BRICKS AND CLICKS: Federal, state, county efforts benefit Hubbard County businesses
A Supreme Court ruling has leveled the playing field for bricks-and-mortar shops versus online retailers.
State Sen. Paul Utke (R-Park Rapids) notes the court decision now requires out-of-state sellers selling online into another state to collect sales tax.
"Previous to this ruling, out-of-state sellers without a brick-and-mortar presence in another state were not responsible for collecting sales tax. The remittance of sales tax was then the responsibility of the purchaser, which rarely happened," Utke explains. As a result, every morning when local business owners turned the key and opened up shop, they were already 7 percent behind their online competitors due to sales tax collection.
"In the majority opinion written by Justice Anthony Kennedy, he noted that internet players not collecting sales tax have cost our states, collectively, as much as $33 billion in sales tax revenue each year," Utke said. "Although the states are interested in the additional revenue, it also represents a fairness factor for our local bricks-and-mortar stores across the state."
Utke calls local businesses "the backbone of small towns."
The sales tax issue "does not solve all the challenges faced by our small business owners but it does help close the gap some," he said.
At the state level, Utke said the Minnesota Legislature's 2017 tax bill " did help our bricks-and-mortar businesses with the reduction of the first $100,000 in property tax value on the state portion of the property tax bill. We had other tax-related items this last session that would have been helpful to our small businesses, but unfortunately, the Governor vetoed that bill so we will be working on it again in the 2019 session."
John Lutz, the former owner of Ben Franklin, thinks city governments "need to look seriously at how they could help the small businesses, not only a program involving banks, realtors, the tax assessor — to make it a more level playing field as far as rent goes, or taxes, financing with a bank. I think we need to have more help by the city."
Shopping locally — online
Kathy Grell is a board member of the Hubbard County Regional Economic Development Commission (HCREDC). Grell said she has always envisioned a "shopparkrapids.com."
"People that come here and shop Park Rapids, really like Park Rapids. They support it. And I really believe if they had an easy way to access products year-round, they would go online and get it. We've got to make it easy," she said.
The HCRECD is currently looking for an executive director, and Grell hopes the new hire may have the technical skills to launch a website.
The logistics aren't "insurmountable," Grell said. "I think it's all doable."
Molly Luther, owner of The Good Life Cafe, said the Park Rapids Downtown Business Association (DBA) is in initial discussions about creating an online shopping site and analyzing the cost-benefit ratio.
"It would be for those who are already committed to spending their dollars locally but can't make the trip to the store or live out of state for half the year," Luther said.
But it's not going to compete with Amazon, she adds.
Utke believes having an online presence is "very important," whether a small or large business.
"The larger retailers are training their customers to not only shop them in their stores, but also shop them regularly through their online presence. That is the part that our small retailers have the biggest challenges with. Having a webpage to showcase your product is one thing, but being able to sell and ship your product competitively is a bigger challenge," Utke said.
Grell expects Armory Square to be another huge asset when it's fully operational. The versatile building can host musicals, plays, recitals, art shows, music, conventions, weddings and more, she said.
RiverBend Home Expressions owner Cynthia Jones agrees.
"The arts are going to play a large part in keeping our community a vibrant, growing place," she said. Jones serves as a board member of the Park Rapids Community Development Corporation that operates the Armory Square cultural center.
"I feel that Armory Square can really bring a value to this community that's an economic driver in the long run," Jones said. "We've seen that in many other small towns. It's the arts that make it a destination."
County recreation plan
The Hubbard County Board Parks and Recreation Board is overseeing the development of a county recreational plan. The county's parks and recreation department will coordinate various user groups and recreational enthusiasts to implement the plan.
"The whole point is that it's an economic driver," Grell said.
If we're going to invite people to enjoy outdoor recreation — snowmobiling, ATVs, camping, hunting, berry picking, hiking, horseback riding, biking — we had better put that on paper and quantify it, she said.
Another citizens-led task force is working with the Minnesota Department of Natural Resources to get a Heartland Trail spur from Park Rapids to Itasca State Park.
The spur is considered a "destination trail," sending bikers, hikers and snowmobilers on an approximately 25-mile jaunt. The DNR is currently seeking engineering consultants for the project.
Greater participation in DBA
Bill Simpson at The Trading Post would like to see 100 percent of businesses as DBA members.
Jones explained, "We started the Downtown Business Association in 2006 because we were faced then with Walmart coming in and the development of other areas outside of town. We knew that the infrastructure on Main Street was going to be replaced in 2010. So, we really felt the need."
Unlike the Park Rapids Lakes Area Chamber of Commerce, she said, the DBA is "only about downtown Park Rapids. All we look at is keeping downtown alive: networking with each other to look at our niches, what we have to offer in four blocks. People don't like to see the same thing in every store that they look at. So, we have, I think, a great variety of different kinds of things to offer consumers."
Many volunteers active in the DBA are not business owners, Grell pointed out, such as Kathy and Denny Ulmer and Mike Bruhn.
Park Rapids Lakes Area Chamber President Butch De La Hunt said Explore Minnesota does a "great job" highlighting the entire state, while the chamber focuses on the Heartland Lakes area.
"We've got to continue to promote the region and the great assets we have and say 'Hey, if you live here, shop local, support your local businesses. If you visit here support the neighboring communities. Support everyone so at the end of the day you don't support them they're gone. Once they're gone, it's harder and harder to re-establish them," he said.
De La Hunt said a retail trade analysis report by the University of Morris has been completed and a public rollout is being planned.
Frank Bray, the new owner of Ben Franklin, thinks the pendulum is slowly swinging in favor of retail stores. Mom-and-pop stores are rebounding, he said.
"That's the only reason I was willing to look at bricks-and-mortar again," he continued. They purchased the Park Rapids store in October.
He and his wife, Lucienne, operated vintage toy stores in California prior to moving to Park Rapids. They opened a shop in 1994 and had an online presence beginning in 1997. As far as how the internet has impacted retail, the Brays were at ground zero. They lived in Silicon Valley and closed their first bricks-and-mortar toy store when eBay emerged, changing the entire marketplace.
"I was getting rid of the bricks and mortar to do just the website," he said. "But I've noticed a shift in the last four or five years where the bricks-and-mortar are making a comeback."
Generation Xers, in particular, are disillusioned with online shopping, he said, and not all products can be bought online, so it's better to shop locally.
To differentiate from online retail, businesses need to offer service and selection, Bray said.
Business owners must "reinvent ourselves and adapt to the market," he said. Customers need to tell owners what they want. "It's a symbiotic relationship. If they do not support a business, they are not going to carry the product. Conversely, businesses have to have a good selection of product to keep customers happy."
The way you beat the Walmarts and Amazons, Frank concluded, is through hard work, investing money, regular business hours and good customer service.