Games Retailers To Swallow VAT Rise

UK games retailers look likely to swallow the recently announced VAT hike, fearing gamers will avoid their stores and shop elsewhere. ‘Senior retail figures’ have told MCV that they will absorb the increase when it comes in to effect this January. Director general of the Entertainment Retailers Association, Kim Bayley, fears the long term effects of the tax;

“This is a big increase which is bound to have an impact on retail. Government action often produces unintended consequences and if the result of this rise was to lead to more closures and interfere with the ecology of entertainment retailing, no one should be surprised if there is a outcry.”

The MD of Activision UK, Andrew Brown, has called for retailers to be more flexible with their pricing. Rather than using £5 increments, he suggests £40.84 may become the new £39.99.

“Perhaps the VAT change will drive retail to re-think the large price steps being used.” he said.

Source: MCV

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24 Comments

  1. Definitely thought this had something to do with Fallout…

    • haha, nice.

      I think VATS and VAT are similar.. but instead of having an enemy on the screen and highlighting its body parts to shoot off they look at a big map of England and do the same. Then for the next year or so it’s slow motion as the government shoot bullets of lies at the torso of the country as they watch the working class suffer fall off in a bloody mess. And the mysterious stranger is the recession coming in to finish the job off.

      • What a nice metaphor :)

      • my compliments on an excellent post crawfail!

      • crawfail?

      • hahaha, crawfail – the dude’s name, although grey_ghost’s post does make it look like a thing.
        how was the crawfail last night?
        crawtastic!

  2. Sounds fair, retailers are the ones who soak up the biggest chunk of your money, a few extra pence wont make much difference to them. Unless they’re struggling themselves.

  3. I studied business (Got a B. Oh yeah) and £40.84 it nowhere near as appealing as £39.99. Its psychological pricing. It works. I’d rather pay £41.99 as it looks right. There’s something wrong about £40.84. Its probably my OCD with the strange numbers.

    • apparently £39.95 and £39.97 are both more appealing than £39.99

    • I hate .99p on the end of things. I prefer them to round it up. It wastes less ink, looks like a rounder number, and has less 9s on it. I always associate 9 as the most expensive thing, seeing as it’s the highest single digit.

      It doesn’t make me feel any better about pricing, and everyone says something is £40 when it’s £39.99.

      I would actually prefer £41 rather than £40.84.

  4. Well they made a nice bit of extra cash when it dropped to 15%. They reduced prices for a month or 2 at most before it went back to the norm.

  5. And a love for gaming isn’t expensive enough to accommodate for as it is?

  6. It’s only right, as they never passed the savings on when there was a temporary VAT reduction… well they did for about a week when there was media attention, but the prices went straight back up as soon as it became old news

  7. Well this will just put more pressure on retailers, not good. Again I don’t see why gamers should get special treatment especially when it causes losses in the industry they want to support.

    Good to see Activision giving pricing advice though, certainly the first people I’d talk to when I need my books cooking.

    • Gamers aren’t getting special treatment – I imagine we’ll see the same thing across the board. As stated above, retailers like the magic xxx.99 prices, so while they may jump up slightly for a few weeks, I expect they’ll settle back down across the board for all sorts of items.
      If anyone remembers the orignal VAT rise from 15% to 17.5% about 20 years ago, the same thing happened there as well. Some initial fluctuation, then things normalise again.

      • It was the same with the reduction in 2009

        A week or 2 of prices reduced by a fraction & then straight back up as soon as the press weren’t looking.

        Anyway they can always charge £40.99 if they really want – it’s their choice

  8. People in the UK like the ‘sound’ of rounded numbers, it’s a psychological thing. If you look at the RRP it’s £49.99 and this is unlikely to change – most major online stores discount to £39.99 and the smaller stores as low as £36.99 or £37.99, so there is clearly enough margin at £39.99 to swallow a small rise – it would just make the bigger outlets more competitive with the smaller ones, the smaller outlets may have to increase the price given their small margins to start with so you may start seeing prices like £37.50 and £38.50 vs £39.99 in the bigger stores.

    Paying £40.84 just wouldn’t feel right!

    Don’t forget they’ll be paying less Corporation Tax on their profits too…

    • You’re right about the margin they make… if a large online retailer can sell the latest release £32.99 (& presumably making money) and a large chain of stores is doing the same product at £39.99 – there must be room for a few pennies.

      Like the Acti guy said they don’t have to move prices in £5 increments

  9. They didn’t lower the price of games when the VAT dropped to 15%, they shouldn’t raise them when it goes up to 20.

    • Ditto, just what i thought

  10. Thus meaning game will probably be around £50 a game, but it’s ok it only affects the fools that shop in that doss hole

    • I walked into game today foolishly and noticed transformers for fifty fucking quid, i wet myself and walked out. £50 and the vat hasn’t even gone up yet…

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