Retailers say VAT cut failed to drive sales

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

Debenhams blames IT systems for VAT delay

Read the Financial Times