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No sign of pre-VAT rise spending spree


An anticipated splurge in spending to avoid January’s VAT rise has not materialised, despite a number of retail analysts predicting the emergence of this trend.

Synovate Retail Performance’s UK Retail Traffic Index shows that November’s UK non-food store footfall was 1.1 per cent down on October and 5.5 per cent lower year-on-year.

VAT will increase to 20 per cent on January 4th and it was expected that sales of big ticket items such as TVs and other electrical goods would improve.

Customer analyst group Retail Eyes said in August that 66 per cent of consumers were planning to increase spending, by buying products like TVs and radios, ahead of the tax hike.

In its survey some 38 per cent of shoppers said they would purchase electrical items before the end of the year.

However, Synovate does not see the situation improving in the coming weeks, predicting that retail traffic in December will be 4.2 per cent down on the same month last year, which is only slightly better than the 5.5 per cent annual decline reported in December 2009.

Dr Tim Denison, Director of Retail Intelligence and Retail Psychologist at Synovate, remarked: “We had anticipated that in November we would see the gap in year-on-year footfall start to close, as more shoppers ventured out to make the most of VAT at 17.5 per cent.

“This simply did not happen. Heavy internet promotions and the first rise in clothing and footwear inflation since 1992 may have contributed to the nation’s ongoing, sedentary state, but whatever the principal causes fewer shoppers braved the elements and the darker nights.

“Neither the stimuli of Halloween nor Guy Fawkes night created more trips to the shops this year against last.”

Industry analyst GfK Retail and Technology agrees that the current economic climate “has been tough on the major domestic appliances market”, with consumer particularly cautious about paying for big-ticket items.

Washing machines, though, have been described as “the hero category”, with sales growing at 5.5 per cent in value during the 12 months to October, almost reaching £845 million.

Published on Friday 03 December by Editorial Assistant

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