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Andy Bond runs Asda, the UK arm of Wal-Mart, and recently agreed to a lengthy interview with the Financial Times newspaper about his views on whether he was the right man for the Marks & Spencer top job. I find it hard to believe that his US employers would be happy for him just to chew the fat with a newspaper about his career options so it was interesting to read what else he was talking about.
So when he says that 2010 will be a tough year, he must be talking to someone other than his shoppers. He notes that the 2.5% rise in VAT and other tax increases in the pipeline will be putting presure on the amount of money that households have to spend. Is it a message to suppliers that they will have to trim their prices so that Asda can cut the cost of its products to shoppers? Probably.
For many local shops, an upward nudge in January is possibly being pencilled into their business plans now. But don’t assume that the multiples will make it easy for you. Think about how it will look if the major supermarkets promise to hold their prices and absorb the VAT hike on, say, the top 250 everyday lines.
2010 looks like being a tough year.
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