I welcome Mr. Vincent Jennings, chief executive officer of the Convenience Stores and Newsagents Association; Mr. Joe O'Connor, national president; Mr. Philip Keegan, past president; Mr. Joe Holmes, membership and development officer; and Mr. Joe Tierney, Mr. Liam O'Connor, Mr. Stephen Daly and Mr. Peter Dwan, executive members. I draw their attention to the fact that while members of the joint committee have absolute privilege, the same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable. I invite Mr. Jennings to make a brief presentation which will be followed by a question and answer session.
Competition Issues: Discussion with Convenience Stores and Newsagents Association.
Mr. Vincent Jennings
We very much welcome the joint committee's invitation to make an address. We are what members know us to be. We represent the shops in which people shop and most likely have given employment to members, their children and many of their constituents for many years. We represent 1,500 retailers in every community, village and town. We are proud of the service we give on a seven-day cycle, opening early and closing late. We do not complain about this, no more than members complain about their late nights. It is part of our service and we are happy to be part of our communities. We are genuinely part of our constituency, as we are members of GAA clubs, rugby clubs, choirs and Tidy Towns associations. We are part of everything people know and they meet us on a daily or weekly basis.
Unfortunately, there are 5,000 fewer shops now than ten years ago. The children of many shop owners did not want to do the job and the shops closed. We find ourselves in a most difficult situation as a group of entrepreneurs and business people who are committed to providing the best service we can. We commit extensive sums to renovations, a considerable amount of energy and create considerable employment. Our difficulty is that with the way the market is moving, where we think we should have the protection of the regulatory authorities the Oireachtas has set up for many decades and from which it expects reports, we do not find ourselves getting a fair shake. In particular, we have difficulties with the Competition Authority and the way the National Consumer Agency was set up. Prior to the agency being set up, there was a consultation process brought about by the Department of Enterprise, Trade and Employment during which submissions were invited. We made a submission that asked specifically for the NCA to be empowered within its brief to encourage complaints of unfair commercial practices to be made by businesses against others. Unfortunately, when the legislation was published to establish the agency, no reference was made to this. The NCA precludes itself from taking complaints from businesses.
We have read extensively about the development of a competition philosophy but the philosophy of the Competition Authority is that unless it impacts directly and in a tangible way on the consumer that can be proved, no complaint by a business about another will be entertained. Although countless thousands of shops have closed and consumers have effectively been disenfranchised and encouraged to use large out of town shopping centres and so on, we cannot suggest this has resulted directly from the abuse of a dominant position by any business but that is our suspicion in many aspects.
Regarding the other regulatory authorities established by or allowed to exist by the Oireachtas, when the National Roads Authority recently gave a contract to an operator that made a previous tolling point toll free for the pleasure of people passing through it, we received a niggardly 1% of the commission. It costs us much more than 1% to process the product. The contract was awarded without any reference to us. When we made several strenuous complaints, we were told that it would be 1% or nothing. The NRA has effectively allowed for a situation where retailers are expected to provide a service at a loss every time.
Other semi-State bodies in which the committee has an interest, such as Bord Gáis and the ESB, and local authorities have recently taken to closing their cash offices and offering their services through our shops. Those services are expensive, which is the reason they are being hived off. The stipend, which does not meet our costs, was not subject to any negotiation. The people providing the services, those who won contracts from the companies, are not interested in the process as service provision. Rather, they are interested in capturing and maintaining a significant slice of the €1 billion telephone top-up industry. In a leveraged fashion, they link terms and conditions, so that one cannot be an agent for the provision of local authority or semi-State products unless one takes their entire range, including telephone top-up services. This is an abuse and contrary to many countries' ideas of what is fair competition. However, the attitude of the Competition Authority seems to be that of angels dancing on the head of a pin, namely, if one cannot prove that something affects the consumer, there is no cause for complaint.
We have experienced difficulties with various Departments. They have allowed the likes of Repak, an industry body, to be the sole provider of a vital service, namely, the funding of recycling facilities. This is so despite the fact that there is only one approved body. The Department of the Environment, Heritage and Local Government has refused to endorse any other applications. It has told us that it would refuse to allow the issue to become a race towards the bottom. By this it meant that it does not want the price offered by the approved bodies to be reduced. Effectively, this tells people that they must pay the figure charged by Repak and so on. The Department is duty bound to provide to small retailers and small and medium enterprises a choice in the matter, but there is none.
We have experienced difficulties with the Financial Regulator in two respects. First, despite numerous communications, including from some Deputies, the regulator has no interest in entertaining complaints on how we pay our bills. Direct debit scheme rules were introduced in 1969 and have been wantonly abused for a considerable period by originators, who are obliged to give a minimum of 14 days notice or, on direct debit plus, seven days notice unless the originator and the bill payer allow a shorter period of time. We have given the company that organises direct debit rules the names of 32 companies to which we make payments from our accounts on shorter timespans without having given them our permission. The effect is that we are frequently paying bills without seeing invoices. The rules were established and overseen by the banks through the Irish Payments Services Organisation, IPSO, and its allied companies to ensure that people have sufficient time to be satisfied that the bills are correct. The ESB and other energy bills and Government bodies operating on direct debits will always give 14 days because that is the requirement.
Frequently, the regulatory authorities established by the Houses set out their own terms and conditions. When a service provider of Laser cards was recently about to double the fees it was charging for cash-back, we found to our surprise that the Financial Regulator has no statutory or other function. It was considered to be a business charge, but the regulator does not get involved in service charges and so on. The 20% was reversed because of competition in the market. It was made clear that people would move their accounts to another body. The reverse was achieved because we were able to change the provider's way of thinking, not as a result of the regulator, who told us that it was none of its business. We were not even told "Sorry".
It is extraordinary that, in the 17 years of the Competition Authority, there has not been a single prosecution or attempted prosecution for abuse of a dominant position. If there are no such abuses, we are living in a stable economy. A major abuse of dominant positions is the way in which telecommunications companies — Vodafone, Meteor, O2 and so on — ensure that the increasing of wholesale prices of products that are clearly labelled €10 and €20 is incurred on retailers through their agents. It is a barrier to us, as it reduces our margins. We must either ask the customer for more than €10 or we must suffer the loss.
It is an industry worth €1 billion and some 10% to 12% of the overall turnover of many of our retailers is derived from telephone top-ups. The price we are getting for the product is one third of our operating costs, but it is so significant that we cannot go without it. When the Competition Authority ruled on the matter, it was convinced by Vodafone's argument that the consumer would benefit. The authority was happy to hear that the savings made from the increased wholesale prices would be passed on to the consumer. Since then, there have been three further wholesale price increases and Vodafone's annual profit in Ireland has risen accordingly. Perhaps there are benefits to consumers, but I would suggest that Vodafone is the main beneficiary.
We have discussed the regulatory authorities. We are looking for fair play from the Government in these matters. The Cabinet handbook on regulatory impact analyses specifically asks for memoranda to undergo screening or full regulatory impact assessments prior to their being brought before the Cabinet.
As an association and a group of retailers, we have spent considerable and worrying times with the Intoxicating Liquor Act, which was debated before the summer recess. This was not subject to a regulatory impact assessment despite the assurance of the then Taoiseach, Deputy Bertie Ahern, that all matters would come before Cabinet with a regulatory impact assessment.
In the response to a question from a Deputy to the Minister for Justice, Equality and Law Reform, it emerged that neither a screening nor a full regulatory impact assessment was carried out on the Intoxicating Liquor Act. I am sure most members were in receipt of representations from the CSNA that we would have to provide expenditure of €200 million. In these straitened times that level of expenditure should have been noted in the most cursory fashion during a screening. This would have led to a full regulatory impact assessment. We need people to remain within the rules they agree to because regulatory impact assessments are very good. Carried out properly they are cost effective and, in multiples of ten and 20, they will save everyone.
If the newly-amalgamated version of the Competition Authority and the National Consumer Agency is to continue in this area, it must give recognition to business complaints. We must be considered as, if not an endangered species, a group of people worthy of merit. I do not refer to retailers but to small and medium enterprises. Within the competition policy of the Department of Enterprise, Trade and Employment there should be an ombudsman to oversee matters such as I have outlined. Other associations have similar difficulties.
We do not have a difficulty with competition, in fact we put up with it every day and thrive on it. We have a difficulty with public moneys, funded by ourselves, directed by the State through the National Consumer Agency, linking the products sold in our shops with those of multinationals and suggesting we are not providing value for money. We are certainly providing value for money on a daily basis. It is highly offensive to my retail colleagues, who operate under symbol group banners, to be linked to multinationals and to have it suggested that the products they are selling are part of rip-off Ireland. The economies of scale are very different and it is very disingenuous of the National Consumer Agency to continue these shopping baskets, displaying the logo of the symbol groups and suggesting they are providing bad value. Only a cynic knows the price of everything but the value of nothing. I ask members to consider setting up an ombudsman to ensure small and medium enterprises get a fair hearing.
I thank Mr. Jennings and his colleagues. It is great to see such a representative group. How many convenience stores and newsagents does the organisation represent and how many people does it employ? What are the margins? We hear that the margins in grocery shops are relatively low. There may be a misapprehension that the members of the organisation are operating at high margins but I do not think that is the case.
Can Mr. Jennings explain the direct debit rules? What legislation does it come from? Mr. Jennings referred to the regulatory impact assessment. Can he elaborate on how this works? Within the current regulatory framework, which is the focus of this committee, is there any representative body within the ambit of the Government that represents the interests of Mr. Jennings's association and whose role could be expanded?
Mr. Jennings referred to negotiations with the National Roads Authority. Is his association not regarded as a representative body in terms of negotiations? I am interested in the number of businesses the organisation represents and how many people it employs. Are figures available in respect of what this sector contributes to the economy in terms of GNP, spending and taxes? The CSNA seems to be a large body in terms of numbers and I would like to hear these points fleshed out.
I welcome the delegation. The purpose of the visit and the establishment of an ombudsman is a reasonable request. We support this and I do not know if it is within the remit of this committee to create such a post but it is certainly within our remit to lobby for such a post. I will be bringing the suggestion to the Labour Party spokesperson on enterprise and employment. It should be on the political agenda.
I represent a constituency that has a mix of urban and rural areas. There are many businesses like those represented by the CSNA in rural settings and they find it difficult to survive. Not only are they faced with the cost and bureaucratic nature of doing business but local authority charges are increasing year on year. If there is a move towards expansion, the development levies and contributions that small businesses must pay to the county council are regressive. Business is being used as a means to fund local government, something that must be reviewed. If we continue to punish small businesses that operate in a rural environment, it will have a knock-on effect on the presence of those businesses in the future. Something must be done and the establishment of an ombudsman would be beneficial to take an overview of the regulatory framework and the punitive costs placed on businesses in those settings.
I was interested in the comments on the National Consumer Agency and Repak. I have not figured out what Repak does. I see the wonderful advertisements it puts out and the impression is created that the recycling regime in this country is wonderful. However, it raises questions about the nature of the recycling regime.
Through their membership of Repak, the larger multiples are let off the hook with regard to the packaging directive because there is no requirement to recycle at the point of purchase. I would like to hear more about this. If there is a position paper outlining the delegates' views on that relationship perhaps that might be sent to me. We must look at that issue.
I did not realise that such a high percentage of turnover related to communications, if I might broadly describe it that way. Perhaps this committee might bring in the National Consumer Agency and put more stringent questions to it. In essence, I disagree with nothing that has been said by the witnesses. It is common sense and highlights the situation of independent retailers who are sustaining businesses in difficult times against competition from larger multiples. There must be a regulatory framework in order to make it a bit easier for the representatives and their members. Rather than hinder them, it should facilitate doing business because of the people and the communities they serve. This is a basic commonsensical argument and it should be supported.
I join the other speakers in welcoming the delegation and I compliment Mr. Jennings on an excellent presentation. He has identified the key areas, what might be called the "pebble and the heel", as far as his members are concerned.
It would be useful for us individually, and collectively as a committee, to have a summary document addressing the various points that have been made, particularly concerning the relationships with the NRA, the public utilities, Repak and the Financial Regulator, as well as the individual and collective relationship the industry has with the Competition Authority and the National Consumer Agency.
I will address the notion of establishing an ombudsman's office in order to deal with the range of issues as outlined. We might fast forward for a moment and imagine the Parliamentary Counsel's office considering the establishment of this position. Perhaps the delegates might flesh out in more detail how they would see the functioning of such an office. Clearly, it would be an arbitrator between the individual members of the industry they represent and the different public utilities and State bodies with which those members interact. The relationship between those State bodies and the individual members clearly vary. We need to further quantify that relationship. Will the delegates offer further detail on how they would see the ombudsman's office functioning in the context of what has been discussed? Can they provide members with a summary document that sets out the relationships with the different bodies involved?
I apologise for being late. I was elsewhere on matters relating to the budget. I missed most of today's presentation but can read it later. The committee has heard from other groups and I can guess that many of the issues are common. We can go through them.
I can confirm that on our side there is a willingness and resolve to tackle some of these issues. From what I can see, the delegates and their members do a lot for local communities, even in bigger towns. They do a great deal in terms of hours of service and they provide an excellent service that is not always rewarded either by Government regulation or by people in general. They also do much for employment, giving young people a start in their first jobs and training them. That is a major bonus for society. We deal with a great number of young people whose first job is in their local shop or business. It is a vital part of their education and of the economy but it is neither rewarded nor encouraged. We must tackle this issue.
A considerable and unbelievable amount of hassle is imposed on small businesses and local convenience stores through regulation, increased charges and the involvement of local government. I do not believe this serves them properly. A small business is like one's own property. This committee and another of which I am a member, the Joint Committee on Enterprise, Trade and Employment, are trying to tackle this issue and examine where changes can be made. Years ago rates were paid which covered all services but that is not the case any longer. Rates now represent one charge but one also pays for water, waste services, parking, etc., on top of that. The small business person is doubly charged yet rates increase every year without any new services being provided. I do not blame local government for this because it is very often left with little choice. It is not funded properly through national taxation. We must tackle this area as it would bring about a beneficial effect on local business.
I am not entirely against the idea of having an ombudsman specifically for the industry but I would prefer to increase the powers or remit of an existing agency in the spirit of trying to reduce the number of agencies. We all support that approach and 41 agencies were culled yesterday. We are not necessarily about to start another one up today but I understand what the delegates mean. If a new body is found to be required that is fair enough but let us look at the matter because these issues must be tackled.
From other groups that have testified to the committee, I understand that the Competition Authority and the consumer agencies do not see the delegates as customers or consumers although they are both. It appears that they are abusing their position, especially in the area of newspapers and magazines. That is an abuse of power and must be tackled because it cannot continue in respect of direct debit payments and the way money is taken. It does not seem right either for existing businesses or for those attempting to start up. It does not help. I did not see the presentation today but I guess that matter might have been a key part of it. We must tackle that issue.
We must find a way in which Government can protect, help and encourage the representatives and their members to increase rather than decrease their numbers. As competition stands we will see a decrease and that is not what we want. Communities will be at a loss if that happens. We have a duty here and members are at one with the delegates on this issue. The two committees will tackle those areas if they can. I will read the document presented today and try to pick out the main issues.
Would Mr. Jennings like to respond to the comments and questions of members?
Mr. Vincent Jennings
A number of my colleagues have gone some distance in covering some of the areas.
The CSNA represents 25% of the entire retail environment. At the last count there are 6,000 shops in the country, of which we represent 1,500. They joined us voluntarily and choose to remain represented by us. Margins vary. One man's shop might have 28% of its turnover in tobacco, another's would be 35%, more would be 17%. Those are at depressed margins, and yesterday the margin was depressed by a further 6.5%. The tobacco companies will decide when that margin will be restored. The Revenue Commissioners should never allow tobacco companies to control the price of cigarettes. We are the people who know what our needs are, not the tobacco companies. It is in their interest to mark the product as cheaply as possible. We have the needs and a carcinogenic product should not effectively be controlled and held in an umbrella fashion by the State, cocooned at the risk of staple products. We must put up the price of other products if we have bills coming in for the additional 9% of Repak or the additional 2.5% wage increase and matters such as these.
How many people are employed in the sector?
Mr. Vincent Jennings
On average, between full and part-time staff, each shop would have 15 people. We are not insubstantial. We employ about 20,000 to 22,000 people. In the matter of expenditure, many of our members would spend €200,000 to €300,000 on re-fits. This is expensive product that comes from outside the country but it gives employment.
On the issue of regulatory impact assessments, the Government's document, Better Regulation, is very clear. It has been Government policy for the past two years. We are on the joint labour commission with RGDATA and Retail Ireland and are finalising the Intoxicating Liquor Act code of practice. We are acknowledged as a consultative body or a body with which the Department of Enterprise, Trade and Employment and the National Consumer Agency consult. However, the extent to which our advice is heeded is another matter. The summary document is not difficult and we will arrange for it to be presented.
On the question of fleshing out the idea of an ombudsman, I do not mean to be pejorative in describing the Ombudsman for the Defence Forces as a one trick pony, particularly as it served as a model of how a small office can make significant changes in people's lives and create a belief that there is fair play. The office does not have to be a monolith and should be located in its natural home, the competition policy section of the Department of Enterprise, Trade and Employment. I am sure my colleagues who have travelled the length and breadth of the country wish to comment.
How would an ombudsman, whether a new office or one located in an existing agency, make business practices more attractive to members of the Convenience Stores and Newsagents Association?
Mr. Vincent Jennings
When I meet a newspaper distributor, company or local authority, I need to remind myself that our association may not engage in certain activities. Although one may wish to suggest that we pull out our forces or refuse to do something, we are precluded from doing so. A sufficient number of dawn raids have taken place and High Court injunctions granted against associations, many of which were acting honestly and in the only way they believed would stop a wrong being done. We are often constrained from acting.
A company such as a large multiple can do whatever it chooses because it speaks only for itself, which means it can decide not to deal with a certain company. I could not say to two people in the same room that they must not deal with a company.
I welcome Mr. Jennings's reply because other groups have been unable to provide clarity on the issue.
Mr. Peter Dwan
As retailers we have one core business. At 7 a.m. we open up to make profit which pays our bills and wages and provides sponsorship for local communities. Over the years, retailing has evolved from the small corner shop offering little more than milk, bread and rashers to shops offering many more products. This large increase in the number of offerings costs us a great deal of money.
Mr. Jennings was asked how much it costs to revamp a premises. We recently spent more than €1 million on refurbishing our store in Ranelagh. This is a significant amount of money but we are proud of what we have created. We have also given back to the community something that will last for the next ten years.
Aware that convenience stores are disappearing, we decided to make our store a focal point of our area by returning to the good old days while we can. Services are one of the areas in which we can do this. As Mr. Jennings indicated, however, the poor margins we make on these items creates a massive problem for us because we need a margin to pay the bills and offer services to our customers.
To cite one problem we have with certain companies, if we print off a top-up code — these have small margins — we pay within three days even though it can take the companies upwards of two months to credit us the money if the code is incorrect. This means we must deal with a customer immediately if he or she returns to the store. At the same time, I am still trying to chase credits from August. This is a major issue.
We are examining every option to try to keep all our costs down, particularly in the current climate. One of the core costs is staff. We can only make staff more productive by ensuring the systems we have in place in our stores are conducive to production. For this reason, it is important that staff are immediately aware of the best practice in managing a task in order that we can continue to offer good service to our customers.
Unfortunately, this approach has been thrown out of the water by our newspaper and magazine suppliers in recent years. We have no control over what newspapers and magazines are delivered. As a result, my staff waste hours every morning unnecessarily putting together or topping magazines which they know will not be sold. This removes a great deal of money from our bottom line because it requires us to allocate staff and, as such, wages to an activity which is of no benefit to the store. We had so much trouble with the distributor of magazines and newspapers that we decided to employ someone specifically to deal with this area and cross-check our credits against our invoices. It would take hours every week to confirm these are correct. The problem is one of making money on selling an item on which the margin is small.
I have produced a small list to illustrate the types of problems we have in this area. Last year, EM News Distribution was created following the merger of Easons with a UK company, EM. The new company took over distribution for the vast majority of English magazines and secured what is effectively a core monopoly in this area because we cannot buy these magazines from any other source. We struggle every week to remove titles we do not want. For example, on Saturdays we receive seven copies of an English magazine entitled Renting despite the fact that few Irish people want to rent property in England.
That may be about to change following yesterday's budget.
Mr. Peter Dwan
I receive another magazine with the title Camcorder Buyer HD. Only a specialist would be willing to buy a camcorder magazine. Other magazines include one on Star Wars and horses as well as Tractor and Farm Trader. My store is located in Ranelagh in Dublin city centre but for months I have been receiving eight copies of the Irish Farmers’ Journal. When I telephoned to cancel the order, I was informed I could not do so because the newspaper is on the distributor’s system. When I asked who put it on the system, I was told the marketing department had done so. I know how to market my business much better than anyone else but I do not have any control in this area.
On Newspread, the distribution company, to take last month as a sample, we found that in the first week 25% of the items the company sent to me were sent back in returns. In the second, third and fourth weeks, the figures were 38%, 46.8% and 50%, respectively. The weekly average over the months was 39.95%. In the case of Easons, the figures for the four weeks in question were 29.1%, 37.61%, 49.5% and 34.14%, respectively, giving a weekly average of 37.58%.
Each of my three stores has a 1,100 litre bin. These are the large industrial containers one sees outside most supermarkets. My three bins are filled to the brim with newsprint every week. I could not find out what a 1,100 litre bin full of magazines would weigh but yesterday I was given a rough estimate of 500 kg. This amounts to 78 tonnes of unnecessary waste per annum or 1.5 tonnes per week. To put the annual figure in perspective, it is equivalent to 22 Bentley cars being stacked on top of each other. This unnecessary waste costs my company a great deal of money which we must, unfortunately, reclaim from our customers.
According to the National Consumer Agency, if a problem does not affect our customers or people on the street, it is not an issue. These problems affect my customers. For example, one of my customers who loves Elvis Presley collected 15 issues of a magazine on Elvis which is published over 30 weeks. Unfortunately, he has not been able to get the final 15 issues.
The same applies to a customer who bought a boat building magazine. He reached the 83rd issue, after which he could no longer get it. Publications send us additional material of which we have to dispose. We have no control over the material sent to us. There is nobody standing up for us to say this should not be allowed. We do not have the luxury of being able to look for a new supplier. If I have a problem with a particular company, I give it the opportunity to rectify the matter. If it does not, I will source the product from somewhere else. It is a simple system and the only way a business can operate. It must have control. Unfortunately, the Competition Authority did not accept that we needed control of our business in this respect. It allowed this measure to go ahead and now we are being abused. That gives members a rough idea of the problems we face.
I will hear from only one more delegate, as we are under pressure to conclude from the secretariat of the Joint Committee on Communications, Marine and Natural Resources.
Mr. Joe Tierney
I am a traditional newsagent from Navan, a third generation newsagent in the oldest newsagent's shop in the country. It opened in 1895. I went into the business 30 years ago. At the time there were seven newsagents in Navan, but now there are more than 44 shops selling newspapers. While that might seem like an expansion in the business, the number of traditional newsagents has dropped alarmingly. The last surveys we read two years ago indicated that the traditional corner shop would be extinct in approximately ten years' time. Therefore, we have eight years to try to defy the odds.
I find it a more difficult business than the one I first entered under the wings of my parents. When I went into the business, tobacco was seen as a scourge product. There was a margin of 7%, but 25% and over on every other product. Since then tobacco has been seen as one of the best products we are selling in our premises, mainly because of the impact of the service industry and phone top-ups, to which we alluded. The provision of top-ups began approximately ten years ago with the introduction of Eircel's ready to go card, giving us a 12% margin. No VAT applied to the product. Thanks to a plethora of top-ups with Hutchinson 3, Meteor, Vodafone and O2, we are realising a margin of between 4.5% and 5%, which includes our VAT. As alluded to by Mr. Dwan, if we sell the product today, it will be taken by direct debit two days later, yet if we sell it incorrectly and seek credit for it, for some strange reason the companies cannot get their act together and we may have to wait for anything up to three to four months to receive credit.
Another product on the market is known as 3V, a form of credit card for young people. It enables them to top up in advance. It is also taken by direct debit two days later. We recently had an incident where it took four months to obtain credit on a card that had been incorrectly sold. Again, it appears nobody is overseeing this business.
One of my major concerns relates to the service and bill pay industry. As our chief executive officer, Mr. Jennings, mentioned, there are three main companies involved in this sector, PostPoint, PayPoint and Payzone. All three have a suite of products for the payment of bills, whether one wants to pay one's gas, ESB, Chorus or Telecom bill. They all want to avail of our top-up business because although the margin is very small for us, it is very lucrative for them. They make almost as much as the percentage we receive, yet we do all the work.
We were told by the bill pay industry that in taking on this product we would increase our footfall. Nobody said we would make money on it and it is just as well they did not. During an average week I recently took in €8,000. After paying the costs involved, not including staff costs, my profit was approximately €35 to €40. I can stand over these figures. If a customer makes a €300 payment to the ESB, I receive 19 cent for processing the transaction. That is the size of the reward to us as a retailer for accepting utility bills. However, my banking charges — 20 cent per €100 lodgment — means I must pay the bank 60 cent to lodge that €300. In the past if I saw €300 in the till, I would have thought we were having a good day, but now such an amount can represent the payment of a bill for which I will receive 41 cent for the privilege of providing the service.
As regards cash flow, what is taken in on a Monday is taken out on a Wednesday. This is a serious problem. My way of solving it is to break bills into €50 payments. I scan and enter a €50 payment to receive a return of 19 cent per transaction. On scanning six €50 payments I will make €1.12, minus the 60 cent I must pay the bank, leaving me with a margin of 52 cent. That is the low base on which I have to operate the service.
With the new NRA eFlow system, we receive a 1% return on a €3 pay-out, but a direct debit is generated every evening if we sell one toll ticket. The direct debit costs 24 cent. Therefore, we need to sell eight eFlow tickets a day so as not to lose money. We have counteracted this by putting a 20 cent charge on the toll ticket which I resent doing because it will drive a wedge between us and the consumer who up until last month could drive through the toll plaza for a payment of €2. An additional €1 has been generated under the new system and it has not been done to give us a bigger margin. We receive 3 cent for every toll ticket we sell. Where does the other 97 cent go? The cost of the toll has increased from €2 to €3.20 and we make 23 cent on each toll ticket we sell. There is the hope we will still sell more eFlow tickets but the average number per day is two or three.
From extensive research I carried out three weeks ago over a period of one week, from a Saturday morning until the following Friday night, I found that people who pay their utility bills in my store do not buy other products in it. This service has become a massive noose around our necks, yet I am not confident enough to dismiss them all. Phone top-ups, as Mr. Jennings mentioned, account for about 10% of our business. Their value represents children's pocket money in years gone by; they would come into the store and buy a bar of chocolate, a packet of crisps and a mineral. They will not do without their phone top-up service now. They buy a product from us with a 4.5% margin, whereas previously it was 25%.
I support Mr. Dwan's point that somebody needs to oversee the magazine and newspaper industry. It is the only product over which we have no control in terms of what is sent to us. We cannot get some of the publications we want to sell such as the Elvis magazine or the Match Attax magazine which is a big craze among young people. We pay both companies a delivery charge of €80 per week, which covers the recycling of products they take back, which can be up to 60% of what they send us. I will cite Newsweek as an example. We may sell one copy every two weeks. It is available on subscription at a fraction of the cost at which it is sold in newsagents. As a result, I am sure most readers get their copy on subscription. The supply I received began to accelerate from 15 copies in week two to 48 in week six. I was practically able to kit out my shop in copies of Newsweek. We have since discovered that many shops receive even higher supplies. This begs the question of what is behind such an increase. Why were 48 copies supplied to a shop when it was known that no more than one copy was bought there? When that question was put to the relevant distributor, I was told that it did not know the answer. It was the decision of somebody with a higher power.
I thank members for their time.
There is a time constraint, as another committee is due to meet in this room at 11 a.m. I thank the delegates for attending. They have made their points well. They have raised many issues concerning the retail sector which we will examine and on which we will possibly have further discussions with them.