Alexa

U.S. stores see boost in profit with new peso policy

U.S. stores see boost in profit with new peso policy

When Pizza Patron announced plans to accept Mexican pesos in its 59 Southwestern stores, the Dallas-based fast food chain was besieged by anti-illegal immigrant hate mail and even death threats.
But rather than fear for its life, the company used the Mexican currency to make a killing.
"From the new business perspective, it has been phenomenally successful," said Andrew Gamm, director of brand development for Pizza Patron.
Once it started selling pizza for pesos in January, the company's same-store-sales rose by almost a third from the previous year.
The fast food chain is hardly alone in trying to turn foreign currency into retail gold. Stores from Dallas to Waikiki have found that accepting international currencies can entice immigrant and tourist shoppers, happy to save a trip to the bank.
"It is about convenience. If somebody walks in and they only have 4 American dollars, but they have the equivalent of 10 dollars in other currency, a store'll help them out," said Ron Paul, president of Technomic Inc., a restaurant market research firm. "The only negative stigma is that it sounds like it is supporting illegal immigration," he added.
Caught in the center of a debate about work permits, health care and legal amnesty for illegal immigrants, stores like Pizza Patron are sometimes accused of breaking the law.
But according to the Treasury Department, international currency is a legal form of payment in the U.S.
The U.S. dollar has been accepted in global marketplaces for years, though U.S. retailers were slow to embrace the idea of international currencies.
But as the U.S. dollar has declined in value, some national chains started to see pesos, Canadian dollars, and even yen translating into big business.
Michael Pisani, professor of international business at Central Michigan University, found that border retailers boost sales as much as 6 percent by accepting Canadian dollars and Mexican pesos.
Stores located along the northern border earn as much as 8 percent on currency transactions and southern border retailers make 3 percent, said Pisani.
Retailers in popular vacation spots, have caught on to the trend, realizing that foreign currency may lure affluent international tourists.
In Waikiki, luxury chains accept the yen, and say it attracts Japanese travelers. The Salvatore Ferragamo store in Waikiki's Royal Hawaiian Shopping Center averages about US$12,700 in yen business transactions per month.
But the store factors in certain risks by trying to profit off the vagaries of the US$2 trillion a day currency market.
With the yen's value sliding to a four year low in June, yen-toting tourists were skimping on their luxury purchases.
Finally, fears of counterfeiting keeps some companies slow to ditch the U.S. dollar as their sole currency.
"It is hard enough to keep track of your own currency, let alone someone else's," said Richard Talbot, President and CEO of Talbot Consultants International Inc.


Updated : 2021-01-20 14:44 GMT+08:00