served by our members and their staff in privately owned businesses that are not in receipt of any public grants or allowances for the functions carried out on behalf of these State owned bodies.
The savings enjoyed by these undertakings in transferring part or all of an expensive operation should, one might reasonably expect, be sufficient to authorise a fair return to the people willing to carry out what was, up until quite recently, work undertaken in a 9-5 (and less), five days a week public office. This was staffed at local government and civil service pay rates.
These bodies also had to pay security firms to transport the money collected to the bank, pay bank cash handling charges, employ auditors and additional clerical officers to administer the reconciliations, in addition to the heating, lighting and general maintenance costs attendant to running a number of offices throughout the country.
It might be considered that such a transfer would have invoked in these bodies a willingness to reward shops as part of their corporate responsibility; not a bit of it, instead some of them wish to reduce further our commissions and “earnings”.
Bank charges have quadrupled in the past three years to most of our members, local authorities have not reduced rates in most parts of the country, and for some, the new valuation system has meant very considerably increased rates demands. There is less disposable income in the vast majority of our customers’ purses, with a marked decrease in spending on newspapers, confectionery and convenience goods. In many urban areas, cigarettes are being sold door-to-door and at workplaces and markets by organised criminals. For many retailers, 25% of their turnover came from the sale of tobacco products and is vital to their viability.
It is against this depressed (and depressing) background that retailers have every right to feel aggrieved that state bodies have achieved very significant savings by hiving off these payment functions and “paying” us less than the cost of providing the service. Getting 1% of a €3 toll for the M50 is in reality a commission of less than 2.5 cents once VAT on the commission is removed. The service cannot be rushed and each digit and letter must be manually keyed; the whole transaction never taking less than 40 seconds. We note that the toll had been €2 and feel that we should have been better provided for by the NRA.
We sell postage stamps, for which we receive a 5% commission when bought through An Post or a local post office. An Post recently informed retailers of a 20% redution in margin to 4% and that retailers were required to install the PostPoint terminal, and offer the “full suite" of services (Bill pay, Top-Up, etc) and in some instances pay a significant deposit.
A customer paying €100 off their ESB or Bord Gais bill may be surprised to learn that the privately owned shop, staffed 16 hours a day will process their payment, provide a receipt, handle the money and provide the utility company with the money overnight by a direct debit for the princely sum of 17 cent. It will cost the retailer more to lodge the €100 with the bank than they earned! 
Incidentally, that is why many retailers installed ATMs, to reduce the bank fees in cash lodgments, currently running to a level of 48 cent per €100 notes and €2 per €100 coin lodged. The retailer filled the ATM with the cash from the tills. Bank of Ireland attempted to get retailers to put in, at the retailer’s expense, anti counterfeit hardware at a cost of €2,000 last year but CSNA mounted a spirited attack and repelled the attempt!
You have every right to ask, why on earth are you prepared to work for nothing? The answers are complex and are never based upon one simple response, but they are bound up in fear (of losing customers if a competitor has it), a desire to keep business local (if the bills are paid in the town, maybe the shopping will be done there also), a genuine wish to provide a wide range of services, especially after the loss of many local post offices, and a hope (unfounded it turns out) that service and bill payers will buy during their visit (the dreaded footfall argument).
Local shops can and do provide an invaluable service, you have always seen the merit in their continued enhancement of our way of life; please continue to do so.
Vincent Jennings 
Chief executive officer
Convenience Stores and Newsagents Association (CSNA)”


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