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.
It seems like the question is whether Burlingame Ave and Broadway should be like Hillsdale mall or like just the Food court at the mall. The Food court seems like it always smells. I know some retailers on the Avenue who think the same about having a restaurant (did someone say Panda express?) nearby.
Posted by: hillsider | August 11, 2012 at 10:53 PM
What's the Burlingame Chamber of Commerce's opinion on this topic?
Posted by: Bob | August 13, 2012 at 03:27 PM
It seems to me like the Chamber just likes to keep its head down on most things. I've lived in a few places where that was not the case with their Chambers.
Posted by: Franklin Dad | August 14, 2012 at 04:04 PM
There is no way a healthy downtown needs any more restaurants or high-end ladies clothing stores. While we talking about it does anyone want to start a dead pool bet on the yogurt places?
Posted by: alan | August 14, 2012 at 06:27 PM
I think the free market takes care of who comes and who goes. For example, if the demographic of downtown Burlingame did not support the many nail salons, there simply wouldn't be as many. The biggest demographic for downtown B game is a woman in her 40's.
I work in a prosperous downtown(PAlo Alto) and it has many more restaurants than downtown Burlingame, but they are supported by the many workers who infiltrate the downtown each day.
We simply can;t make assumptions on what works and what doesn't. The point here is that "showrooming" hurts local retailers, especially independently owned retailers who can not compete with big box or internet retailers.
I hope everyone remembers that shopping local really is important, even if it costs a little more, the returns to the community a really bigger than we might realize.
Posted by: Russ | August 16, 2012 at 01:27 PM
Has anyone heard recently of people getting more than a manicure at some of these salons and massage places? I know Broadway had a bit of that going on a couple of years ago.
Posted by: not so sure | August 18, 2012 at 12:10 PM
What did you have in mind Big boy?
Posted by: sure | August 18, 2012 at 10:44 PM
customer loyalty varies based on your demographic. A millennial buyer resides in the 'mercenary' quadrant, http://bit.ly/bIVfTw Mercenary buyers aren't loyal and shop price (showrooming and online).
brick and mortar shops need to be social to appeal to these new buyers, who will become their prime customers in the future; to 'convert' this category to 'loyalist' requires effort, time and resources.
Doing business 'the old fashioned way simply isn't sufficient anymore, and will result in eventual small business failure.
Taxing amazon won't fix the retail loyalty problem. the avenue businesses can't offer the convenience of delivery to your doorstep, or maybe they can. Local business needs to modernize. Further adding a different mix of restaurants vs retail doesn't impact the health of business mix or solve the social/loyalty problem.
re the free market comment above, that is a bit of whimsical fantasy. The market isn't really free. True saturation of 1 business category will tend to balance out.
however, large corps, have amazing power over customers, competitors and brands, they have jacked up rents on the Avenue over the past couple of decades. A small brick and mortar store, now pays unnatural rents for their income stream as a consequence, draining profits.
the free market doesn't really exist in any pure way. Large companies have pricing/information asymmetries, scaling benefits, that a small single shop can only pray for.
Also the deregulation inspired Great Recession has forced many young buyers into this 'mercenary' category out of financial necessity.
Again another argument for why ignoring the middle class to benefit the TBTF banks and top 1% results in extreme hardship for traditional businesses dependent on the middle class buyer.
Vote GOP and you're inadvertently voting for more failed small businesses not less, because of the extreme naivete of their 'free market' argument, and where the GOPs real ambitions (and primary actions) are in advancing big business. What explicit plans and strategies are offered to assist small business. I've heard none articulated....
Also DBID really has failed to make any significnt impact on customer loyalty. It stumbles using traditional tactics, and hasn't really made Burlingame a shopping destination, or explored social to help create an improved business climate for all the local small brick and mortar businesses who are being levied (taxed) for BID services.
Posted by: socrates | September 08, 2012 at 11:38 AM