Dave's already considering the implications and inconvenience of the rise in VAT in January

The announcement in the recent Budget that VAT would go up to 20% was about as predictable as the demise of our national football team.

Implementing the increase concerns me, though, as I can change my epos VAT rate in one keystroke, but re-pricing all my stock isn't so easy. It's not feasible to consider working through the early hours of January 4, 2011, recalculating all my prices, entering them manually into my epos and printing and replacing all my shelf edges.

At this point in time I have no strategy in place and am waiting for all the trade bodies and trade press to start providing advice. I had considered putting an extra 2.5% on my margin now as I buy in new stock, so that I would benefit for the rest of the year and then simply pass it on to Mr Cameron next year.

However, with our current economic woes it's not exactly the best time to squeeze any more out of my customers' shrinking disposable incomes. And with customers very much focused on value it's not good business sense to change my 99p lines to £1.01.

I am intrigued to see how manufacturers are going to respond and suspect that we may see many products resized to protect certain pricepoints. Cadbury's 99p blocks, for example, are a big seller for me at a fair margin, and I just hope that they reduce the size and, as a result, the wholesale price to accommodate the VAT rise.

Like many retailers, I round up many prices to the nearest 5p or 9p, but will have to abandon this policy when I implement the VAT increase. A £1.29 product will increase to £1.32, but taking it to £1.35 is most probably not the best PR exercise as some eagle-eyed customer will certainly notice.

Pricemarked stock is the area where I am most confused, in particular tobacco. I choose to stock a lot of pricemarked goods as customers trust pricemarks, even if they don't always represent the best value.

Obviously, a lot of concerns are about not incurring any unnecessary losses as a result of the VAT increase, but then I am sure I am one of many retailers who gained from last year's reduction in VAT, so is it just a case of those good old swings and roundabouts?

Dave Newman