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08 Dec 2008
Last week’s cut in value added tax failed to drive sales, prompting one retailer who was asked what difference the VAT rate cut from 17.5% to 15% had made to answer 'none'.
'Two weeks ago when we had massive discounting going on, we had a big peak,' Anita Sharma Manan, an analyst of Experian FootFall, told the Financial Times. However, a second one-day sale by Marks and Spencer on Thursday failed to attract as many shoppers into stores.
Last Thursday’s footfall estimates, measuring the number of shoppers, showed a 0.4% drop on last year - a smaller decline than Monday and Wednesday, but the first four days of the week were still down 2.4% on average.
However, John Lewis noted a rise in big-ticket purchases. Simon Wolfson, Next chief executive, is one of a few retailers who have spoken publicly against the reduction, while several retailers have complained privately about a large administrative cost.
Further reading:
VAT cut makes more work for finance
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