A clear look at the state of retailing

  • Judy Herrell poses in front of Thornes Marketplace, where her store, Herrell’s Ice Cream, is located. File Photo

For the Recorder
Thursday, June 07, 2018

Competition from e-commerce, lack of technical and financial assistance from the state and demographic changes among shoppers are continuing to impact retailers across Massachusetts.

These are among conclusions from the Senate Task Force on Strengthening Local Retail, which issued a final report last week, an 18-page document that is based on a series of meetings with shop and restaurant owners throughout the state over the past several months.

For Judith Herrell, owner of Herrell’s Ice Cream in Northampton and a member of the task force, the report offers important insights into current conditions for brick-and-mortar stores.

“It took a really good hard look at retail in the state and what are the real challenges retailers come up against in running a business, and being mandated by the state to do certain things,” Herrell said.

These requirements imposed by the state include minimum wage, premium pay and health care assessments, all of which are driving up the costs to run a business.

Making the Legislature aware of these issues, and others such as the impact of the state sales tax on retailers closer to New Hampshire, the high cost of housing on Cape Cod, and the appreciation of the annual sales tax holiday weekend, is a point of the document.

“I think this is going to be one of those reports that will not sit on someone’s shelf and collect dust,” Herrell said.

She said she envisions that the report will go to various committees focused on employment and labor.

Sen. Donald Humason, R-Westfield, who with Herrell represented western Massachusetts on the task force, said he looks forward to the extent retailers can be helped by government, possibly in the economic development bill that is being taken up in the current session that ends July 31.

“I’m optimistic and hopeful we’ll take some of the findings and turn them into action items before the end of the session,” Humason said.

Humason said he was struck by how the findings were similar across the state, whether convening in Northampton or in Salem, Boston and Hyannis.

“One thing I heard repeatedly, and surprisingly, was calls for the return of the sales-tax-free weekend,” Humason said.

That has been nixed because it would cost the state $18 million to $25 million in tax revenue. But Humason said it can benefit retailers because it gets people out of their homes, and off their computers, and seems to attract people to the stores.

Sen. Michael Rodrigues, D-Westport, and Sen. Vinny deMacedo, R-Plymouth, served as co-chairmen of the task force.

“Now that the task force’s work has concluded, I look forward to working with my colleagues to explore ways the state can support retail business growth, and ensure retailers remain a core part of our commonwealth’s foundation,” Rodrigues said in a statement.

Senate President Harriette L. Chandler, D-Worcester, has also endorsed its contents. “Supporting the retail sector is very important and I am happy that we have this report to inform our future policymaking,” Chandler said.

The report summarizes several aspects of the current retail environment, including highlighting how e-commerce, such as Amazon, are impacting stores, with online sales increasing by 127 percent since 2004. Last year, 15 percent of all non-food retail items came from online sales.

“The rapid growth in e-commerce has significantly disrupted the retail industry, and disproportionately affected many ‘main street’ brick and mortars, such as electronics, appliances, building material and supplies retailers,” the report notes.

Another factor has been changing demographics, with millennials, unlike the larger population of aging baby boomers, more likely seeking services, and not items, when they are shopping.

The report observes that minimal financial support has been offered through Workplace Training and YouthWorks grants.

“The need for technical and financial assistance emerged as a common theme among small retailers and new entrepreneurs,” the report states. “Small retail businesses often lack access to resources to grow and support their businesses, as well as capital.”

Other ideas embedded in the report include promoting a statewide “buy local” campaign, re-establishing the Massachusetts Mainstreets Office to help small businesses promote shopping locally, suggesting zoning changes that could help drive consumers to shopping centers and downtowns and reducing the rising cost of living in Massachusetts, including health care, child care and housing, which are burdening employees and employers.

The report provides statistics, including that just over 4 percent of economic activity in the state came from retail in 2016. But, that same year, the restaurant and food service industry accounted for over 330,000 jobs in Massachusetts, and 10 percent of employment in the state.

Herrell said having these hard numbers supplements the feedback received.

“One of my favorite things about the report is how it analyzes the changing market for retail,” Herrell said.

Humason said the report reveals how the Legislature’s actions play a role.

“All the things we do, right or wrong, good or bad, do have an impact on the profitability of a retailer, the viability of a retailer,” Humason said.