Which? way up!

The report in the August issue of Which? magazine about ‘never-ending sales’ throws a powerful light on the tricks of the trade some companies use in price promoting their products.

I must admit to having a love-hate relationship with Which? I’m bemused by how its ‘Best Buys’ can often give different ratings to the same products - albeit with a different brand name on them.

And I am frequently frustrated by its suggestions that a better price for an integrated appliance may be available online when the price quoted does not include the removal and disposal of the old appliance and installation of the new product.

But I take my hat off to Which? for its exposure of ‘special offers’ that are far from special. It concentrated on freestanding products such as beds, but the dramatic discounting of kitchen and bathroom products is the curse of KBB-Land too.

Perhaps now a respected consumers’ champion has highlighted how misleading some of the special offers being advertised are, Jo Public will think twice before being tempted by a 50% discount or a ‘free’ oven, hob and hood appliance pack.

Were this to happen, KBB retailers would have to drop their ‘free’ design service and that, in my opinion, can only be a good thing. How can you put a value on your most important asset if you give it away for nothing?

If the new Which? report achieves this; it will have done the whole KBB market a great service.

Fooling the people

Who was it that said you can't fool the people all the time? If the so-called "special offers" I see advertised are anything to go by, you can certainly make a fair stab at it.

There is a bathroom retailer (I won't mention its name because I think there is something fishy about the offer it is promoting), offering a half price sale plus an extra 20% off for a limited period.

Let's "do the math" as our American friends would say… A bathroom tap normally retails for £100. The half price sale reduces this to £50, and then a further 20% off reduces the sale price to £40.

Where's the retailer's margin in this? Come to think of it, where's the manufacturer's margin?

How much does it cost the manufacturer to make a tap of sufficient quality to "normally" sell for £100 and what sort of trade discount does it give to its retailer? Is it subsiding the sale price or does the "loss in revenue" all have to come out of the retailer's pocket?

And if the retailer can afford to slash the price by 60% and still make a profit, how can it justify its "normal" selling price?

I'd love a manufacturer or two - and a retailer or two come to that - to fill in a few of the blanks, but I won't be holding my breath for a response.

Office of Tax Simplification

The Chancellor George Osborne and Exchequer Secretary David Gauke today established the Office of Tax Simplification (OTS).

The Chancellor has appointed a Board of tax experts who will be responsible for leading the work of the OTS over the next year. The Board Members are Michael Jack (Chairman) and John Whiting (Tax Director).

Their responsibilities will be to identify areas where complexities in the tax system for both businesses and individual taxpayers can be reduced and to publish their findings for the Chancellor to consider ahead of his Budget.

The OTS will undertake two initial reviews over the coming year. They will focus on tax reliefs and small business tax simplification (including IR35). The OTS will publish the initial findings from their work on reliefs in late autumn and on small business tax by the 2011 Budget.

The OTS will also draw on external expertise from the tax and legal profession over the coming months. These experts will focus on specific areas of complexity in the tax system and provide additional advice to the OTS.

Full details about the Office and its work are available on its website: www.hm-treasury.gov.uk/ots

Country of origin

I have no doubt that there will be a wailing and gnashing of teeth over the announcement of the closure of Twyford's Alsager factory.

I can guarantee you that the usual suspects will bemoan the demise of another UK manufacturer, written on a computer made in Taiwan, before driving home in a Japanese car to watch an American made film on their flat screen TV made in Korea.

Let's get real please! My heart goes out to the skilled trades people from Twyford's factory that, even in a booming economy would have found it difficult to be reemployed in their vanishing profession.

But truth be told, the writing was probably on the wall for the Alsager factory while the ink was still drying on the sale contract of Twyford to Sanitec.

Country of origin stands for very little in most industries and the KBB market is not exempt from this.

Apart from at the bespoke end of the market most kitchen furniture companies get some or all of their doors from Italy.

Drawer runners, wirework and hinge systems almost certainly come from Germany or Austria or even further afield. One German kitchen company even gets its cabinets made in Italy, so how German is that kitchen today?

Kitchen appliances are much the same. Even if they are assembled in Italy or Germany, you can be pretty darn sure that some of the components come from China.

It cuts both ways of course. Whirlpool, that most American of companies, makes most of its refrigeration for Europe in Italy, and one Korean company has just bought a washing machine factory in Poland.

While there will always be a minority of people who want to buy British if they can, they are going to find it increasingly difficult to do so, as manufacturing is switched to countries who can offer the shareholders the best return on their investments - and don't even think of getting me started on the foreign ownership of so called 'UK' football teams!

I think the country of origin is going to mean even less in the future for the vast majority of KBB purchases. But what will be worth its weight in gold will be the service given to customers.

Ironically, we don't do service that well a lot of the time, and that is what will cost orders, not where the factory was that produced the goods.

The generation game

Is it time the government did more to encourage energy conservation instead of tilting us at windmills?

I was at the Bathroom Manufacturers Association's AGM (BMA) a couple of days ago and amongst its success stores was the uptake of its Water Efficient Product Labelling Scheme which has been welcomed by amongst others DEFRA.

It's an easy-to-understand labelling system that indicates the water-saving efficiency of taps and shower systems and it now covers almost 1000 products.

The thing about drinking water is that it's pretty difficult to manufacture sufficient quantities to make up the shortfall so we have no choice other than to make what we have go as far as possible.

We are running short of the raw material we need to make energy too, but instead of throwing its full weight behind saving energy, successive governments tell us the answer is to generate more.

Clean energy is a good idea of course, but it is not the only answer. The payback time on solar panels for example is considerably more than the payback time on the latest low-energy refrigeration products.

And as for those little windmills on individual rooftops? One may as well lash the hamster's wheel to the national grid for the amount they reduce a home's carbon footprint.

The evidence of other European countries, many of who are ahead of the UK on the purchase of lower energy appliances, shows that government intervention - such as reducing VAT on A++ rated refrigeration - leads to high sales levels.

So rather than trying to convince us that with a combination of wind farms, wave farms, and of course the nuclear option we can generate ourselves out of trouble, perhaps the government would be better to take a leaf out of the BMA's book and concentrate on conservation rather than just generation.

Hey spooky; within hours of writing the above. Siemens announced a cashback incentive to encourage consumers to buy new, energy efficient refrigeration products. For more details, visit www.siemens-home.co.uk.

Publication of the Finance Bill 2010

The Government is today publishing the 2010 Finance Bill.

In addition to this Finance Bill, which will quickly enact the Government's priorities, there will be a further bill in the autumn.

This will introduce  minor, technical measures announced by the previous Government and will be published in draft later this month, to allow pre-legislative scrutiny.

The Exchequer Secretary David Gauke MP said: "The Government's inheritance was one of debt and unsustainable spending. We are taking the decisive action needed to pay for the past and plan for the future.

"That is why today we are legislating the key measures at the heart of our comprehensive five-year plan to put the British economy back on track.

"We have made the tough choices needed to get our borrowing down, but we will do it in a way that is fair, protects the vulnerable and supports businesses across Britain."