Monday, 22 December 2008

VAT Reduction worth more than 2.5%

VAT notice in M&S

I was Christmas shopping with the boys yesterday and was struck with a realisation about the VAT reduction. At checkout after checkout, the price was always a little bit lower than I was expecting.

Most retailers haven't changed the price tickets, so it's not till you get to the till that you see the saving. On a £30 clock it was 75p, not a huge amount but still cheaper.

The feel-good factor was far in excess of 75p.

The continuous little reductions were adding a little shiny glow to each purchase. Put shoppers in a good mood and they'll spend more. Simple but effective.

Like many people, I had some doubts over the impact of the VAT reduction and questions remain over the affordability. However, I didn't consider this benefit of retailers not being able to change the price tickets quickly.

Some good Christmas retailing figures certainly won't harm sentiment and as we've learned recently, sentiment seems to be the foundation of the Western economies.

Picture credit: Simon Aughton

No comments: