I think there is just no way ultimately, push come to shove, retail can truly price match online, pay it's employees/rent, and be profitable.
That is really the heart of the problem. Sales tax may have helped, but it would have only been a short term fix. That, and I still question what right my state has to tax me on a product literally bought and sold in another state, but meh. Law is law.
Owning a physical distribution business at one point, I can say that you can truly exceed online value and be profitable--but it has to be a time-based thing, ie, you need it today and can't wait. This was definitely the case for auto parts, even though people could wait if they timed all their jobs perfectly. And 5-7% on most goods isn't much of a premium compared to overnight shipping, so same-day local wins. It's one of the reasons free in store pickup has made the retailers relevant again.
It's actually the federal government that should be dealing with the state tax issue since one of the jobs of the federal government is to regulate interstate commerce. The problem is that the sheer number of taxing entities--states, counties, and municipalities makes the whole job a tremendous load on a business. At the federal level there should have been a system established to tie into pos systems and remit the taxes collected daily, just as how the merchant systems pay retailers daily. No more returns, no more reconciliations outside of the daily register balances, and no more wondering if it is correct or not.
In the state of Alabama where I was a distributor, I only had to collect taxes for my retail customers which was less than 20% of my overall customer base. And I still had to make a spreadsheet to help me calculate and file over 40 returns to different municipalities, counties, and the state. And this didn't even cover business licenses, which also need to be obtained if you sell even a single retail product in a particular municipality or county, of course in addition to the state.
The defacto rule for many years was that each state honored taxes as being paid as long as they were in another state. But when taxes were not being collected by mail order companies for
any state, that's where the problem began. Technically, taxes were due from every consumer of every product sold, but the challenge was how to make them pay for it outside the sale process--hence the introduction of 'use tax' which hardly anyone pays because they are unaware of it. And use tax was really just a band-aid anyways--companies,
every company, charging and remitting the proper tax was the real solution, and they're finally getting around to it. And the companies are popping up to help manage all that as the database of just all the tax rates and zip codes has got to be enormous--especially keeping up with it in real-time and adjusting sales systems for any changes immediately. This overhead far exceeds the local retailer that's got at the most 3 tax rates to worry about and 3 places to send it. And that's what would have leveled the playing field a bit between online and store retailers.
The Frys out by me is usually doing well any time I've gone in there. Usually more people there than BestBuy.
After Tiger Direct closed (live close to the warehouse in Naperville Il) it was rather depressing.
Now, Online shopping has a grip on me. I miss walking into the stores and buying hardware. The chicago taxes also make it difficult.
Wow, I had no idea Tiger Direct was there too. I really missed out. I never even got a chance to see abt while I was living there.
Online has its plusess and walk-in has its as well. It's nice to actually see the hardware and see it in action or check something you can't see in pictures or spec sheets. Online is great in that you don't even have to leave home and you get what you want usually for the cheapest you can find it for.
I think the old Service Merchandise retail model would have done absolutely terrific in this environment. They had everything you could buy out on the retail floor to see, but you wrote down your order based on the item numbers and whatnot and then went to check out. After checking out, you went to the pickup area where the items came out on a belt directly from the stocked warehouse--they didn't waste effort stocking the products on a sales floor. Today, you could update that model with an amazon store like interface where you simply scan your items and then tell it you want to pick up and then get them at the delivery belt. Maybe a little too connected this way, but you could have small handheld pos units that would do the scanning and totaling and you swipe your card on them and they print a receipt for pickup. And the same warehouse could also work on fulfilling shipment orders in the same manner so the delivery of belt or ship would be the only difference. Too bad Service Merchandise went out 20+ years ago. I still have a lot of stuff we bought from there.
They have responded to every comment on facebook lately. I don't think they are closing, I was thinking the same thing. I think they are getting leaner like Microcenter is. ofcourse microcenter is going to look more filled then frys because the sheer size of frys. They didn't used to respond and Below is finally their response to every customer talking about low stock.
"i! We apologize for the low stock levels in our stores. We are moving to a consignment model with our vendors.
During the transition, we have to temporarily stop ordering product as we put new consignment agreements in place.
As of now, we have over 170 vendors on consignment and adding more every week! We appreciate your patience and support during this transition. ^Billy"
That's awesome that they're able to do things on consignment--that's actually badass. Then their cash requirement and holding costs go way down, and the manufacturer can probably dictate the price which means they are taking the bulk of the profit and frys will need high volume to make serious money. But this sounds like what MC may be doing already as their prices are sometimes too cheap to believe.
www.tweaktown.com
Looks like sales tax enforcement for the online stores came too late...
