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.
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.
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.
ReplyDeleteBut 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
Hi Steve,
ReplyDeleteYou 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