VAT rate cut information design in Muswell Hill

 by Martin Belam, 21 December 2008

We are approaching the end of December, and will soon be getting retail figures that will prove whether the Government's emergency VAT rate cut sparked a last minute Xmas shopping spree, or whether retailer's doom and gloom about the Christmas period was warranted.

I have painful memories from back in the 1990s of having to re-price every single item in Note For Note, a record store in Walthamstow, due to a VAT rate increase. With no computerised till or stock control, it meant walking around the store with an old-fashioned price gun and a calculator, physically dealing with every CD, tape or record.

I thought it might be interesting to walk down one retail area, Muswell Hill Broadway, and see the different ways that shops have implemented the VAT cut, and, more importantly, informed their customers about what they have done.

Thank you, Darling

Several shops have signs in their outside window to promote the fact that they are passing on the price cut, and quite a few of them make an attempt at humour. Holland and Barrett are using a well-worn Blackadder-style joke on the Chancellor's name to promote their price cuts.

Holland and Barrett

By order of H.M. Customs & Excise

Another store that has gone for a 'humour' angle is the Crocodile Antiques and Cafe shop. This has several signs in the window pretending to be royal decrees over the VAT rate change.

"By Order of H M Customs & Excise a special VAT discount of 2.5% off all prices will be applied at the till from today!"
Crocodile Antiques

They may not have quite got their maths correct however...

Blanket 5%

A lot of the press and media coverage implied that a 2.5% reduction in VAT meant a 2.5% reduction in price, which isn't actually the case. [1]

Some stores seem to have got fed up doing the micro-calculations to adjust each item by the correct amount. 'Diva Art' in Muswell Hill has just applied a blanket 5% discount on everything in store.

Diva 5% discount

Beauty salon Hair Waves have also opted for a blanket discount, or just didn't understand what the rate of VAT was in the first place. The sign in their window states that:

"Beauty retail VAT discount. Dermalogica, Jessica, Esste and St Tropez reduced by 5% from 1st December 2008"
Hair Waves

The charity angle

Clothes shop White Stuff had a totally different approach.

White Stuff shop front

The Muswell Hill branch has a sign up at the till saying that they will not be adjusting their ticket prices to take account of the VAT rate change until the New Year.

However, in the meantime, they will be donating 2.5% of December's takings to charity, hoping in this way to raise £100,000.

"Thanks Darling! We're giving it to charity"
White Stuff Sign

Caffè Nero 'inconvenience'

Perhaps the strangest sign was the one in my local branch of Caffè Nero. All of their price boards had been adjusted to the new lower prices, but they had a sign saying that the electric till system had yet to be altered. That meant that although they seemed to be displaying new lower prices, they were still charging prices with 17.5% VAT added. The sign apologised for any 'inconvenience'. By 'inconvenience', I think they may have actually meant 'over-charging'.

Cafe Nero VAT sign (blurry)

[1] VAT is added to the retail price, so at 17.5% VAT a £10 item became £11.75. With the new lower rate, the item should now be £11.50. That is a saving of 25p, but not a saving of 2.5% on the previous shelf price of £11.75 [Return to article]


Meanwhile, just up the road, the Wetherspoons is pretending that nothing's happened, and is quietly taking 2.5% extra profit.

The Card Warehouse store in Milton keynes has a bemusing notice stuck in its window saying - I paraphrase - that they won't be taking the 2.5% reduction as they're in administration and it's too complicated for them to do, but they'll come to a decision about what they're going to do in the new year.

Great piece, by the way. I love the little stickers on restaurant menus; it's one of the tangible signs of the economic crisis on the high street (apart from the ghostly roar of Woolworths and MK One)...

This has been driving me slowly mad. It was bad enough that when it was announced both the BBC and ITV got it wrong in a number of their reports.

What about Poundland, eh?

I'm sure I went into a Caffe Nero and had the opposite effect - the price I was charged was less than what was on the board, with a sign explaining the signage wasn't correct.

Who knows. I'm sure that Caffè Nero must be run on a franchise basis, so maybe it wasn't the same everywhere. They are also one of those places where VAT only applies if you stay in, but I bet not everything they sell actually attracts VAT...

What I bought was coffee to take away - which is apparently always VAT chargeable. The VAT rules are rather confusing - quite why a cold takeaway drink is different to a hot drink-in drink is something I can't get my head round!

Caffe Nero don't do franchise - it's likely to be similar to the situation at Costa, where we simply can't get the menu boards printed quickly enough to get them up in time so some have got temporary stickers for the prices and others haven't.

At Costa, we went for a blanket 5p discount on all menu board drinks, cakes, pastries, and all cold and hot eat sandwiches, which worked out to actually be in the customer's favour in some cases.

We won't be having 'correct' menu boards until mid-February either, because of the printing time to produce them. All the other price labels are being replaced on 1st Jan though.

Complicated, heh!

White Stuff have a sign up now saying that across their shops they donated £150,000 to charity in December by passing the VAT cut on in that direction instead of back to the consumer.

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