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Norwich stores' verdict on VAT rise
The majority of the larger Norfolk-based stores, including Bakers and Larners, Palmers, Roys, John Lewis Norwich and Jarrold, have decided to absorb the VAT increase initially.
31 December 2009
Norfolk shoppers have been granted a brief reprieve from tomorrow's VAT hike as stores temporarily absorb the increase in a bid to remain competitive.
The VAT rate in England will be going back up to 17.5pc on New Year's Day after being reduced to 15pc last December as part of an emergency government plan to stimulate consumer spending and thus boost the economy.
At the time it was estimated that the change would cost the Treasury around £12.5bn and save the average person around £170 a year.
But according to the British Retail Consortium (BRC), re-pricing items in line with the 15pc VAT rate cost retailers close to £90m in lost revenue, and the cut had a “very limited effect” on helping retailers through a tough financial year.
While there have been some reports of an increase in shoppers keen to buy goods before the higher rate is resumed, many shops in Norfolk say it is impossible to know whether this is simply bcause of good-bvalue sales.
The majority of the larger Norfolk-based stores, including Bakers and Larners, Palmers, Roys, John Lewis Norwich and Jarrold, have decided to absorb the VAT increase initially. They will not increase the majority of their prices until they have sold their existing stock and have to buy more in at the higher VAT rate.
Some of the larger chain stores such as Topshop, Tesco, Asda and Argos plan not to pass the price increase on to their customers immediately, but others, such as Marks and Spencer, plan to increase their prices on January 1.
Robert Hallam, managing director of John Lewis Norwich, said: “Retailers realise it is a competitive market and if they don't price their products competitively, customers are likely to shop elsewhere.”
However, although the majority of shoppers in Norwich said they would like to see the 15pc rate continued, most did not feel the increase to 17.5pc would affect their habits.
Radio producer Martin Bruce, from Upton, said: “The lower rate has been a nice bonus but I don't think it has made me buy any more. It has been good for people who wanted to buy things like cars, but I've only bought smaller things.”
Yarmouth housewife Jackie Roberts added: “I think it will make a bit of difference to everybody because money can only go so far, but I haven't really been rushing around trying to buy things before the extra tax is added on myself.”
Peter Mitchell, managing director of Jarrold, said: “We believe that it makes no sense to be putting prices up in January 2010, as it is a time when retailers need to work harder and harder to encourage their customers to stay loyal and keep shopping.
“It will undoubtedly mean that our margins are squeezed in 2010, but we accept we need to tighten our belts in this way.”
Roger Pemberton, chair of the Norwich Lanes Traders' Association, said: “I think there is a general nervousness about what 2010 will hold. Whether they pass the cost onto the customer or try to absorb it will depend on the store, but it will mean the erosion of profit margins.”
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I hope your local stores will keep the rise to themselves for a while.
Lizx
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Good news for Norwich shoppers then Liz. I really like Norwich for shopping - nice and compact, not too busy and wide variety of stores in the two malls.
I'm in London and it's a real rat race lol
Catie x
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Stores pledge VAT hike delay
Jan 1st 2010 - 11.37amText SizeAAA
Big stores pledged to absorb or delay the VAT hike as retail groups predicted this month's spending will be "a little lighter" than usual.
Consumers - particularly those looking to buy expensive "big-ticket" items like furniture or cars - rushed to the shops before VAT returned to 17.5%.
But many of the bigger retailers promised to freeze VAT at the lower rate of 15% on thousands of products while others will introduce the increase gradually.
Sir Philip Green has said all of his Arcadia Group stores - including Top Shop, Dorothy Perkins and Miss Selfridge - will absorb the cost of the VAT increase.
Argos plans to delay any price increases until the end of January, when its new catalogue is published, minimising the costs associated with the change.
But its fellow Home Retail Group firm Homebase has said it will raise VAT on all its goods, although it said that because the tax was only one element of pricing, the increase was not likely to be immediately evident.
Tesco pledged to freeze VAT on many non-food items, adding up to a projected £12 million in savings for customers.
It is understood the supermarket increased the price of 1,577 items - around 6.3% of its range - last month. The increases are thought to include 500 products which are subject to VAT, including bedding, cooking equipment and crockery.
A Tesco spokesman said: "We work hard to keep prices down for customers, which is why we have frozen VAT on thousands of products at the lower rate of 15%. This is on top of 5,000 price cuts over the last two weeks, with average reductions of over 10%.
"A small proportion of products will have increased in price but this is either because of special offers coming to an end or an increase in the cost price. Many more prices have fallen than increased and overall consumers continue to get a great deal."
© 2010 Press Association
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But what they don't say is that some of the stores who have pledged to absorb some of the VAT rise put up over a thousand of their items in December (T****, B***s for example)
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We will have to see what happens, lots more stores are saying the vat won't change yet but the proof is in the pricing.
Lizx
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