M.E.D. showroom to close soon

Press, 17 June 1986, Page 9

M.E.D. showroom to close soon

By October the Municipal Electricity Depart-' ment will not sell household appliances. The Christchurch City Council has decided to close the M.E.D. showroom, which last year netted it $185,000 from sales.

The council believes the proposed Government tax on the trading profit of local authorities would eat into that profit and that the money it spends on showroom stock could bring a better return elsewhere.

The 1985-1986 profit of $185,356 would have been almost halved if taxation had been imposed at the rate the council will have

to pay from April next year.

If such a reduced profit of $96,385 were offset against the interest that might have been earned on the money used to pay for stock a $51,335 loss would result. The council has decided to quit while it is ahead. Sales in the last year have dropped 35 per cent for ovens, 15 per cent for refrigerators and 23 per cent for laundry whiteware, said the chairman of the policy and finance committee, Cr Matthew Glubb.

More than 70 per cent of the goods sold by the M.E.D. were sold under hire-purchase and time arrangements.

That showed the showroom was meeting a need, said Cr David Close. The M.E.D.’s interest rate for time payment was 7.5 per cent. No-one else offered that. It kept finance companies competitive.

But while it will shut down its showroom, which offered the best time-pay-ment rates in town, the council will open a demonstration centre to display household wares.

That centre will cost $161,539 a year to run. Offset the estimated showroom loss and the centre will still cost $llO,OOO, about 0.125 per cent of the 1985-1986 electricity sales income.

The centre will probably use the showroom

space. Depending on the present building extensions the retail showroom will be, closed some time before October. The showroom will be established early next year.

The change is one of several listed in a report on customer services offered by the M.E.D.

Others include a faultsservice centre to co-ordi-nate requests for assistance.

None of these were acted on by the City Council last evening.

The abolition of the showroom would not mean any job losses, said the electricity committee’s chairman, Cr Morgan Fahey.