Stores and malls are dying from coast to coast. That’s hardly a secret, and it’s not really up for debate.
This trend may vary a bit from state to state, but if you drive down a major road with big-box retailers you’re likely to see it in action — or perhaps in inaction.
After you’re done doing that, examine how often you drive to shop today versus 10 years ago. Then look at how much you buy online.
What is up for debate is what government can do about it. When stores die, sales taxes go with them. Governments rely on those taxes, and even though Utah has long required people to voluntarily pay taxes on purchases they make remotely, few do.
Utah lawmakers once again are attempting to fix this by requiring online sellers to pay taxes. They
| || |
feel compelled because Congress won’t do anything about it.
But if you really want a debate, try proving that sales taxes will entice people to drive to real stores once again, or that the state really is missing out on the $220 million a year from these taxes that legislative fiscal analysts say it is.
If you step away from legislative hearing rooms and into the world of business, you’ll find a lot of opinions as to why traditional businesses are suffering. Few of them are related to taxes.
At a legislative hearing Tuesday, the owner of a Utah clothing store complained that customers regularly come to her place to try dresses, compare colors and styles and then, after sometimes using hours of her employees’ time, pull out a cell phone and purchase the same dress elsewhere online in order to avoid a sales tax.
A lot of merchants complain about this tactic, known as “showrooming.” It really happens. A lot. No question.
But business experts say complaining won’t help, and it won’t change customer behavior. They suggest retailers embrace “showrooming” by offering their own online specials and turning their physical stores into mini fulfillment centers. The website smallbiztrends.com notes than 74 percent of small businesses offer no sales online, which means their customers are forced to look elsewhere if they’re making comparisons.
Successful stores “all realize that having some kind of sticky customer experience across all channels is the path to success,” Todd Werden, vice president of the consulting firm Boston Retail Partners, told National Real Estate Investor.
Translation — give people lots of ways to buy your products, and make it easy for them.
That doesn’t help governments much, though. Sen. Curt Bramble’s SB110 would require any retailer who sells more than $100,000 in Utah to collect and remit sales taxes to the state, even if they don’t have a physical store here.
The bill is opposed by so-called Mommy bloggers, who worry they no longer will be able to make money when their readers click ads on their websites. Others say it will invite a lawsuit because the Supreme Court long ago ruled that states may collect taxes only from companies that have an actual presence there.
Mark Griffin, speaking on behalf of Overstock.com, may have made the most credible observation. He said the state already collects much of the money it is worried about losing, estimating all but a few of the top 100 online retailers already collect sales taxes here. Amazon.com recently signed an agreement to do so, as it has in 39 states so far.
I have opposed similar attempts by Bramble in the past, but now I am becoming sympathetic. Perhaps that’s mostly an acknowledgement that online sales taxes are coming anyway, and that they’re mostly here already.
But despite what was voiced on Utah’s Capitol Hill Tuesday, this has little to do with how the world is changing.
Business Insider’s Ashley Lutz spelled out the challenge for storeowners in a report last summer. Quoting figures from the real estate research firm Cushman and Wakerfield, she said mall visits declined 50 percent from 2010 to 2013 alone, from about 35 million to 17 million. Big stores with familiar names are failing.
Sales taxes are a factor. However, you’ll be paying them online in the future, and my guess is that won’t stem the online tide.