Stores feel the New Year pinch

BUSINESSES in Mansfield are feeling the pinch as many shops report disappointing Christmas sales amid fears about a hike in VAT.

Despite offering January reductions on hundreds of items, stores in the town have been hit with lower than expected profits from the festive period.

Shop owners say the lack of custom is a combination of VAT rises and unpredictable weather.

The VAT increase, which took effect on 4th January, saw the current rate of 17.5 per cent rise to 20 per cent.

Despite many stores slashing prices in a bid to attract customers before the VAT leap, retailers are reporting a significant loss compared to last year’s sales figures.

Small stores will now have to raise their prices to avoid losing money, with the bulk of the rises being felt by the customer.

While not all stores have raised their prices yet, some shopkeepers are anxious about how the hike will damage their profits.

Manager of the Collections store Vijay Chadda said: “ The rise in VAT will definitely affect us. We’re going to cushion it as best we can but some prices will have to go up.”

“This year’s sales were harder than last year. People have stopped spending, which makes it very hard for us.

“On top of that, the snow probably cost us at least a day and a half’s worth of trade.”

Store managers are now left with the option of lowering their prices even further, despite the VAT rise, in an attempt to make up sales and keep customers.

Store manager of Quality Shoe Repairs David Lee said: “I think the snow badly affected us in particular.”

“At least 40 to 50 per cent of our customers are elderly and barely any could make it out over Christmas.

“We’re probably going to have to lower the prices of both goods and services if custom continues to drop.”

Shopper Esther Proctor (79), of Mansfield, said: “It was far too hard for me to get out much this Christmas.”

“Transport stopped running and I didn’t have enough interest in the sales to walk through the snow. It might have been dangerous for me.”

But Ian Morgan, president of the Derbyshire and Nottinghamshire Chamber of Commerce, insists businesses can look to 2011 with optimism after a year of slow but steady private sector growth.

“Over the past 18 months, local businesses have proved time and again that they are resilient, pragmatic, flexible and innovative.

“I am confident that this will continue into 2011 and beyond, as business continues to drive the recovery.”

And Mansfield mayor Tony Egginton added: “Having spoken to some of the traders, I think a lot believed they were going to suffer. But for a lot the week before Christmas really helped.”

“Everyone rallied round and seemed to do a lot better than expected.”

Elsewhere, it was a bumper festive period at Pinxton’s East Midlands Designer Outlet - which enjoyed record sales between Boxing Day and the New Year.

Said Kenny Murray, centre manager: “There were phenomenal sales of multi-brands such as Next, Marks & Spencer and Gap.

“Families who had been previously cooped inside due to bad weather were out in force to spend their Christmas cash and treat themselves before New Year’s Eve. “