Skip to main content

2010 looks like being a tough year

Andy Bond runs Asda, the UK arm of Wal-Mart, and recently agreed to a lengthy interview with the Financial Times newspaper about his views on whether he was the right man for the Marks & Spencer top job. I find it hard to believe that his US employers would be happy for him just to chew the fat with a newspaper about his career options so it was interesting to read what else he was talking about.

So when he says that 2010 will be a tough year, he must be talking to someone other than his shoppers. He notes that the 2.5% rise in VAT and other tax increases in the pipeline will be putting presure on the amount of money that households have to spend. Is it a message to suppliers that they will have to trim their prices so that Asda can cut the cost of its products to shoppers? Probably.

For many local shops, an upward nudge in January is possibly being pencilled into their business plans now. But don't assume that the multiples will make it easy for you. Think about how it will look if the major supermarkets promise to hold their prices and absorb the VAT hike on, say, the top 250 everyday lines.

2010 looks like being a tough year.
Labels:

Comments

  1. The Village Postmaster16 September 2009 at 19:07

    Yep, 2010 is going to be a tough year and so will 2011 be also. With an election and a likely change in Government cuts will follow. That means less money in the economy. The Tax Payers Alliance and IoD are suggesting £50 Billion less.

    But your point about holding the price of 250 top everyday lines, most of those will be zero rated.

    We already plan to treat the VAT rise in the same way we treated the reduction, No Action, just let it gradually happen.

    What ASDA or Tesco will do is shout about it, so must we.

    Steve

    ReplyDelete
  2. Unknown17 September 2009 at 06:53

    Hi Steve,

    You are right about the zero-rating. I have not seen any figures about the proportion of zero-rated turnover in the mix for local shops and must look it up.

    Nick

    ReplyDelete

Post a Comment

Popular posts from this blog

Digital disruption in the UK wholesale space

“Twenty years ago I was driving boxes to the post office in my Chevy Blazer and dreaming of a forklift,” says Jeff Bezos in his most recent letter to shareholders. A blink later and he points out that the company has grown from 30,000 employees in 2010 to 230,000 now. But his ambition is the same. “We want to be a large company that’s also an invention machine. We want to combine the extraordinary customer-serving capabilities that are enabled by size with the speed of movement, nimbleness and risk-acceptance mentality that is normally associated with entrepreneurial start-ups.” Amazon is great at disruption because of its customers focus and the fact that the internet means it needs none (or very few) people between its warehouses and the shopper. The threat of Prime, its membership service, is the biggest challenge facing the UK retail market and the wholesale market by extension. It is both a direct threat and an indirect threat in that is inspiring countless numbers of othe...
Post a Comment
Read more

Traffic lights: a fuss about nothing

I am sure that FT columnist Michael Skapinker has written about traffic lights food labelling before and his latest article is provocatively called: The food companies that make people fat. He criticises Coca-Cola and Unilever for sticking with guideline daily amounts (GDAs) when traffic lights work much better. Former Walmart Europe public affairs head Bernard Hughes wrote in to support Skapinker. He said: "There isn't ever a perfect information system flowing with beautiful logic. But traffic lights give powerful direction to the busy consumer." But in this age of smart phones surely this debate over the labelling on the packaging is easily overcome. The government can simply issue an app that when held over a bar code provides shoppers with a traffic light system. The supermarkets could do this on their websites. Surely the whole point about the future is that the internet and limitless data storage means that the shopper is being empowered with the informatio...
Post a Comment
Read more

Sunday trading consultation: fair or fixed? You decide.

My local council, South Oxfordshire, asked me to complete a survey on Sunday trading as a local resident. The deadline is next week. The first question was about the current arrangements and what I thought. There were five options: large shops shouldn’t open six hours is already too long current restrictions are about right large shops should be allowed open for longer no restrictions. My answer was the current restrictions are about right. The next question was about what would happen if the council allowed large stores to open for longer. The menu included 10 options and a space for other. The options were that it would: encourage me to shop more in my local town give me more flexibility impact on my religious or cultural beliefs have a positive impact on my business have a negative impact on my business increase footfall to my business reduce footfall to my business provide more employment opportunities open to me in the local area mean that I need to...
Post a Comment
Read more