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November 27, 2008 2:00 am
Tesco stole the march on rival retailers yesterday by declaring that it would cut value added tax on all its non-food lines by tomorrow, as the wider retail sector rushed to follow suit by Monday.
The UK's biggest retailer said it would pass on the 2.5 percentage point cut in VAT to shoppers in time for the weekend. The next few days should be some of the busiest on the retail calendar, coinciding with most people receiving their final pay cheque before Christmas.
To kick-start the weekend, 30 retailers in London's West End announced that they would host an "early bird" shopping event tomorrow. Stores from Liberty to House of Fraser and Topshop will open from 7am in an attempt to lure customers out of bed and on to the high street with the promise of free breakfasts and goodie bags.
Meanwhile, Asda declared that it would be cutting prices on a further 4,000 products during the weekend, while also cutting by 17.5 per cent the prices of all televisions and DVD players for three days.
Sir Stuart Rose, executive chairman of Marks & Spencer, who together with Arcadia's Sir Philip Green had been in discussions with more than a dozen leading retailers about how to manage the VAT cuts, said that he would implement the reductions on Monday.
Asda also said it would pass on the cuts on Monday.
The decision by Alistair Darling, the chancellor, to cut VAT from 17.5 per cent to 15 per cent by December 1 will reduce prices by 2.1 per cent on the shop floor and will be in force until the end of 2009.
Sir Philip, who owns retailers ranging from Topshop to Wallis in his Arcadia empire as well as department store chain BHS, gave himself a little room for manoeuvre on timing.
"The price reduction will be given on standard rated products and will start to be applied on, or as soon after, Monday, allowing for the complexities of implementing the changes required," he said.
It is not only the biggest national names that are passing on the VAT reduction early.
Barker and Stonehouse, the UK's largest independent furniture retailer, has also immediately passed on the full cut in VAT.
The cut at its eight stores, all in northern England, came into effect on Tuesday, with the objective of building customer goodwill and business. It meant a customer buying a £2,000 settee would save about £42, a cost the company will have to bear.
The Barker and Stonehouse product offer is at the upper end of the market and includes many designer brands.
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