Archive for August, 2010


Budget retailer Poundland recently announced that its pre-tax profits had more than doubled to £19.8m.

Some commentators view Poundland’s success as evidence of the UK consumer preparing for hard times ahead. Poundland’s Chief Executive, Jim McCarthy, said that Poundland had benefited from the recession with consumer confidence falling due to economic uncertainty and the prospect of significant public sector spending cuts and higher taxes.

Whilst this might be undoubtedly true, a less pessimistic view is that even in difficult market conditions, someone will find an opportunity to make money. In the case of Poundland, their success means plans to open at least 50 new branches, many of which were sites previously occupied by Woolworths.

It will be interesting to see how or whether other retailers will respond to Poundland’s success.  

Please note the views expressed in this blog are the views of the author, Andre Brown and do not necessarily represent the view of Locayta, its employees or its shareholders. For more information about Locayta, visit www.locayta.com

VAT increase

Is anyone else in two minds about the proposed VAT increase to 20%?    I realise the absolute necessity for the coalition government to raise revenue etc, but I have some concerns about the proposed increase.

When VAT was reduced by 2.5%, this reduction was tiny compared to the 20%-40% discounts that many retailers were offering during the recession. So there is an argument that many retailers will just absorb the 2.5% cost increase – so what’s the big deal?

However, one sector where retailers cannot absorb the VAT increase and where consumers cannot avoid purchases is petrol and diesel. You cannot stop drivers on the roads as most people need to get from A to B. The argument here is that the increase in VAT will take money out of the economy because drivers will have to make cutbacks elsewhere.

I would be interested to hear from anyone with views on this.

Please note the views expressed in this blog are the views of the author, Andre Brown and do not necessarily represent the view of Locayta, its employees or its shareholders. For more information about Locayta, visit www.locayta.com