Cataloguers don’t expect to benefit from VAT reduction

As they scramble to accommodate the 1st December reduction in VAT, few merchants expect to see much of a benefit from the move. The government announced on 24th November that it would cut VAT from 17.5 percent to 15 percent to help spur consumer spending but “as ever with grand government gestures, it’s pointless,” said Mark Dugdale, chief executive of multibrand jewellery and collectibles cataloguer Compton & Woodhouse. “Will a £2.50 reduction on a £100 product make any difference to spending patterns? I don’t think so, but it does create a monumental amount of work for retailers from all channels and disciplines to change prices, especially for Christmas.”

But it does give direct marketers a slight advantage over their bricks-and-mortar counterparts, said Nigel Swabey, chief executive of multititle mailer Scotts & Co. “Conventional retailers will need to reprice most of their stock on the shelves,” he said. “In some cases prices have been incorporated within the packaging, and these cases will be difficult to rectify. Direct retailers, being more agile, should be able to adjust to the change more swiftly.”

Indeed, some direct marketers are already using the cut as a promotional tool. Online electrical retailer Dixons began promoting the discount on its website Tuesday, just a day after the reduction was announced and six days before it goes into effect. Fashion cataloguer Boden, meanwhile, sent out an email touting a 17.5-percent discount on all goods. “Gordon, if you’re going to cut VAT, cut it properly,” the email admonished.

For more on the VAT reduction, visit Catalogue | E-Business and The Catalogue Exchange.

Woolworths races to save itself

Shares in Woolworths have been suspended from trading as the company continues to negotiate for a sale of its retail division and its portion of the 2Entertain joint venture with BBC Worldwide. And according to reports, Woolworths may have to declare insolvency and does not even have enough cash to pay its November wages. The company’s ecommerce site reflects its sad state of affairs: Although the site header declares “Buy Childrens Cheap Toys, gifts, garden furniture & kids outdoor toys”, the site now sells only video games, DVDs, CDs, mobiles and books.

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