Guest Post by Chase Pursely
Marketplace Fairness Act = Retail Protectionism / Cry-Babyness
One of the debates going on in commercial real estate circles, especially retail is:
“should online retail customers pay a sales tax?”
Political pundits and now CRE trade organizations like ICSC along with the National Retail Federation, Retail Industry Leaders Association, National Association of Wholesaler-Distributors and the National Association of Real Estate Investment Trusts are arguing that online retailers are not paying their fair share of the sales tax that states “deserve” by introducing the Marketplace Fairness Act. This bill has been introduced to both the U.S. Senate and House which “will grant states the authority to compel sales tax collection on online purchases made by in-state consumers.”
All legalities aside, are states really ‘owed’ sales taxes by out-of-state web-based retailers? Or is this simply a desperate grasp for revenue by states with declining fiscal health – and on the retail side – a last ditch effort to force their online competitors onto an even playing field? But is the playing field really rendered uneven due to the lack of an online sales tax? I’d say no. The reason retail is having such a difficult time is yes, partially the national economic recession – but primarily it’s consumer preference. The truth is folks,
The retail experience sucks.
Retailers have really gotten desperate. I can’t remember the last time I wasn’t hounded for a store credit card. I’ve had cases where I’d have to say no at least three times firmly so I could just pay and get the hell out of there. Some retailers even have quotas for their cashiers – sell x amount of store credit cards or you lose the job. And Girl Scoutsnow camp out in front of my local grocer like a bunch of beggars. Unbelievable! During my childhood, I remember my sister had to work hard to sell those cookies! Maybe retailers could learn a few things from the Girl Scouts of old.
In addition, driving to one of these ugly strip shopping centers and then fighting for a parking space does not sound like my idea of time well spent. And once you’re in the door, you have to see if they even have what you want in stock – and don’t bother asking the sales person – they have no clue. Plus, even if they do carry what you’re looking for, it’s priced above that of online retailers – and not because of the sales tax. And you know because you just did a price check with redlaser on your smartphone. Which is another interesting development – Retailers Fear Becoming Amazon’s ‘Showroom’.
The real reason the Marketplace Fairness Act has been introduced by the retail lobby is frankly industry protectionism. You can always count on the old guard to either sue the new guard or lobby congress to have laws written specifically to hurt the new market entrants in response to their own failure to innovate. Instead off focusing their efforts on creating a better retail experience for customers, the old guard is taking the place of the schoolyard bully. I would expect better from the well-respected ICSC.
But all is not lost for retailers
This is a huge opportunity for forward-thinking retailers
This is not the end of the line for all retailers. Just the crappy ones. In fact, what we’re seeing now is a great cleansing of mediocre retailers through technological and business model innovation. We’ll be seeing more and more vacant retail centers. Good riddance – maybe they’ll all be bulldozed and turned back into farms. This is where the quality developers, investors and retailers can step-it-up. Those that can provide an all-around superior retail experience that is well designed with a low environmental impact and properly integrated into the surrounding neighborhood will enjoy nice returns.
Then what should online retailers pay?
Back to the sales tax thing. It’s reasonably justifiable for customers of web-based retailers who’s corporate offices or distribution facilities are located in their state of purchase to pay sales taxes (in addition to corporate and property taxes that they already pay). After-all, their physical presence enjoys the legal protection, infrastructure and human resources located in the particular state.
I know this is not politically correct to say for someone who’s livelihood dependes on a healthy commercial real estate market. But I quite like the demise of the ugly farmland eating mega-malls and ugly strip retail centers as a less land-intensive, time-consuming and expensive alternative has appeared online – and I can shop in my underwear.
Good-by crappy retail, it was a good run. Long-Live Amazon Prime and Netflix.
P.S. – It dosen’t matter: 3D Printing Changes Everything
Anyways, all of this retail talk is redundant. What retailers and manufactures really need to fear is 3D printing. At the moment, 3D printing is in an infancy stage similar the home-brew computer movement that gave birth to Steve Jobs and Apple. Home replication devices may have even bigger implications than the personal computer:post-scarcity hyper-abundance…
- Yes, Cry-Babyness is not a word – but it should be.