Retailers are wary of stocking price-marked packs in the run-up to January's VAT rise, a survey of C-Store readers shows

I'm concerned about how the VAT increase will affect our margins on PMPs and I will probably stop selling them on items like chocolate, although we might keep them on tobacco. I can't see many manufacturers reducing the cost price of PMPs as everyone is trying to save money wherever they can." Jennifer Mansfield, J&J Newsagents, Cottingham, Humberside
"We'll move to non-PMPs if we don't get a good margin. I have no faith in manufacturers to help small stores. They're only interested in the mults." Jane Devonshire, Witheridge Village Stores, Witheridge, Somerset
"It would be terrible if small stores were forced to drop PMPs as they really help to prove that we're not more expensive than the multiples."
Trevor Parkes, Parkes News, Poole, Dorset
Independents are running down stocks of pricemarked packs (PMPs) ahead of the VAT increase on January 4, for fear that supplier reluctance to reduce cost prices will eat away at their already tight margins.

Independent retailer Dave Newman, who runs three stores in and around Hastings, East Sussex, is one of many retailers critical of manufacturers and wholesalers for not communicating their plans for PMPs sooner.

The decision to start buying non-PMPs in the current climate was tough one, but he felt that he had little choice, he told C-Store.

Confectionery and some essential household products are particularly troubling, and products marked with a 99p or £1 price flash such as Cadbury 140gm 99p bars, Nestlé Aero £1 bars, Fairy Liquid £1 and Colgate £1 are of key concern.

Retailers are particularly worried about tobacco, where PMPs play a crucial role, but praised manufacturer Imperial Tobacco for making the first move, announcing that it would lower the cost price of its PMPs from December 13 to "ensure that trade margins were not negatively impacted when the VAT rate increased".

However, as C-Store went to press none of the UK's other big tobacco manufacturers had shown their cards.

Cadbury declined to comment on its intentions, but Nestlé said it would "continue to work tirelessly to minimise the impact of increases to [its] cost base".

Retailers are also questioning their wholesalers, with many fearing that any potential cuts would not be immediately passed on. At the time of going to press, Booker and Landmark were not yet able to communicate their intentions.

Robbie Indrim, who owns a Costcutter in Colliers Wood, London, said he'd be surprised if retailers didn't lose out. "I'd like to think that manufacturers will reduce the cost price, but it probably won't happen, and even if it does the wholesalers won't pass on the saving to us.

"I'll still buy some PMPs, but in significantly decreased volumes."

Lionel Cashin, owner of the News Shop in Market Weighton, York, said he aimed to have no PMPs in stock by the new year.