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Hitwise Intelligence - Robin Goad - UK

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Last minute surge in online retail traffic before VAT increase

January 04, 2010

The UK VAT rate returned to 17.5% on January 1st and, as a result, UK Internet searches related to the change also increased. As the chart below illustrates, searches for our “VAT Increase” portfolio (which includes terms such as ‘vat increase 2010’, ‘vat rate change’ and ‘when does vat go back to 17.5%’) increased by 54% last week.

UK_Internet_searches_for_VAT_increase_2010_2009_chart.png

Nearly 47% of people searching for information about the VAT increase last week ended up at Government run websites. News and Media websites picked up a 13.3% of clicks, while Business and Finance sites came in third with 12.9%. The latter category paid for 26.8% of the traffic it received, with Business Information sites such as Business Link bidding pretty aggressively on a number of terms.

Perhaps surprisingly, only 4.2% of searchers ended up at a retail website, implying that retailer may have missed an opportunity. However, looking at traffic to our Shopping and Classifieds category, it is clear that the VAT increase has led to a last minute surge in visits. As the chart below illustrates, there was a big spike in traffic last week. Between the weeks ending December 27th and January 2nd this year, UK Internet visits to retail websites increased by 13%; last year the increase over the same period was just 2%.

UK_Internet_visits_to_retail_websites_before_VAT_rate_increase_2010_2009_chart.png

Consumers have clearly been looking to take advantage of the final few days of 15% VAT. The biggest increase was in the House and Garden sector, where retailers experienced a 67% increase in traffic last week. Other sectors selling big ticket items also experienced above average increases, with the Sport & Fitness, Computers and Appliances & Electronics categories all performing well.

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