Consumers split over VAT rise

Consumers appear split over whether next January's VAT hike will affect their spending habits.

Research outfit Retail Eyes said that 52 per cent of the 2,863 people polled in a recent survey said the 2.5 percentage point rise in VAT would not affect their spending.

However eight of 10 shoppers said they would be minded to visit a retailer that had frozen its VAT rate at the current 17.5 per cent.

The research also found that 38 per cent of those surveyed were planning to make additional purchases before the sales tax goes up.

Of these, two thirds were keen to buy electrical goods - TVs, etc - while nearly a quarter planned to buy 'white goods'.

Simon Boydell, marketing manager at Retail Eyes, said: "While the jury remains out on the exact impact the VAT rise will have on consumer spending, one thing is pretty certain - the competition on the high street will remain high next year.

"It may be a bit early for consumers to decide whether the VAT will affect their shopping habits but delivering excellent service by improving your customer's experience is a simple and cost effective way to boost sales, distinguish yourself from the competition and most importantly, create customer retention.

"Make sure all staff are briefed on the expected high standard of service and they recognise opportunities to cross and up-sell. Also, seek regular feedback from customers about their experiences and share this with your staff."

Chancellor of the Exchequer George Osborne announced in his emergency Budget in October that VAT would rise by 2.5 percentage points, to 20 per cent, on January 1 next year.