With the looming threat of the VAT increase on 4th January 2011 fast approaching pre-christmas shopping is set to be at an all time high this year. With Kelkoo the price comparison site saying that 16% of shoppers admit they will buy now to beat the increase. Shoppers are rushing to buy cheap. Or at least that’s how it seems.
The truth of the matter is that it is unlikely the effects of the increase will be felt in the retail sector. As Alan Sugar alluded to this morning on Twitter, the retailers are likely to absorb the increase by cutting margins or screwing over the suppliers. They have had 6 months to prepare for the increase and will have discussed it with suppliers and planned for lowering the costs of their products.
In my opinion it is looking good for the economy this Christmas as the people rushing to buy is only good for the economy. Increasing the cash flow is essential. However this is not to say that rushing to buy is a good idea and that this false pretence of rocketing prices is playing into the hands of retailers quite well.