VAT cut is not optional

The report revealed inflation fell 1 per cent on the back of December’s VAT cut. But what it also showed was that of the VAT-able products it surveys – and it records 120,000 products in total – only two thirds had been cut in price, whether that was on the shelf or at the till.
Now we know that if its retail sales data is anything to go by, ONS figures need to be treated with a degree of caution. And we also know there were huge logistical challenges in implementing the VAT change.
But nevertheless, this reflects ill on those retailers that haven’t implemented the change. It simply wasn’t good enough to do what at least one big multiple did and put a sign in the window saying all products had already been cut in price by more than 2.5 per cent during the course of the year.

It would be a bit like the Government cutting income tax and retailers cutting the pay of store colleagues to keep pay levels the same. Everyone knows it was a pointless tax cut that was too insignificant for shoppers to notice the difference, but it was done in good faith and retailers owe it to their shoppers to respond in the same way. The failure by some to do so lets all retailers down, and if the Rip Off Britain campaign kicks off again, they will be to blame.

A responsible age

If you read one thing in Retail Week this week, make it Joanna Perry’s piece on US retail. What’s fascinating about the comments that industry giants like Lee Scott and Mike Ullman made at the NRF in New York last week is that the brutality of the economic downturn has prompted a cultural shift in the US, and retailing has had to change too.

We’ve yet to experience the pain American retailers have, but many experts – such as John Richards – are adamant it’s coming our way. If and when it does, retailers will need to consider their relationships with shoppers. In an age when debt is deeply uncool, retailers will need to be a trusted friend rather than a seductive temptress.