I recently came across a new word for a known phenomenon. The word is "showrooming" and describes the practice of shopping at a brick-and-mortar shop (the "showroom") but making one's purchase on-line to save money. The savings come in two forms–cheaper prices of the goods because of the low overhead of warehousing goods in some low-cost location like rural Nevada and the savings on the sales taxes.
The former is unavoidable for the most part when compared to the overhead of the rents on B'way or B'game Avenue. The sales tax savings are a hot issue right now because of the move in Congress to tax internet purchases–a law known as the Marketplace Fairness Act–that seeks to level the playing field on taxes. Proponents want a "level-playing field" and the cash for the nearly 10,000 state, local and municipal tax jurisdictions. The opponents say it's taxation without representation since, for instance, Amazon doesn't have a physical location in B'game. It's also complicated and expensive to implement especially for small businesses. The Wall Street Journal quotes a 2006 PWC study putting the compliance costs at 16 cents per dollar of revenue for a small business with an internet presence.
My current interest is for the retail mix in our downtown B'game locations. The prevailing thought amongst Avenue merchants and landlords is that "showrooming" is killing most retail and therefore we need more restaurant permits since that is the future of the Avenue. I'm not so sure. For starters once a retail location becomes a restaurant it's hard and expensive to go back to retail space. So if the 8.25% (or higher if the state and county proposals go through in November) sales tax disadvantage disappears we may have shot ourselves in the retail foot….and that would be bad for everyone.
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