Tax hike will affect luxury items less

The rising cost of everyday living concerns UK shoppers more than that of luxury items, according to Retail Eyes, the customer experience improvement agency.

Its recent survey, which conducted research into the effects of January’s VAT increase, also revealed that UK consumers are polarised when it comes to whether they will change their spending patterns after the tax hike is enforced.

The survey, which declared the rising cost of groceries to be the biggest concern after that of petrol, also revealed that 80% of those surveyed will be more tempted to use stores which have frozen the rate of VAT and that 38% are planning on making additional purchases before the new VAT rate is introduced.

Speaking about the results, Simon Boydell, marketing manager at Retail Eyes, said: “One thing is pretty certain – the competition on the high street will remain high next year. There is still a lot of uncertainty among shoppers so retailers need to consider ways to entice consumer spending both before and after the rise in January. 

“Our results show there’s real opportunity for retailers to increase footfall and spend before the VAT hike,” he added.

The VAT rise will move from 17.5% to 20% on 4 January 2011.

Jane Parkinson, 09.08.10