Shoppers rush for bargains before Friday's VAT rise

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The Independent Online

The post-Christmas surge of shoppers hitting the high street to hunt down bargains continued on Sunday, but the rush could end once value added tax (VAT) goes up from New Year's Day, this Friday.

After a record Boxing Day, the total number of UK shoppers rocketed by 17.9 per cent on 27 December, compared with the same Sunday last year, according to retail analyst Experian.

Many retailers left their biggest discounts until after Christmas, and consumers looking to snap up bargains – particularly on big ticket items, such as electricals and furniture – before VAT returns to 17.5 per cent drove traffic into stores and set tills ringing.

But Anita Sharma Manan, an analyst at Experian Footfall, said: "Worryingly, the recent surge of shoppers could be short lived as we are now only days away from the imminent VAT increase on 1 January 2010 and sales which would have been made in 2010 are happening now, already bringing forward next year's sales."

Experian said that footfall on Saturday was 18.6 per cent higher than on Boxing Day last year.

Retailers call the final three months of the year the "golden quarter", as it is then that most stores make the bulk of their sales and profits. The department store John Lewis delivered a 24 per cent sales uplift on Christmas Eve, compared to the same day last year, driven by men buying last-minute gifts.

Ms Sharma Manan said that Sunday's footfall data could have been boosted by some shopping centres and key retailers choosing to open on 27 December instead of Boxing Day.

Howard Archer, the chief European economist at IHS Global Insight, said there had been a strong start to the clearance sales, despite evidence that there is "less dramatic discounting" this year, compared with last year's steep discounts when trading was dire.

He added: "Strong early consumer interest in the clearance sales will boost the likelihood that the economy has returned to growth in the fourth quarter of 2009. However, it will do little to dilute suspicion that the upside for consumer spending – and hence overall economic growth – will be limited for some time to come."

Yesterday, the British Retail Consortium said it expected 2010 to be a "tough" year. Four out of five retailers surveyed said they expected sales next year to be the same as in 2009, although none said they would be worse.

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