Sales start early
High street stores are unveiling huge price cuts and opening their doors for post-Christmas shoppers.
Online sales at John Lewis, Boots, House of Fraser and Comet kicked off on Christmas Eve, while Marks & Spencer and Argos launched their sales on 25 December itself.
The much-anticipated Selfridges and Next sales started on 26 December. The latter store, famed for the mass appeal of its sales, opened its stores at 7am – a day earlier than normal.
The bad weather during the run-up to Christmas and the return of VAT to 17.5% from 1 January are likely to be prompt more than four million people to shop online for bargains over Christmas.
Up to 13.3 million people were expected to hit the shops on Christmas Eve, spending around £1.37 billion, according to Sainsbury’s Credit Cards. This is equivalent to £57 million an hour or £951,000 per minute.
Online spending on 25 December, meanwhile, was expected to hit £120 million. And with Boxing Day falling on a Saturday this year, consumers are expected to hit the shops in their droves.
Given that most retailers make around 25% of their weekly revenues on a Saturday, and the fact that Boxing Day is a major shopping day in its own right, Jonathan de Mello, director of retail and property at Experian, believes this Boxing Day could be the biggest shopping day of the year so far.
Last year, there was a 12.5% rise in Boxing Day shoppers, mainly driven by discounts of up to 90%.
However, Cameron McLean, general manager for PayPal Merchant Services in the UK, says many people will avoid the crowded streets this year, preferring to shop online from the comfort of their own homes.
“With hundreds of top retailers starting their online sales early and the temperatures dropping we expect even more shoppers than usual to head online to pick up a sale bargain,” he adds.
“Shoppers who head online before the end of 2009 will also make the most of the final days of lower reduced VAT."
Invented by a Frenchman in 1954 and ironically introduced in the UK on 1 April 1973, VAT is an indirect tax levied on the value added in the production of goods and services, from primary production to final consumption and is paid by the buyer. Its levying is complex, with a number of exemptions and exclusions. For example, in the UK, VAT is payable on chocolate-covered biscuits, but not on chocolate-covered cakes and the non-VAT status of McVitie’s Jaffa Cakes was challenged in a UK court case to determine whether Jaffa Cake was a cake or a biscuit. The judge ruled that the Jaffa Cake is a cake, McVitie’s won the case and VAT is not paid on Jaffa Cakes in the UK.