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Editorial: Valuable report by task force on strengthening local retail

  • Judith Herrell, owner of Herrell's Ice Cream in Northampton and a member of the Senate Task Force on Strengthening Local Retail, applauds after Bill Rogalski, right foreground, addressed the dozen members during a hearing at Union Station in Northampton on Feb. 5. About 60 people attended the hearing. GAZETTE FILE PHOTO


Tuesday, June 05, 2018

A legislative task force examining how to strengthen local retailers in Massachusetts describes challenges ranging from the competition of e-commerce to the need for more state initiatives providing technical and financial assistance.

The report concludes that “e-commerce and the rise of technology, evolving consumer preferences, and demographic factors are changing the Massachusetts retail sector, presenting both new challenges and opportunities for retailers; technical and financial assistance could help support new and existing businesses, and establish retail as a strategic sector for the Massachusetts economy.”

The Legislature should take action on some of its key provisions before the current session ends July 31.

The report released May 30 was issued by a 17-member task force established last July, which held hearings across the state beginning in October. Its members include Judith Herrell, owner of Herrell’s Ice Cream in Northampton, and Sen. Donald Humason Jr., R-Westfield, whose Second Hampden and Hampshire district includes Easthampton and Southampton.

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

While the task force stops short of making specific recommendations, it provides a wealth of data and suggestions made by retailers and economic experts that legislators should examine carefully.

Humason, who noted that many themes were the same across the state, said, “I’m optimistic and hopeful we’ll take some of the findings and turn them into action items before the end of the session.”

Among the key findings in the report:

Online sales have increased 127 percent since 2004. “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.”

In order to attract millennials (generally regarded as people born in the 1980s and 1990s) to shop locally rather than using their computer, “retailers must focus on providing a consumer experience. According to MIT Sloan School (of Management) professor and retail expert Zeynep Ton, retailers must establish emotional connections with consumers, provide them with a compelling reason to shop, and meet basic customer needs with high efficiency. Providing a unique, compelling consumer experience often requires additional investments in both time and resources, including training, physical plant and ancillary point-of-sale items.”

The need for state-supported technical and financial assistance was commonly cited, particularly by small retailers and new entrepreneurs. The report finds that while “providing resources and support to small businesses is critical to grow the retail industry in Massachusetts,” the state has reduced such assistance.

For example, the Mass Growth Capital Corporation’s Small Business Technical Assistance Grant Program received just $750,000 in state funds during the fiscal year that ends June 30, $1.75 million less than the Senate proposed in its budget.

“The task force heard directly from small businesses on the importance of investing in programs and services supporting the retail industry. … Affordable, online courses designed for small business owners through local community colleges could help retailers grow and adapt to the current market.”

Promoting statewide “buy local” initiatives also will benefit retailers, who suggested reestablishing the Massachusetts Mainstreets Office affiliated with the National Main Street Center. It supports locally-owned businesses and helps nurture entrepreneurs.

Competitive disadvantages cited by retailers include online transactions not being subject to a sales tax unless the company has a physical presence in Massachusetts; state law requiring that employees be paid time-and-a-half on Sundays and holidays; lack of a training wage for new workers; and mandates such as the Employer Medical Assistance Contribution fee for employees who receive assistance from MassHealth.

Retailers also want the state to reinstate the annual sales tax holiday in August, which has not been held since 2015 because legislators believe the state cannot afford the loss of between $18 million and $25 million in tax revenue.

We trust that the Legislature during the next two months will give serious consideration to the task force’s findings, particularly as it shapes an economic development bill.

“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. We agree.