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VAT rise to strike near-term
Near-term impact of 2.5 per cent VAT rise to be pronounced amongst retailers
The 2.5 per cent VAT increase, which came into force today (January 4) and increased VAT to 20 per cent, will have a major impact on sports retailers in the near-term, according to leading trade voices.
Ward Robertson (pictured), managing director of the STAG buying group, said the impact of the increase will be more pronounced on goods consumers need to purchase, such as fuel, but will have an impact on all retailers.
“2.5 per cent is not a huge amount but it’s something we could do without,” said Robertson
“It will have a bigger impact on things people have to buy like food, but it will put costs up for all of us.”
Simon Millet, managing director of Millet Sports, said he, like many other retailers, had not acted on the VAT increase until recently.
He said: “I realised 2.5 per cent off our bottom line would impact profitability quite considerably. Some suppliers have already sent out revised price lists while others view it as not their problem.
“For us, this means stock has been devalued, and there is the potential we’ll have to take a hit on the stock we’ve got, which is a lot.
“Some businesses might be able to work out deals with their suppliers to minimise the impact, but bigger retailers will find that easier than the independents.”
Robertson said long-term, consumers will become more considered with their spending as it is unlikely the VAT increase will be rescinded.
“If people want it they’ll still spend, but just look at buying cheaper. VAT won’t go back down and the economy will have to cope with it.”
Millet added: “Long-term the VAT increase will make no difference to business but it will make trading tough in the next few months.”
