Taken for a costly ride

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From Rodney Ison.

I HAVE noted with great interest the recent campaign to buy local. In practice I have supported this sentiment but now my views are rapidly changing as many of the local retailers are simply taking us for a costly ride.

I recently visited the Co-op to purchase a new bed as they were advertising double divvy and excellent prices. The bed which I selected was over £1,000 which was going to entitle me to a dividend of approximately 4%, if approved by the shareholders, which I could have back in approximately a year’s time and £40 worth of stamps to spend in the Co-op.

It appears that I was really taken for a ride, as the price charged by the manufacturer inclusive of delivery to Jersey to the Co-op was £460. Taking into account that the retailer and I both paid GST, this would show a mark up of over 100%.

Can the public really afford to support local retailers and pay these excessive prices? The buyer tells me he has excessive costs to meet. I pointed out that they are no different to any other local business. He also tried to point out that his company is owned by the shareholders and he thought it was right that I should pay this rip off price to subsidise other shareholders.

Our freestanding refrigerator is past its sale-by-date and I inquired from three of the largest electrical retailers in Jersey for a price for a specific model. Each one of these (Co-op included) gave me a price which only differed by £3.

Imagine my surprise to find that the same model was advertised on the Internet in the UK at exactly the same price VAT included. On further inquiry, I was advised that the mainland companies would deliver to Jersey free of charge and they would remove the VAT.

Hence, at least, three large retailers are taking the Jersey public for a ride by using the UK VAT price as the normal retail price, and we are urged to support local suppliers. It is time they stopped being so greedy, then they might get the support.

In the meantime I would urge all potential purchasers to compare local prices with the mainland and if they have to organise their own shipping to Jersey, it is a very simple matter and not the 15% cost the retailers would like us to believe and, if it is under the specified rate, no GST.

Perhaps the JEP might like to run a regular list of those companies who are blatantly ripping off the public.

Jim Hopley, chief executive of the Co-op, responded as follows:

As always, the subject of pricing is complex with many non-obvious factors coming into play. We have now fully investigated the detail concerning the pricing of the bed.

We believe the item is question was sold at a special price of £989 (UK suggested retail price – £1,320 less 15% VAT = £1,122). As indicated in the letter Mr Ison received, we did offer a further 8% discount off this price by way of Dividend and Double Dividend, therefore netting the price inclusive of 3% GST (£29.67) to £909.88.

You writer is correct in stating that the cost price of the bed delivered to the exit point (Southampton) was £460 but this is not a delivered price to Jersey.

We have significant onward delivery costs to bear to bring the product across the water, into store and onwards to the final recipient. To claim mark up in these circumstances of over 100% is salacious, especially when we now also collect 31/2% GST on the product for the benefit of the States Exchequer.

We believe we are fully competitive with all other major retailers of beds in the Island and could cite a number of similar products on sale elsewhere closer to the £1,200/£1300 mark.

Turning to the question of VAT, which is difficult to answer in the specific case without having full details of the model concerned. We do not charge VAT in any of our stores (food or non-food) as a matter of policy. We certainly watch what our competitors are charging and strive to maintain competitiveness at all times.

To fix our retail price, we take net costing on product (no VAT), allow for freight costs, add on GST and arrive at a sensible, but far from excessive, margin. This can at times be close to UK VAT inclusive suggested pricing, but this element forms no part of our calculation.

Of course, as already indicated, we do offer dividend permanently off all our sales, our way of returning a large part of our profits to our member customers who we have no intention of ‘ripping off’ as after all they own the business.

I would also be surprised if any UK retailer will deliver a bulky item such as a large refrigerator free of charge to the Channel Islands. Although there is no need further to charge VAT, any recipient of goods where the value tops £400 would be subject to GST of 3%.

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