The rate rise in January will be disruptive, but the six-month notice period is a help, retailers say.

A survey of Convenience Store readers reveals a split reaction to next January’s 2.5% rise in the standard rate of VAT.
While some believe the increase will drive customers to larger retailers who will delay passing on the rise, others are relieved last month’s budget did not hit them harder.

“I am worried about the impact on the business,” said David Bridge of Here to Please You Stores in Bolton. “We will have to be even keener on price if we want to compete with the supermarkets. They will just be able to absorb the increases.”

Others were more upbeat. Des Barr of Sinclair Barr Newsagents in Paisley saw positives in the move. “There’s far too much to be gloomy about in this industry. We really need to work harder at overcoming the negativity,” he said. “When it comes to making the changes, why not add an extra 1p or 2p to the cost and make a bit more money on top?”

The timing of the change on January 4 was generally agreed to be reasonable, although retailers in Scotland face extra operational difficulties as it falls on a Bank Holiday.

Harry Goraya of Nisa Gravesend, Kent, said: “It won’t be too much of a hassle changing everything over as we’ve had a lot of practice over the past couple of years! We’re going to have to cut back on pricemarked packs over the next couple of months, especially cigarettes, as there will be a discrepancy between the prices.”

C-Store columnist Dave Newman was also concerned about pricemarking. “We can hardly start putting labels over the pricemarks to reflect the increase,” he said. 

“Will the tobacco suppliers give us a margin rise for a few months beforehand, will they phase out pricemarking for a period, or do they risk thousands of retailers not stocking pricemarked stock?” (See Dave’s column).

Tobacco suppliers JTI and Imperial Tobacco both told C-Store they would communicate their policy on price marking to retailers well in advance of the implementation date.

Association of Convenience Stores chief executive James Lowman said that the much-anticipated rise was the government’s “least bad option for increasing tax revenue”, but added that it still presented a risk to local shops.