Impact of VAT increase on retail


With the increase of VAT from 17.5% to 20% being introduced on 4th January 2011, we ask what its impact will be on consumer spending now and in 2011. Although many retailers took the hit and absorbed the rise in tax at the beginning of 2010 when the temporary reduction to 15% returned to 17.5%, this time it is widely reported that many retailers are planning to increase prices above and beyond 2.5%.

Whilst some believe that the impact will be negligible when purchasing low cost goods, there is a general consensus that big-ticket items will be hit particularly hard. It is also expected that there will be an imminent spike in spending as shoppers bring forward planned purchases in order to beat the tax rise. It is also likely that such a spike will be prolonged over the January sales period as retailers temporarily absorb the VAT increase within sale prices before moving to higher prices in late January. Today’s reporting of comments by Chancellor George Osborne that the VAT rise will be permanent could perversely have the effect of preventing a slump in sales, as consumers decide not to delay big-ticket purchases in anticipation of a VAT reduction.

In reality, it’s likely that there will be some effect on consumer spending habits due to the fact that incomes will remain the same yet prices will increase, resulting in a reduction in expenditure. It is anticipated that customers will engage in smarter shopping, using promotions and special offers, trialling more own-labels and visiting lower priced stores. Retailers on the other hand will have to find an alternative way of standing out from the competition, for example offering a better product, shopping environment and customer service.

January will no doubt be an interesting month as we monitor consumer spending and buying habits to evaluate what long-term effects may occur.

Lucinda Hannington, Senior Account Executive
Emily Burns, Account Executive

More

Bouygues Development appoints Innesco on Canning Town


Following a competitive pitch process, Innesco were recently appointed by Bouygues Development (BYD) to handle all communications and public consultation on BYD’s  £500m strategic development project at Canning Town, London.

More

Government to legislate to abolish Regional Strategies


The High Court ruled today that the decision of the Communities & Local Government Secretary, Eric Pickles, to abolish Regional Spatial Strategies was unlawful. The judgment in the case brought forward by Cala Homes threw the housing industry into confusion, with DCLG initially stating that the Secretary of State would not be appealing the ruling.

Calm was restored, however, this afternoon when Pickles wrote to MPs confirming the Government’s intention to legislate in next month’s Localism Bill to abolish Labour’s RSSs (you can view the letter here). DCLG also circulated a letter from the Chief Planner to local authorities and the Planning Inspectorate stating that the government’s intention to legislate should be treated as a material consideration in matters currently before them (view here).

Despite a brief break in the clouds for housing developers, it’s clear that Coalition’s government’s commitment to a new planning framework remains steadfast, meaning a continuation of the uncertainty that has been plaguing the industry since the General Election in May.

More

The Innesco lunchtime update from BCSC Conference 2010 – Weds


As we headed for a bright and early start on the last day of BCSC Conference 2010, we were able to reflect on the eventful night before. Starting early, we headed to the Savills cocktail party at Revolution Bar to mingle on a more social level with our fellow BCSC delegates. After an extremely lively debate-filled supper, we managed to get our hands on some golden tickets: to the must-attend LandSec party at Room.

The rest of the night was spent catching up with others we had been unable to speak to earlier, spinning on the dance floor and discussing who was going to host the after party. By 3am, there was a unanimous opinion that our beds were beckoning.

With a gruelling schedule of meetings with clients and contacts on their stands, the Innesco team have had a busy few days. The atmosphere surrounding this year’s conference has been notably upbeat, following last year’s more melancholic mood. It’s clear that many developers are looking afresh at those crucial on-hold schemes, whilst the clusters of huddled conversations around the agents’ stands points to an upturn in deal making. Overall, BCSC 2010 has been a huge success and a great year for our two youngest team members to make their BCSC debut.

Emily Burns, Account Executive

More

The Innesco lunchtime update from BCSC Conference 2010 – Tues


Retail property professionals descended on Manchester last night and this morning for the annual BCSC Conference.

More

Build it, but will they come?


To look back on the last ten years of Retail Week Awards is to look back on the very best centres that hit the headlines for all the right reasons.

More

Big Brands and Fresh Fascias


Our team recently attended the BCSC New Generation Seminar “Big Brands and Fresh Facias” held at Hammerson’s Central London offices. The New Generation has been created in order to encourage younger members to engage with the BCSC and its activities. The seminar consisted of three distinctly different presentations from Howard Saunders (founder of Echochamber), Tim Gambrill (Head of Marketing, Westfield Stratford City) and Tim Danaher (Editor, Retail Week).

Howard kicked off with a eye-opening insight into current retailer trends, highlighting how the growing popularity of ‘pop-up’ stores emphasised his view that consumers are no longer shopping based on needs but instead are lured in by the “must haves” and “must dos”. Tim Gambrill then gave a unique look into the perspective of a global shopping centre organisation. He showed how Westfield shopping centres are a space for brands to flourish, offering scope for creativity and encouraging retailers to be dynamic and indentify themselves with their brand facias.

The seminar was closed by Tim Danaher who gave an impressive without-notes presentation on what the general retail market is looking like at the moment. Focusing on the increased use of online shopping, Tim made an interesting point that not all retailers are heading this way, drawing attention to Primark as an example of a retailer growing over-the-counter sales strongly.

As this was my first BCSC seminar, it was a great introduction to their work and I very much look forward to attending more!

Emily Burns, Account Executive

More

Pick then Click


The last few years of downturn have taught the industry that conventional shopping patterns will soon be a thing of the past. It is the multi-channel retailers that are forging ahead and seizing new market share – can shopping centre owners do the same?

More

New offices for Innesco


Innesco is moving to new larger premises in the City next week. Having expanded its client base, the strategic marketing communications consultancy has agreed terms with The City of London to take newly refurbished space in its London Fruit & Wool Exchange building on Brushfield Street,

More

Coalition budget of compromises


Yesterday’s Emergency Budget, the first for George Osborne and the Tory-Lib Dem coalition, contained few surprises.

More