EUROPE: The currency of trust will prevail

Adoption of the euro will mean a re-evaluation of fiscal frameworks and values, forcing consumers to trust that retailers and banks are giving them value for their new money.

In my last article (MW April 19), I made reference to the introduction of the euro, due to be adopted as a common currency across continental Europe from January 1, 2002. The point was made that, whatever the effects of the change in currency, these could not be assessed in isolation from national cultural indicators and the effect these have on patterns of consumption from country to country, from culture to culture. But what of those effects that are attributable to the change of currency?

In an interview with Le Monde, Jacques Birouste, vice-president of Paris-X-Nanterre University, outlined fears, based on his own research, that instability would be introduced into everyday human contact as a result of the currency change.

Once one touches on the subject of money, he says, one brings into question the framework of human relationships as defined within commercial transactions. One brings into play, therefore, the question of trust between consumers and retailers, between banks, their representatives and their customers. One also brings into question people’s perception of their roles within those transactions. Some, reports Birouste – particularly those shopping on a limited income – believe that their identity in such exchanges could be weakened as a result of the change.

Optimistically, Birouste estimates that the crucial period during which these issues will arise and be resolved may last only one or two months though, of course, there is no way of knowing this. Nevertheless, several short-term developments can be envisaged.

Impulse buying, for example, may be curtailed during the changeover as shoppers struggle to rebuild their framework of values. Some consumers, he believes, may resort to purchasing predominantly low-priced items as a way of limiting their exposure. Others will seek support from powerful retail partners. Many consumers, says Birouste, perceive the major retail chains to be like a “new military force, in charge of the land and capable of supplying the nation’s needs”. Others, he says, will look to manufacturer brands to guide them, believing that these carry the “assurance of identity, indicating clearly the existence of an established sovereignty within the global economy”.

Research, by Marc Vanhuele and Xavier Drèze for the Fondation HEC business school, suggests that while 40 to 45 per cent of shoppers describe their shopping trips as being in “pursuit of the lowest prices”, actual knowledge of individual prices is poor: only 21 per cent of those interviewed were able to estimate prices to within a five per cent margin either way and only two per cent could report the exact prices paid.

To explain how this could be the case, Vanhuele and Drèze suggest that, with all the major chains claiming to offer “everyday low prices”, shoppers place sufficient trust in their preferred retailers to ensure they will not feel they are losing out. The question might then be, with the price framework temporarily up in the air, in whom do they place the most trust?

John Shannon is president of Grey International

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