VAT cut lost in a sea of discounts

The 2.5 per cent cut on duty came into force on December 1. But with the British Retail Consortium announcing on Tuesday that UK sales had declined for the second consecutive month, by 2.6 per cent compared with last November, is it too little, too late?

The consensus was the cut has made no real difference to business, with most shops offering significant discounts to tempt customers through the doors.

With Christmas takings likely to be down this year, Mr Darling’s scheme looks to have given most retailers cold comfort this season, particularly with big job losses around Canary Wharf shaking consumer confidence.

Most stores are relying on heavily advertised pre-Christmas price, with even bigger discounts promised for the New Year. So at least there should be good news for bargain hunters.

Ray Hancock, store manager of Accessorize and Monsoon in Canada Place mall, said: “We had a good week last week but that was because we had a promotion. I don’t think the VAT cut has made any difference at all.

“Things are difficult this year. This is the fourth Christmas I’ve been here and normally the queues are huge but that’s just not happening now.

“We’re seeing how business goes week to week with promotions to bring customers in. This week it’s 30 per cent off shoes in Accessorize.

“Our main sale starts on December 27 and we’ll be offering more price cuts than before.�

Jenna Thetford, store manager of Ted Baker in Canada Place mall, agreed that any rise in sales had more to do with promotions than VAT cuts.

She said: “Last week was good but the main reason was because we had a 20 per cent off promotion rather than the VAT cut.

“I don’t think the cut has made much difference.

“I’m not sure there’s anything else that can be done other than to have promotions and then our main sale starts on Boxing Day.�

Ross Guard, assistant manager of HMV in Canada Place mall, said: “We haven’t seen much difference because of the VAT cut. It’s been just as busy as it’s always been.

“The cut is about 12p off a DVD, which won’t draw people in. It’s the big ticket items that will show the difference.

“Our trade really depends on what has been released. When the Sex And The City film came out we sold 1,200 copies on the first day, but then Batman didn’t do anywhere near as well.

“People are always going to buy DVDs and CDs as Christmas presents but we won’t be able to tell how well we’re doing this year until Christmas is over.�

But Asif Fazal, deputy manager of Currys in Cabot Place East mall, argues that the cuts are more obvious on more expensive items in-store.

He said: “Christmas is our busiest time and our customers are happy because they are noticing a difference because of the VAT cut.

“Every penny counts and there is a good saving to be made on the price of a TV. If it wasn’t for the credit crunch we would be doing even better but our customers are happy.�