Orders of the Day — Trading Stamps Bill

Part of the debate – in the House of Commons at 12:00 am on 31 January 1964.

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Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough 12:00, 31 January 1964

If my hon. Friend reads what is said in The Times he will see that that is what is inferred.

Trading stamps form what I would describe as an unholy alliance which ties the customer to the retailer and then ties the retailer to the finance corporation, which is in restraint of trade. Neither the customer nor the retailer can easily shake off the shackles of the finance corporation. This is the antisocial aspect of the matter which I deplore.

I support this modest Bill for three simple reasons. First, I believe that it would help the small shopkeeper, the self-employed family man, in his struggle against the savage competition which he is having to meet from the huge modern supermarket. Whatever the House can do to help the small retailer it should do, and that is the most compelling reason why I support the Bill.

Secondly, if it became law, I think that the Bill would help to reduce the self-deception which the stamp companies exercise or encourage among the customers when they think that they will get something free. There is nothing free in the world. Somebody must pay for it, and ultimately, in this case, it is the customer. One of my hon. Friends said that the customer would not pay for it. In that case, the retailer would pay. If the retailer can afford to have someone take 2½ per cent. from him, prices should be reduced by 2½ per cent.

My experience is that the small retailer is having a hard struggle to keep going. To allow a finance company to put its hands in his till and to take out 2½ per cent. before he has done a farthing's worth of business is socially wrong and contrary to the interests of the small man.

Thirdly, I support the Bill because it would help to stop possible fraud by the stamp companies. I regard stamp trading as economically wasteful and socially undesirable. Questions have been asked about what the experience has been in America. It has been asked whether the practice has increased prices. Perhaps the House will allow me to make one or two quotations from an excellent article in the Statist of 13th December, 1963. We all regard the Statist as a very responsible journal. This is what its correspondent in New York wrote: If the American history of trading stamps is anything to go by, there is a good chance that within a few years the British companies who are fighting out their own stamp war will live to regret that it ever started". That is a warning from America.

I want to emphasise the following quotation to my hon. Friends who are concerned about whether this practice will cost much: Trading stamps have become the second most costly item for America's supermarkets … stamps now account for 14 per cent. of the American supermarket's expense dollar, ranking second only to the 44 per cent. covering personnel costs". That is a staggering figure.

If trading stamps are costing supermarkets in America 14 per cent. of their total operational costs we do not want them here. Neither the small retailer nor the customer wants them in this country. If they are costing 14 per cent. of operational costs, one of two things must happen. Either they prevent prices from coming down, or they must cause prices to go up. We must face this issue; this is the bare economic fact.

What is the experience of the great American companies? One of the biggest is the Great Atlantic and Pacific Tea Company, known in America as A. & P. It is about America's largest supermarket chain, with about 4,500 stores in America and Canada. This company has told its customers that trading stamps cost money, and these costs must be passed on to the customers in the form of higher prices". This is what one of the biggest chain companies in America says, and it has been in and out of the racket for many years.

Hon. Members have asked for evidence in this matter, and I hope to give them evidence from, as I say, a very responsible journal. In the autumn, the National Association of Food Chains Convention was held in America. About 1,800 top executives representing about 300 chain companies and 15,000 stores met. It is obvious that these men have a wide and comprehensive experience in this matter. They openly blamed the trading stamp war as the cause of a steady profit decline, despite the fact that their sales were increasing. This means that their profit margins were being reduced.

Many of my good friends in this country are little shopkeepers, who are struggling hard to make a living now. I do not want to see them squeezed out as a result of a stamp trade war in this country. They are having a hard enough time as it is. To introduce this and make it harder for the little men to earn a living is contrary to my ideas of Conservative philosophy.

The article continues in this way: The problem for most chains today, therefore, seems to be one of getting out of the stamp trade business gracefully". When I read that, I thought of the advice I was given a long time ago that men who take either to drugs or to keeping a mistress find it very hard to give them up when they want to. I should think that about the same thing would apply here with the smaller man who takes to issuing trading stamps.

The article in the Statist concludes in this way: It is, therefore, a safe assumption—one that is based on dozens of interviews with chain store executives—that stamps are on their way out as a major promotional tool in America's supermarkets. They have failed there. I do not want them to come here.

I take the argument one stage further. At the moment, stamp trading is in its infancy here. If it is good for one form of retail trade, why should it not be applied to the whole retail trade in this country? I will give hon. Members an idea of what that would mean. The last returns of the Board of Trade I could get were those for 1962, which showed that the total retail trade was £9,088 million—let us say £9,000 million. As I understand it, the trading stamp companies levy 2½ per cent. Two and a half per cent. on £9,000 million, if it were spread right throughout the country, would mean that the finance corporations would in this way be taking £225 million out of the tills of the shops and, in my opinion, rendering no service for it.