This week’s emergency Budget could undoubtedly have been worse.
This week’s emergency Budget could undoubtedly have been worse. The widely trailed rise in VAT to 20% was confirmed, though fortunately the Government had the foresight to give retailers six months to prepare for the mammoth task of re-ticketing. That the change will come after the crucial Christmas trading period is also a bonus if spending ahead of the hike accelerates as expected.
But we still don’t have all the answers as to how the consumer will respond to higher tax rates. Unemployment levels remain of massive importance to the recovery. How the planned cuts in public spending will manifest themselves in terms of job losses is of serious concern and we won’t know the answers until the Chancellor’s statement in October.
The public sector employs more than seven million people - that’s a lot of a shoppers. These customers stopped spending post-election amid the uncertainty so it would be foolhardy to expect them to return to the high street until they are confident of job security.
However, retailers, suppliers and brands that can serve up exclusivity and interesting must-have product at acceptable prices can thrive even in a fragile climate. Look at Superdry, All Saints, Ted Baker, JD Sports Fashion and Burberry, whose growth stories have not been held back by shoppers’ fears.
The heart of their formula is not about outwitting the competition or manipulating margins. It’s about doing something different and individualistic and doing it with conviction. Now is the time, more than ever, to let product do the talking - best-sellers are always best-sellers, no matter how tough the climate. With this is mind, Chancellor George Osborne’s “open for business” message should be allowed to ring true.