Independent retailers say they will struggle to stock new games when the VAT rise comes into effect next year.
The already troubled indie sector says it will have
to fight harder against High Street chains and supermarkets in order to break even or make a profit from the latest releases.
VAT will increase from 17.5 per cent to 20 per cent on Tuesday, January 4th, 2011.
Mark Conacher from Console Connections in Truro told MCV: This will not help us or any other independent retailer who will be making virtually nothing on new releases.
The VAT increase will make stocking new games virtually unviable. Which other market would operate on such small margins for such risk?”
Andy Jones from the Game Cave in Telford added: There will be more closures across the spectrum – both indies and majors – next year. I'm afraid 2011 will be tough for all.”
One indie was even plainer in his appraisal of the situation.
The VAT increase sucks arse,” said Khalid Hussain from Fusion Gamez in Skipton. It means more will come out of our pockets. We can't raise our prices either as we already price our games slightly higher than supermarkets.”
The Coalition Government says that ‘years of debt and spending' made the VAT rise unavoidable.
In July MCV reported that it is unlikely games retailers will increase prices to offset the tax hike, for fear of driving customers away.
But growing indie chain Grainger Games told MCV it remains resilient.
Matt Almond from the firm's recently-opened Leeds Crossgates store added: I think most people expected it and the VAT rise will affect all retailers, so it won't cause us any big issues. Grainger Games will continue to offer competitive prices.”
Ironically, the rise will not affect businesses based in tax haven Jersey. A separate three per cent Goods Service Tax (GST) was introduced there in 2009.
The VAT rise won't affect us,” said Seedee Jons' Jersey store owner John Holley. Goods are more expensive here and we are still suffering in the economy.”