1960s >> 1964 >> no-715-march-1964

Big stamp wrangle

The biggest battle for a long time is now being fought in the retail trade in this country—and all, on the surface, over a little piece of green, or pink, or gold, sticky paper called a Trading Stamp. Yes, on the surface. The real cause of the battle is to be found much deeper than any newspaper cares to dig.

Trading Stamps have been going in this country for a long time with Green Shield, a British company, having the big hold. But the stamps were mainly confined to small shops; they had no really big retail organisation to issue them. What started the present fuss was the decision of millionaire Garfield Weston (ABC, Fine Fare Supermarkets) to issue the American Sperry and Hutchinson pink stamps in his supermarkets.

This started a flood of stamps, among them another American concern — King Korn — and another British Super Yellow, owned by the same John Bloom who has made a lot of money out of direct selling washing machines. One gimmick followed another — Mr. Weston, for example, had glamorous pink-coated hostesses outside his supermarkets dishing out the S.H. gift catalogue.

Sperry and Hutchinson have been going for a long time—since 1896, to be exact, and have been in England, looking for an outlet, for over a year. They claim forty per cent. of the £300 million trade done in 275,000 retail shops in the States and have 280 redemption shops where their stamps can be exchanged for what are called gifts. The man behind them is Mr. William Sperry Beinecke, who says that trading stamps are no panacea for the retailer but only a promotional tool to help his sales.

Ranged against the stamp firms are some of Britain’s retail giants Boots, W. H. Smith, Sainsburys, and so on. Labour peer Sainsbury, who has hundreds of shops, is spending some £50,000 in a campaign to thwart the trading stamp firms. Sainsbury opposes the stamps because, he says, they are wasteful and in the end lead to higher prices. And, of course, because they are “unfair competition.” He is doing his best to persuade the Labour Party to make the matter one for legislation.

On the side of the big retailers in the battle is the shopworkers’ union— USDAW, whose executive committee, in the name of their 350,000 members, say that trading stamps are against the interests of shops and stores, employees and consumers and that in the end the nation (by which they mean you and me) will bear the added burden of the cost of the stamps and gifts and the labour involved in producing and checking them.

Mr. Garfield Weston, for his part, protests that he would not do anything which was against the public interest and so is determined to carry on his sales drive with what he hopes will be the help of the stamps.

The printing and distribution of hundreds of thousands of gift catalogues alone costs at least £2 million; it is this sort of cost which Lord Sainsbury says will be passed on to the customer. The Progressive Grocer Magazine figures that trading stamp amount to fourteen per cent, of a retailer’s operating costs and that he has to take this into account when setting his prices.

Frank L Chavia in his book Supermarkets, published in 1961, writes:

  “Selling Operations“. Stamps are generally at the rate of one stamp for each 10 cent purchase. For a supermarket to use this promotional tool successfully certain prerequisites must be met.

 

  1. The (user) shop should be part of a group of different stores reasonably close to each other geographically. All should handle the same stamp with the super or a departmental store as the centre of influence.
  2. Stamps are promotional: customers must be encouraged to save them and associate the stamps with that particular store.
  3. Stamps must obtain and hold additional volume, while the volume increase varies; at least 10% increase in sales is needed to break even on the stamp cost.
  4. The super must be able to handle added volume without materially increasing the overheads.
  5. Stamps are not a panacea for supers whose quality and type of service are inferior to those offered by competitors.
  6. Stamps do not permit much if any, independence in pricing.

Now it is obvious that the retailers who have taken up the stamps have not done so, so that they can give the housewife a brand new set of saucepans or any of the other “gifts.” They hope and expect to increase their profits through the stamps and this need not come about by a simple rise in their prices. What they say they are aiming at is to increase their turnover and by this means to increase their profit. One of the stamp companies’ press adverts claims that, in retaliation, some anti-stamp retailers have had to cut prices and that therefore the ultimate winner in the struggle is the consumer. In this sort of advert it is always the consumer—and never the shareholder—who wins.

In fact, trading stamps, like the checks, coupons, premiums, samples, contests which have all been well tried in the past are part of the jungle of capitalism’s competition. And competition will only bring prices down when there is an overall excess of the supply of a commodity over the demand for it. The fierce competition between the grocery retailers did not, for example, prevent the increase in the price of sugar last year.

The process of profit making is basically quite simple. The capitalist class, who own the places and the materials which go to produce and distribute wealth employ the working class. The labour of the working class produces the wealth; it builds the shops, produces the groceries, transports them. The workers serve in the shops, they take the cash at the counters. In this process they are exploited simply because, in terms of a commodity’s value, they contribute more than they get back in wages. When their labour is done the commodity they have made or handled has a higher value than it had before. It is from this higher value that the employer—the industrialist, the retailer perhaps—gets his profit.

This profit often has to be shared with other capitalist concerns—with advertising agencies, insurance companies, banks, landlords. And sometimes with a “gimmick” concern like the trading stamp companies. In the competitive rat race the capitalists get headaches, and worse, in trying to outwit and outsell each other. Some retailers may try simple low prices—like Salisburys and Boots. Others may fall for the wiles of the stamp trading companies. In this they are creaming off some of their profit, sometimes in the hope of making a larger overall profit—and sometimes merely to survive.

The working class are as passionately divided in this struggle as are the competing retailers. Some of them like the stamps—they like sticking them in, they get a kick out of their “free gift.” Other workers think that the stamps are a dishonest gimmick. Yet if they will all take a deep breath and have a good think about it, what would they find? Why. that whether they collect stamps or not, and whether prices go up or down, they still only just manage to get by on their wage. When they have paid the landlord and the grocer and the H.P. man, when they have put a bit by for their holiday, and when they have paid for all the other necessities of life, there is precious little left.

As long as the working class are deluded by the gimmicks of capitalism—in all their many shapes and sorts—there will be no end to them. Perhaps some enterprising firm will try white balloons next. For saving so many white balloons you can get so many black stamps which you can exchange for so many pink discs which you can swop for . . . and so on, and so on, until they get wise to it, and it dawns on them that a better, saner way of making and distributing humanity’s wealth is so that it is strictly for use instead of for sale and letting all human beings have free access to it.

Joe McGuinness