Whether the UK will retain the 20% VAT seems likely, but it is not certain. In any event, it is the third VAT change since November 2008. Rightly or wrongly, the government clearly sees VAT as a legitimate lever to steer the economy, and Retailers may therefore expect further changes over the next parliament or two.
At ZBD, we talk to retailers about the real operational costs of maintaining correct, synchronised pricing and the costs of implementing changes, including promotions, on time. To do this – as well as modelling all of the other manual in-store processes that graphic ESL (electronic shelf labels) can eliminate or improve – we use a comprehensive ROI modelling tool: now in Version 8 and soon to be launched as an in-house toolset to ZBD’s clients and partners in USA and Europe.
Using this model, we can calculate a realistic cost for making a single VAT change. For a typical non-food store with 30,000 products this could be around £25,000 – a figure which comprises the cost of additional labour & materials, as well as a quantification of sales losses arising from the ‘price discrepancy period’ (the period during price changes when manual shelf-edge ticket are at variance with the price at the checkout). If the retailer wants to avoid these losses, he can always plan and execute a department-by-department price-change exercise outside trading hours: Management effort and staff overtime would probably leave him similarly out of pocket.
With these three VAT changes, and perhaps a similar number over the future lifetime of the system (5-8 years), retailers will have already justified around half the cost of their investment in a graphic display system. This is in additional to all the other day to day savings.
Jann Naef
Product Marketing Director
jann.naef@zbdsolutions.com
