COUPON SYSTEM.

Press, Volume LXVI, Issue 20104, 6 December 1930, Page 13

COUPON SYSTEM.

CONDEMNATION BY TRADERS. Legislation demanded. As vicious a scheme as anyone could conceive" was the way in which the coupon system was characterised by a largo number of representative grocers, wholesale merchants, drapers, fruiterers, confectioners, tobacconists, and chemists, when questioned on the subject yesterday. All maintained that the operation of the system in no way benefited the public, and that it was actually detrimental to the traders themselves. -They were unanimous in the opinion that legislative action should be taken to put a stop to the practice. The procedure of the coupon companies was outlined as follows: —The retailers are offered, coupons at £2 10s I )e r thousand, and one of these is to be given to each customer who buys goods of a certain value, generally two shillings, at the shop, with further coupons for each two shillings extra value. When the customers have a sufficient number of coupons they redeem them through the company, obtaining in return various sorts of goods, the number of coupons required varying from 90 for such a thing as a comb to 25,000 for a radio gramophone. The system was attacker] first of all because, it was maintained, it was of no real benefit to the general public, who seemod to think that when they redeemed the coupons they would be getting something for nothing, while in reality, since the trader had to pay for the coupons, they would probably pay more for their goods than under normal circumstances. As the coupons were issued for cash payments, the customer would not receive the normal discount for cash, which was generally 2A per cent., and was sometimes more, but instead received goods after he had saved a large number of coupons, usually representing at least ten pounds of expenditure and generally much more. On the actual value of the goods received for coupons the percentage of discount was far lower than per cent., so that he was losing by the proposition. Loss to the Trader. The system did not benefit the trader because be was being taxed by it at the rate of 2A per cent, on his gross takings if he gave a coupon for each two shillings' worth of goods, and 5 per cent, if he gave them on a one shilling basis. If he was working his profit on a 10 per cent, basis on his turnover, be would be paying the coupon company 25 per cent, of his profits in the one case, and 50 per cont. in the other. The supposed advantage to the man who gave the certificates, of stealing a march on his competitors because the public would buy from him for tho sulco of the certificates, did not exist, for no less than three coupon companies were already operating in competition with one another in the samo area. Several Coupon Systems. '•They say that they aro getting an advantage for you, that your business will be increased because people will buy for the sake of the certificates," said Mr S. W. Lambton, president of the Canterbury District Fruiterers' Association. "That is all right so long as no one elso gets them. They give you a written guarantee that nobody else in the same line of busness within a certain area will do so, but the advantage is destroyed when another coupon company gives the same terms to the man alongside of you. "When practically every trader is giving certificates of one sort or another the only advantage will be to the companies themselves, and the public will be paying a higher price for their goods in order to cover the cost of the coupons. "As an examplo of the practice of the companies there is this fact: one trader agreed to take the coupons, buying 2000 of them. His weekly turnover on goods and amounts on which the coupons could be given was not more than £3O, or the equivalent of 300 coupons. Within ten days after receiving them he received a letter from the company as follows:—'ln accordance with the terms of your contract with us, we are not to offer coupons for sale to others in the territory reserved for you so long as your repeat orders come along regularly. This letter, therefore, is a reminder that another order is almost due from you.' With the letter was a requisition for ordering, and a request for an accompanying cheque. They gave him no time to get started before actually threatening him! "There is no fault with the ordinary system of giving direct discount, or with a trader giving coupons redeemable in his own shop. The system there is self-contained, and is an arrangement entirely between the trader and his customers. A further step is to be seen in tho cigarette and tea coupons, where the individual trader does not handle the coupons, which go to all alike with the manufactured goods. The disadvantage there is that they are redeemed on goods of a class different from those with which the coupon, is given. The wider systems are not run by manufacturers at all, but by those who see an opportunity to make a direct profit, at the expense of both trader and customer." A Tax on the Retailer. "The main objection is that the system is a tax on the retailer, who is already in a bad enough position," said Mr H. A. C. North, secretary of the Canterbury Traders' Welfare Association. "These people are producing nothing at all, but just making a levy on all who fall in with their scheme. In Australia and South Africa the position became so bad that legislation was passed blocking all prize and bonus schemes, whether by manufacturers or universal distributors. At the present time there is a general feeling that all prize and bonus schemes are much overdone. "The present scheme is undoubtedly of the type that the Government intended to put a stop to many years ago. There has been legislation on the Statute Book ever since 1900 to prevent trading stamps, and the matter is being taken up by* our organisation with the Minister for Industries and Commerce. There can be no doubt that every member of the Association, which really covers the grocery trade, including all retailers, wholesalers, and manufacturers, is right behind the executive in the effort to have a stop put to the operation of the scheme.'' The Gifts. Similar opinions were expressed by -lr W. Tuck. The coupon system, he said, did not in any way extend the buying power of the community, and an important fact was that the coupons ad to be redeemed within two years, which meant that the ordinary working man, who spent perhaps £2 per week on goods for which he could obtain a coupon, would at the end of that time nave only 2000 of them, which gave him no opportunity of obtaining anything but the smaller gifts. The gifts themse \ were marked in the coupon book as being worth sums far in excess of wieir *eaj ag whys, an giTwniTrimß

tea-pot, for 130 coupons, was marked as being worth 5s 6d. Its real value was 3s, which, on an expenditure of about £l3, was a discount of a little over one per cent. "They are all no good," said Mr W. Machin, general manager of the New Zealand Farmers' Co-operative Association of Canterbury, Ltd. "I knew of them twenty years ago when friends came to me asking if I would take up with a similar scheme. I said that I would be happy if they all took up the scheme and left me out of it. That's how good I think they are for trade!" An endorsement of Mr Lambton's opinion was also given by Mr T. B. Boulton, of the firm of Fletcher, Humphreys, and Company, Ltd., and by a number of tobacconists, confectioners, and chemists, all of whom were emphatic in their condemnation of the system.