The head of a state retail association has high hopes in the pro-business administration of Chris Christie, but is spending a lot of time in the trenches of Trenton battling policies that are contributing to an already-challenging environment for New Jersey shopkeepers.
John Holub, president of the New Jersey Retail Merchants Association, said it’s been a busy time. At the top of his list is the association’s continued pursuit of an e-fairness bill requiring online retailers to charge the 7 percent sales tax that brick-and-mortar shops must apply. Legislation now working its way through the Statehouse would expand the basis for collecting online sales taxes, but also grant a delay to Amazon.com, in exchange for the company building warehouses here.
Besides Amazon and the sales tax fight, Holub also has been in a public battle with Trenton over a state plan to escheat gift card balances unused after two years, and is dealing with the possibility of a minimum-wage increase.
“Amazon and gift cards are two of the biggest issues I’ve ever dealt with, and certainly having both of them occur at the same time certainly has its challenges,” said Holub, who has led the group for nearly seven years.
Retailers like Anthony DelRicci, owner of Medford electronics store Camera and TV Stop, went to Trenton in March to ask lawmakers to require Amazon to collect taxes on online sales.
“My biggest concern in this millennium is the cost of doing business, especially in New Jersey, with the real estate taxes, insurance and the estate taxes,” DelRicci said.
Another bill generating angst among retailers is an effort to regulate the advertising of rebates. That bill, A-1511, would require retailers to sell products at a price that includes the rebate, or to advertise prices without rebates in the same print size as prices with rebates.
“It could potentially have the unintentional consequence of rebates no longer being offered in New Jersey,” Holub said, comparing it to the gift-card issue, which prompted American Express and other gift-card issuers to say they will stop operating in the state.
Holub remains hopeful that the gift card and other issues can be resolved, as “this is the most pro-business administration that we’ve had in quite some time.” But Christie has said the companies have long been “profiting wildly” over unused gift cards, and rejected the premise that the state would lose business due to the policy.
“I’m not worried about it, I’m not losing any sleep over that one. If they want to move out, move out,” Christie said of gift-card companies.
The online sales tax issue has been the most difficult for brick-and-mortar retailers, who are frustrated with a lack of action nationally. But Holub said the industry is accustomed to having to make adjustments, with online sales providing only the most recent hurdle.
“It’s a constantly evolving industry, and it’s one where you obviously have to provide consumers with what they want and how they want it — and the ones that do that are the ones that thrive,” he said.
John McGinnis, a marketing professor at Montclair State University, noted that the sales tax issue has arisen at a time when brick-and-mortar retailers are facing a general challenge from online sellers.
“One of the things that’s happening is showrooming,” McGinnis said. That’s when customers treat physical stores as “showrooms” for sales tax-free purchases they later make online.
But McGinnis said physical stores can compete with a page from online retailers. They must use their physical space more efficiently, and be open to selling through multiple channels. Brick-and-mortar stores also have the advantage of providing a social experience to customers, he said.
James W. Hughes, dean of Rutgers University’s Bloustein School of Planning and Public Policy, said retailers also are exiting a period of overbuilding. He said New Jersey followed a national pattern that doubled the amount of retail space from 1990 to 2010, expanding from 19 to 40 square feet per person.
“There are many challenges that have occurred over the past seven, eight years with online retailing,” Hughes said. He added that the state’s economy has only replaced 35 percent of the jobs lost during the recent recession, putting a further strain on consumers.
“Retailers really are forced to compete with a consumer buying power pool that is not growing fast,” Hughes said.
Debbie Schaeffer, CEO of Mrs. G TV and Appliance, in Lawrence, told legislators that retailers can still compete on price with online sellers, despite broader economic challenges. However, they cannot afford to offset the difference from having to charge sales taxes.
“You must do something, I implore you,” Schaeffer told the Assembly Appropriations Committee on March 12. “There are so many empty stores in my areas, and it’s not because of the economy. It’s because no one would want to open retail stores today — no one.”
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