Shops not passing on VAT cut

ArchAnGeL

ArchAnGeL

ArchAnGeL

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OCUK have been exemplary in passing on this cut. Not so some others.

I am talking about a high street electronic component retailer here.

I spotted a few items in ****** yesterday that I wanted to get as presents. Since ****** is usually a bit pricey I left them and checked around online last night but the price was still ok when delivery was factored in.

However, the price should have dropped today with the decrease in VAT but checking on the ****** website the final price was the same. looking into it a bit further I found the ex.vat price and this +15% is giving the same price as yesterday. Conclusion they increased the ex vat price so that when the new vat rate is added they have the same selling price as yesterday, thus pocketing the difference instead of passing it on to the customer.

I phone their sales line who confirmed that the vat decrease had been implemented today but selling prices had not changed.

It's only a small amount but the principle is important. The government is decreasing VAT to stimulate spending via lower prices in the shops. To fund this they are looking at increasing taxes later on. So basically I will be funding ****** profits via my taxes. N1!
 
Good. The whole thing is ridiculous and stores are stuck in a difficult situation.

They have two choices:

a) Reprice EVERYTHING. This means moving away from established price points, bringing in completely random new ones. Going through huge amounts more change at tillpoints, increasing the time it takes each customer to be served. Spending hundreds of thousands reprinting price stickers, POS, adverts all over the country.

For what? So a £29.99 item can become £29.27? Whats the point, really? Are you actually going to be pleased to pop into a shop, hand over 30 quid for a 29.99 item and instead wait whilst the cashier counts out 73p of change for you? Great. I'd rather just have the penny. We are all going to end up carrying huge amounts more loose change.

So, at a time when the economy isn't doing great companies already experiencing a downturn in sales must commit much money to this utterly ridiculous idea.

Or they can do b)

b) Keep prices the same. Not incur huge pricing costs and retain sensible pricing strategies. Get absolutely slated by the Daily Mail and driven out of business as a result.

Fanastic. And just 3 weeks before Christmas as well.
 
[TW]Fox;13001216 said:
Good. The whole thing is ridiculous and stores are stuck in a difficult situation.

They have two choices:

a) Reprice EVERYTHING. This means moving away from established price points, bringing in completely random new ones. Going through huge amounts more change at tillpoints, increasing the time it takes each customer to be served. Spending hundreds of thousands reprinting price stickers, POS, adverts all over the country.

For what? So a £29.99 item can become £29.27? Whats the point, really? Are you actually going to be pleased to pop into a shop, hand over 30 quid for a 29.99 item and instead wait whilst the cashier counts out 73p of change for you? Great. I'd rather just have the penny. We are all going to end up carrying huge amounts more loose change.

So, at a time when the economy isn't doing great companies already experiencing a downturn in sales must commit much money to this utterly ridiculous idea.

Or they can do b)

b) Keep prices the same. Not incur huge pricing costs and retain sensible pricing strategies. Get absolutely slated by the Daily Mail and driven out of business as a result.

Fanastic. And just 3 weeks before Christmas as well.
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You don't need to cut display prices, just recalculate VAT at the till. IF you don't want the money give it to the guy outside with the cup.
 
Exactly Fox.

Another thing that you do not consider OP. I run a specialist retail business and we have incurred roughly around a 20% increase in costs. This is due to increased manufacturing costs and the horrible situation with the currency exhange rate.

We have not passed on a 20% increase so we will not be passing on a 2.5% decrease in prices.

The whole thing is a bit silly and has not been thought through very well.
 
ArchAnGeL said:
You don't need to cut display prices, just recalculate VAT at the till. IF you don't want the money give it to the guy outside with the cup.
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How is that a sensible and viable long term solution? That would mean every price in store would be incorrect and most of the public (Not very bright) wouldn't know how much they were going to pay until they got to the tillpoint.

And you still come out with a pointless fistful of change after spending 4 times as long at the checkout while the girl tries to count out 73p instead of just giving you a penny.
 
Saw an advert in the paper for asda which explained that the prices have changed today and you will receive the vat reduction at the till point while they get around to changing the shelve prices! that will take a good few weeks i suspect but at least they are knocking off the vat at the till point :)
 
jrodga2k5 said:
Saw an advert in the paper for asda which explained that the prices have changed today and you will receive the vat reduction at the till point while they get around to changing the shelve prices! that will take a good few weeks i suspect but at least they are knocking off the vat at the till point :)
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They are all saying that, better start checking those till receipts. ;)
 
You would honestly rather have 1p change than 73p?

Obviously you have more far more money than sense - wait until you live in the real world!
 
Unlight said:
You would honestly rather have 1p change than 73p?

Obviously you have more far more money than sense - wait until you live in the real world!
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1p = 1p coin

73p = 50p, 20p, 2p, 1p

Now really, how useful is that?

The only thing the VAT cut is useful for is businesses being able to advertise they've passed on the the cut to gain more custom, or to slightly increase their margins so they stand a little less chance of going bust.
 
tbh this was always going to happen.
I cant see a lot of shops having to reprice their whole inventory just for a couple of pennies.

I can understand on bigger more expensive items ie T.Vs etc. But seriously 29.99 to 29.27.... I guess every penny really does count to some people. :D

But yea it would be easier for e-shops just to add the diff VAT rate at the end. But prob is a lot of e-shops have the VAT added b4 the checkout so.

Can't be that hard to change i would guess
 
The whole 2.5% VAT thing is a pointless waist of time... with a lot of shops already offering large discounts 20%/30%/40% etc... what is an extra 2.5% going to do? absolutly nothing...

Would have been much better off cuting lower rate income tax by 1p / 2p etc.. atleast then people would actually see a difference in their take home
 
Beansprout said:
1p = 1p coin

73p = 50p, 20p, 2p, 1p

Now really, how useful is that?

The only thing the VAT cut is useful for is businesses being able to advertise they've passed on the the cut to gain more custom, or to slightly increase their margins so they stand a little less chance of going bust.
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I'm no scrooge by any means. But I'd far rather have 72 extra pence in my pocket on a £29.99 purchase than the retailer..
 
Jambo,

Manufacturing costs and distribution costs will rise and fall depending on the nature of the business. If your business is specialist i.e. not selling commodity products that can be bought elsewhere, haven't you increased prices or at least improved efficiencies/diversified to reduce the impact on your company? It's a business decision. It shouldn't be used as an excuse for not passing on the VAT cut imo.
 
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