By all accounts, e-tailers are poised to experience the first of many monster holiday seasons and sell more goods and services online than anyone would have ever thought possible
However, this success has not gone unnoticed in the traditional brick-and-mortar world. In fact, it was reported last week that the Saint Louis Galleria, located in Richmond Heights, Missouri, has prohibited its 170 retail tenants from displaying any “signs, insignias, decals or other advertising devices that promote or encourage the purchase of merchandise via e-commerce.”
The edict — sent out in the form of a letter from owners Hycel Partners 1 LP — shocked shopkeepers and even provoked one of them to threaten legal action.
Currently, mall tenants pay a base amount of rent plus a percentage of sales, which can range from about four to ten percent of their total rent payment.
The Saint Louis Galleria ownership apparently fears that tenants are attempting to lower their rent by promoting online sales. In addition, management contends that these stores are also making it possible for customers to avoid paying the state’s 7.25 percent sales tax.
Conflict Just Beginning
Meanwhile, the new policy does not seem to be working, because many of the tenants in question are simply ignoring the request.
Stores such as the Sharper Image, Banana Republic and Rand McNally continue to promote their Web outlets in various ways, and Athlete’s Foot is brazenly flouting the rules with a storefront sign that beseeches shoppers to visit its Web site.
There can be no doubt now that the stakes are growing higher, and that this line in the sand is a precursor to a pitched battle that these mall managers would have laughed off as inconceivable just a few years ago.
Time Is Now
Despite the fact that e-commerce appears to be an unstoppable tidal wave, the reality is that the brick-and-mortar world is still the Goliath in the economic equation.
For that reason, I think e-tailers must get together as a group and prepare a calculated defense against this widening backlash. Any and all measures must be considered, including legal action, aggressive lobbying and public relations.
After all, it is not so farfetched to think that, before you know it, the natural alliance between developers and politicians could conjure up a new e-commerce tax to make up for the mall owners’ lost revenue.
What do you think? Let’s talk about it.