ZBD Solutions

VAT rate set to change again?

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

28 days, eh?

So the UK government has presented retailers with a concession that for 28 days after the 1st January 2010, provided the retailer displays a sign they can get away with showing lower prices at the shelf edge versus higher prices at the tills (as long as the difference is only the incremental 2.5% VAT).

Now, I don’t know about you, but my ability to remember the price of everything I buy when completing a weekly shop in my local supermarket whilst adding 2.5% to the displayed price where applicable is going to cause me some confusion!!

Nevertheless, this still means that retailers across the country will have to print and place hundreds and thousands of paper shelf edge labels costing the retail business as a whole somewhere in the region of £90million (according to the British Retail Consortium) to complete.

Furthermore, I think it is also safe to say that this won’t be the last time the UK's VAT rate will be on the increase - the current Government has not ruled out future increases in VAT and Shadow chancellor George Osborne has also declined to rule out increasing VAT to rebalance public finance.

Of course, if your retail store operated ZBD’s epaper solution, in 28 days you could have changed millions of individual shelf labels at zero cost ensuring your customers only paid the price they see at the shelf edge - With zero infrastructure and 3 different sized labels, ZBD has packages to suit all sizes of stores and budgets - from individual promotional displays to Fresh Food counters & departments through to a complete storewide solution.

Contact me today to learn more.

Rob Morgan
Business Development Manager
Rob.morgan@zbdsolutions.com

Time to batten down the hatches or invest to differentiate?

Industry commentators are unanimous in their view that this recession is the most challenging the UK has ever seen. They cite huge pressures on the cost of doing business, (labour, raw materials and utilities) coupled with one of the most competitive marketplaces in the world, making UK and European retailing the toughest of environments in which to succeed.

Historically, when trade is this tough, retailers (both large and small) typically fall into two very distinct technology camps – In the first, there are those retailers that will batten down the hatches, stop investing and innovating, and hope to ride out the storm adopting a ‘if it ain't broke don't fix it’ type approach  – in the second camp, there are those retailers that actively seek out new ways to make up the shortfalls in margin they may be experiencing and actively invest in the customer experience to differentiate themselves from the crowd, capitalising on the opportunity to gain custom and market share (normally from those sitting in the first camp!).

ZBD’s electronic shelf labelling solution is one technology that presents retailers with a very real opportunity to re-engineer business processes whilst at the same time enhance customer service and perception through improved merchandising, availability and promotional price management. As recent speculation of VAT increases to 20% seem to be becoming more real, the latest threat of new legislation to ban retailers from being able to offer ’Buy one, Get one free’ type promotions will do nothing to slow down the inevitably huge volumes of price changes these initiatives will attract.

If you're interested in finding out more about how we can help your business succeed in the face of this ever changing retail landscape, email me – I think I have part of the answer.

Rob Morgan
Business Development Manager
Rob.morgan@zbdsolutions.com

VAT changes made simple

The Estonian government recently increased the country's VAT from 18% to 20%. In a move similar to the UK's VAT reduction in 2008, companies were given just 6 days to effect the price changes within stores.

Retailers have had to spend the last week investing in additional resource to update and print off new price labels in time, bearing the cost of extra labour, toner cartridge and paper.

On the other hand, EMT, Estonia'a leading telecoms provider, who is currently rolling out ZBD's epops throughout all 33 stores in their estate, are reaping the benefits of the new solution. They have been able to implement the VAT changes quickly and easily in store, at the touch of a button.

Anyone looking at January 2010's proposed VAT increase in the UK? Perhaps now's the time to start planning and avoid some of last year's headaches...

Sarah Hool
Marketing Manager
sarah.hool@zbdsolutions.com