Retailers face potentially calamitous VAT shelf price update scenario

The increasing VAT amount is having an enormous impact on retailers that use paper price tags but almost none on retailers that use electronic shelf labels (ESL).

Retailers that use paper price tags have to ensure that every single price in their stores changes overnight to reflect the new VAT amount on the morning of April 1, with many of the large retailers having to update 30 000 to 40 000 labels per store.

“The impact is huge,” says Hendrik Bredenkamp, MD of NEC XON Retail, which supplies Pricer ESL. “Even the smaller retailers have to update more than 10 000 prices in one night. The basic result is that everyone suddenly has a workload they’re not accustomed to so they have to hire extra staff, and buy a lot more labels than they normally would, which puts the label supply stocks under pressure because all the retailers are doing it at the same time. The cost is huge when you think about how many labels they have to do. Unless they’re like the Pick n Pay, SPAR, BP Express and other retailers who use the ESLs.”

The problem, he says, is that retailers must find an equitable means of handling discrepancies that inevitably occur under the manual, paper-based system.

Also impacting the enormous undertaking for retailers is the fact that employees will have to make sure they locate all the products in-store correctly, which can be a problem for items like chocolates, for example, which are usually placed at numerous locations throughout stores.

Bredenkamp says the ESL system requires only one change, the one VAT entry in the central database, which is then pushed from the retailer’s head office to all the branches and all the price tags are automatically updated at a rate of 90 000 per hour.

“Retailers who use the ESLs will basically walk into their stores in the morning and everything will have been done automatically in the night but for the other guys they’re having a real problem dealing with this issue,” says Bredenkamp.

Caption: Hendrik Bredenkamp, MD of NEC XON Retail Caption: Hendrik Bredenkamp, MD of NEC XON Retail`

About NEC XON

NEC XON is the combination of XON, a Systems Integrator providing custom ICT and security services and solutions in Southern Africa since 1996 and NEC Africa, the African business of the global technology giant NEC Corporation. NEC Corporation implemented its first communication solution is Africa in 1963 and established NEC Africa in 2011 to grow its business ICT and public safety.

Kapela Holdings, XON’s B-BBEE partner since 2012, continues as NEC XON’s B-BBEE partner in South Africa with Israel Skosana as chairman of the board of directors of NEC XON.

NEC generates global revenues in excess of $30 billion by orchestrating a brighter world for public entities, enterprises, telecoms carriers, and providing system platforms for businesses.

The combined NEC Africa and XON (NEC XON) operations seek to more fully explore the opportunities for safe city, energy, cyber security, telecommunication solutions, retail, energy, managed services, cyber defence services and cloud (both public and private) among others in sub-Sahara Africa.

NEC XON maintains its head offices in Gauteng, South Africa with a footprint that covers all nine provinces in South Africa and 16 Countries in sub-Sahara Africa.

Media enquiries: Hendrik Bredenkamp, NEC XON
Contact details: (011) 237-4500, hendrik@nec.xon.co.za

Issued by: Michelle Oelschig, Scarlet Letter
Contact details: 083-636-1766, michelle@scarletletter.co.za