Getting more for less somehow...

On 1 January the rate of VAT in the UK is set to go up by 2.5% after the temporary cut to see us through the Crunch. Many local retailers may not have cut their prices and this is the end of a very handy extra 2.5% margin. But they need to think now what they are going to be doing in January.

It is clear that the multiple retailers are all planning now. City analysts say they are well placed with lower stock levels and clarity about what shoppers are thinking. Lower mortgage costs mean that many families have had more money to spend each week - around £12 a week in June and £9 in July.

If shoppers feel that the Crunch is not so bad, then they may be tempted to spend a lot before Christmas. Analysts say that retailers will be promoting hard. However, they also say that the multiples will be pushing prices up in the background.

"With list price increases to more than offset the cost of higher promotions, customers may not be getting quite the bargain that they think," says Andrew Hughes of UBS.

If shoppers are getting wiser to this kind of marketing, the opportunity for local retailers can only improve. If you treat your key customers as you treat friends, offering them value without ripping them off, then you can retain (or win) their loyalty.

Comments

Three secrets of great merchandising

Look at the ceiling and top wall of this McDonalds restaurant. There is a picture of two good looking healthy people having fun and some bright primary colours. Ask yourself what is the purpose of this picture? In the latest issue of Retail Newsagent in a feature on merchandising, Andrew Knight of RI tells its independent readers that they need to think about using sharp pictures of non-packaged products linked to people consuming goods. Perhaps this has been taken to the next level by the fast food chain - that is selling the feeling of being happy and healthy rather than the products. A second, related tip from the same feature is made by most contributors - it is vital to keep windows clean and clear of clutter. "I believe that less is more," says Roli Ranger, a retailer from Ascot, Berkshire. He has posters for promotions in between the windows that are regularly updated and discreet signs in the windows. Third, a highly visible well-stocked promotion at the entranc

Overcoming a price disadvantage

Planning for his speech at the Independent Achievers Academy last week, Theo Paphitis asked an assistant to buy a basket of six essentials from a Tesco, a Londis (independent operator in a symbol group) and a One Stop (Tesco's CTN/convenience chain). Tesco was cheapest by a big margin. Second came Londis. The most expensive was One Stop. Mr Paphitis understands the power of the supermarkets and he says the way to counter them is to focus on how to make the experience of shopping with you more relevant to shoppers or more enjoyable for them. John Heynan, sales director of Molson Coors, told Retail Newsagent at about the same time that occasional beer buyers will pay 13 per cent more for their beer in an independent convenience store, provided the retailer targets them appropriately. Tesco has carved itself out this 13 per cent head start. Looking at pricing, if Tesco is 100, then Tesco Express is 108, One Stop is 112, a good symbol group is 115 and non-affiliated independents

A sign of retail stress perhaps

It must have been four months since this window was broken in the Tesco Express on Pentonville Road and I simply cannot believe that it has not been fixed. This is the sort of lack of focus that independent shops usually get criticised for. The only purpose in sharing this image is to encourage those independents with high standards who are finding the going tough that they can do better than this.

nickshanagher

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