Festive sales 'will start early'

Shopping street
Debenhams sales have taken a similar form in the past

Festive sales will start early this year - including price cuts on Christmas Day - as VAT is set to rise, a retailing expert has said.

However, discounts will not be as generous as last Christmas, according to Don Williams, head of retail at accountancy firm BDO Stoy Hayward.

Debenhams started a £250m price cutting campaign with a four-day sale on Wednesday, six weeks before Christmas.

Many retailers are expected to promote cheaper prices before VAT rises.

The tax will revert to 17.5% on 1 January, having been cut to 15% in November 2008.

Early start

Debenhams is the first of the major department stores to have a big sales push. Its campaign offers up to 25% off products and comes six weeks before the festive holiday.


There will be bargains but not to the same sort of scale as last year
Don Williams, BDO Stoy Hayward

Last year, Marks and Spencer jumped ahead of the pack with 20%-off days, but these took place in December.

Mr Williams said that stores had used promotional activities throughout the year to keep sales up during the recession.

However, whereas last Christmas there was enormous concern over the whole banking system and economy, this year there are signs of recovery.

"This time we are in a much better place so there will not be the depth and breadth of discounting seen last Christmas," Mr Williams told the BBC.

"There will be bargains but not to the same sort of scale as last year."

Tax bill

The change of the VAT rate is just one of a series of new tax measures that will add to a complex system, according to Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants.

Shoppers
Shoppers are still expected to flood the High Street despite the recession

"Businesses that charge VAT, which is currently at 15%, will need to change their rates to 17.5% in the New Year, which will be an administrative burden for them," he said.

"But bars and clubs will be exempt from the VAT hike as the midnight handover from 15% to 17.5% will be a problem for them. If they are open at midnight they will not need to change their rate until 0600 GMT on 1 January 2010."

Germany was the last big economy to increase its VAT rate, and Mr Williams said that the move led to an increase in sales volumes in the build-up to the change.

This suggests that many stores will start their January sales early, immediately after Christmas shopping is over.

It could also mean that some stores may start offering discounts on their websites on Christmas Day itself.

The busiest day for online Christmas shopping is expected to be Monday 7 December - 12 days earlier than the busiest day on the High Street, according to the Centre for Retail Research.

In a poll for comparison website Kelkoo, 72% of shoppers asked said they would use the internet for Christmas shopping this year, with 38% intending to do the majority of their shopping online.