Palo Alto Weekly

News - July 8, 2011

Local retailers feel Internet heat

Competition with Internet-based stores changes strategies for independent shops

by Casey Moore

The sole of Palo Alto has felt a great loss.

Robert Krohn Shoes, a Palo Alto footwear retailer since 1969, closed its doors June 8, according to a sign posted on its brown paper-covered windows in Town & Country Village. There are no immediate plans for replacement, said Jim Ellis of Ellis Partners, which manages Town & Country. Two other vacant stores border the space.

A member of the Bay Area-based chain Euro Walk Shoes, Robert Krohn Shoes fell victim to the difficult economy and powerful online competitors, according to owner John Riker.

"We just really felt the need to downsize to get healthy," said Riker, who as the president of Euro Walk Shoes currently operates four other stores in Los Gatos, Danville, Rockridge and Davis, under the name Shuz. Euro Walk Shoes previously operated nine stores throughout northern California, according to a 2008 Weekly article.

Robert and Marlene Krohn co-founded Robert Krohn Shoes in 1969 and moved the store to 825 El Camino Real, just outside Town & Country, in 1985. In 2001, Robert Krohn retired and sold the store to Riker. The store returned to Town & Country Village in 2008.

But customer volume had decreased in recent years, Riker said, as a casualty of bargain-savvy consumer spending.

"Brick-and-mortar stores can't survive when you can buy the same thing online for 20 percent less," Riker said. "It's hard to compete with that."

Internet retail giants like Zappos.com are often exempt from the fixed costs that physical stores have to pay. Many Internet stores can afford to offer incentives like free shipping both ways and tax-free sales, thanks to headquarters in sales tax-free states.

Online stores are "not paying sales reps, not paying rent," said Paula Sandas, CEO of the Palo Alto Chamber of Commerce. "And the retailer can pay for shipping. For the customer, it's a win-win situation."

Customers have certainly noticed. Nielsen reported in 2008 that 94 percent of American Internet users shop online. The highest amount of them had purchased books (41 percent), closely followed by shoes, clothing, and accessories (36 percent).

"People come into stores, try on shoes, and then buy them online at a discount," Sandas said.

But not all is lost to the Internet. Brick-and-mortar shoe stores have one thing that online stores cannot have, according to Alan Miklofsky, chairman of the board of directors of the National Shoe Retailers Association and president of the Tucson, Ariz.-based Alan's Shoe House chain.

"You can't experience the comfort of footwear just by looking at the product," Miklofsky said. "We offer full service and sizing. ... We pay attention to the customer. Many people are willing to pay for this."

Miklofsky also cited other pressures that impact sellers including the world economy, heightened exchange rates between China and the United States, and increasing costs of materials, not just the spread of e-commerce. Many small businesses are studying the changes in the retail environment and repositioning themselves accordingly, Miklofsky said.

Bill Burruss of Know Knew Books in Palo Alto could be a poster child for this type of repositioning. As owner of his used book store for 23 years, Burruss operates both his California Avenue store as well as an online store on bookseller rival Amazon.com. Amazon's popular and highly successful model allows everyday sellers to list used books online for free, then pay transaction fees if the book is sold. (Frequent sellers are charged a flat rate of $40 per month.)

"You can't stop progress, so you better learn to live with it and use it to your advantage," Burruss said.

Still, his expansion online has not saved his bricks-and-mortar business. The Know Knew Books store is scheduled to close "unless some miracle happens," Burruss said. But his Internet store provides an avenue for him to continue selling used books, if in a less community-oriented forum.

"It's sad because I do think the store is valuable," Burruss said, recalling the store's community events that featured everything from break dancing to Stanford student plays. "But I will be able to drop the expense of the store. Actually, I do hope to gain more of a presence on the Internet."

Not all is lost for Robert Krohn Shoes, either. Riker plans to expand Euro Walk Shoes once the economy stabilizes — and even hopes to return to Palo Alto.

"We wanted to downsize basically to show we could get bigger in the future," Riker said. "We're just going away for a short period of time."

Editorial Intern Casey Moore can be emailed at cmoore@paweekly.com.

Comments

Posted by Abcurd Wilson, a resident of Palo Verde
on Jul 9, 2011 at 9:54 am

I can understand the issues between stores and their online competition. I myself love having an in-store experience, but online shopping from sites like Amazon is quick and easy.
I want to commend this intern for his work. He seems to know his stuff well and writes very nicely. I appriciate the first sentence pun as well. Good work, He must make his friends and family very proud.


Posted by Internet shopper, a resident of Barron Park
on Jul 9, 2011 at 10:12 am

The free market has spoken. Too bad PA does not understand that and feels that local need to be "protected" from competetion.
I shop on the interent.


Posted by taxes, a resident of Adobe-Meadows
on Jul 9, 2011 at 11:20 am

I would think that a shoe store would be more competitive vs the internet than book or music stores. Style, quality, and fit are very important with shoes and those are difficult to judge on-line. The problem with shoe stores is probably more complicated than just internet competition. In particular, people are dressing much more casually these days, especially in Silicon Valley.

However, I do agree that charging sales tax for local stores and not for internet stores is just wrong. I know that California charges use tax on internet sales, but they put no effort into enforcement. Our schools and roads could really use this money, in addition to the help to local businesses and jobs.

Raise your hand - who would be in favor of cutting local sales taxes in half and charging the same sales tax rate on internet sales?


Posted by internet taxer, a resident of another community
on Jul 9, 2011 at 4:28 pm

yo, internet shopper:

what happens to your 20% savings when you finally start submitting your sales tax on internet purchases? you do file use taxes, don't you?

it ain't a "free market" when one retailer is required to charge you ~8% more than another, just in taxes


Posted by Internet shopper, a resident of Barron Park
on Jul 9, 2011 at 11:27 pm

"what happens to your 20% savings when you finally start submitting your sales tax on internet purchases? you do file use taxes, don't you?"
The 20% savings are still there and I pay less in taxes as well.
It is still a free market. The local retailers could cut prices to match online sites and cover the taxes themselves. It is obvious that people, despite all the talk about supporting local business, are still more concerned with prices in these tough financial times.


Posted by judy, a resident of Duveneck/St. Francis
on Jul 10, 2011 at 10:35 am

I wear a common size shoe and petite size clothes. I can never find my size at local stores, so I can buy off the internet or find and pay a tailor to alter every item of clothes that I buy.


Posted by internet taxer, a resident of another community
on Jul 10, 2011 at 11:18 am

[Portion removed by Palo Alto Online staff.]

Pay local rent, local wages, still match the lowest sell price in the country and then just eat another 8% paying the tax? Please show your math on how that works.


Posted by Walter_E_Wallis, a resident of Midtown
on Jul 10, 2011 at 11:27 am

Walter_E_Wallis is a registered user.

The shipping charges are very often greater than the savings, tax and other. You don't have to drive, you do have to wait. Businesses need to adapt. Ideally, stock leaders but catalog more options.


Posted by Internet shopper, a resident of Barron Park
on Jul 10, 2011 at 12:43 pm

""The 20% savings are still there and I pay less in taxes as well."
You do?
Want to clarify that with the FTB?You, ma'am, are a tax cheat. In light of that, all the rest of your drivel is just that.""#

Okay, let me explain it to you so that even you could understand.
Let#s say something in Palo Alto costs $100--I see it online for $80. I save 20% and at the end of the year, I send the FTB the tax on the $80 purchase. I have saved $20 plus the difference on the tax.
So no one is being cheated. Understand?????

"ahhhhh, another "bidness" expert who clearly has not ever run a business."

Some business have "we pay the sales tax" deals. Why not do it moreoften. No need to be so insulting and condescending either.

"A cheat and a loon. Sheesh!"
My we are on a roll with derogatory comments, aren't we??? It is called the free market. If you do not like it then shop locally
Internet taxer needs to calm down and be more civil.

"The shipping charges are very often greater than the savings, tax and other. "
Many companies offer free shipping.


Posted by internet taxer, a resident of another community
on Jul 10, 2011 at 1:21 pm

If you're paying the California sales tax, then good on you. Most, as in the vast majority, don't. So I'll take you claim at face value despite that it flies in the face of reality and real world statistics.

"Some business have "we pay the sales tax" deals" is just a discount, sales ploy in lieu of a different sales tactic, such as "10% off today only!" One can't do that AND match the lowest national price.

You don't think a retailer can do it all and remain profitable, do you?

See the comment - Pay local rent, local wages, still match the lowest sell price in the country and then just eat another 8% paying the tax? Please show your math on how that works.

I treat you the way you deserve to be, going online as if you know something about the subject. Pontificating on SP structure and maintaining a fair profit, as if you know something about it.

"Some business have "we pay the sales tax" deals. Why not do it moreoften."

Sheesh.

Spew about the free market and then expect a segment of the market to lose money, so you can shop locally.

That said, I've made far, far more from working with b2c/b2b net clients than brick and mortar. Darlin', just quite oversimplifying and think you can get it all because you think the math works in YOUR head.


Posted by John, a resident of Meadow Park
on Jul 10, 2011 at 3:41 pm

The "tax cheats" are the overpaid, over pensioned, over benifitted state and local unionized public employees and their bought and paid for politicians.
We shop online. A natural response to being overtaxed.


Posted by internet taxer, a resident of another community
on Jul 10, 2011 at 3:54 pm

"We shop online. A natural response to being overtaxed."

Do you pay the legally required sales tax to the great state of California, or just use some anti-working family rightwing talking points to rationalize breaking the law and cheating our community?

A criminal is a criminal.

A cheat, a cheat.

Justifying why you're breaking the law and cheating everyone to enrich yourself is pretty lame.

Selfish, too.

Just guessing, but sounds like a typical lib (-ertarian) or a republican. I got mine, screw the community that allowed and helped me make it.


Posted by John, a resident of Meadow Park
on Jul 10, 2011 at 4:26 pm

To th. e taxer. All true. Taxes are a strain on the economy.
Lower taxes equals less of a strain and we can compete with other states for jobs.

Lower tases makes for a better economy. Stores closing are a result of a bad economy.

You can't keep r!aising taxes and not expect a reaction!


Posted by internet taxer, a resident of another community
on Jul 10, 2011 at 5:36 pm

"Lower tases makes for a better economy... You can't keep r!aising taxes and not expect a reaction!"

Nationally, when have we had lower taxes than the last ten years? And the last two years have been the lowest with the middle class tax cuts in the stimulus and the extension of both the middle class and the high end tax cuts last December.

Yet we have the worst economy since the great depression.

It's the national economy that has stores closing. Foreclosures. Job loss. Unemployment and massive UNDERemployment. Wall street putting the screws to working families.

Which president has had lower taxes than the last two?

And that doesn't address the above issue of a California citizen not paying his legally required sales tax. Selfish cheating at our community's expense.


Posted by John, a resident of Meadow Park
on Jul 10, 2011 at 5:48 pm

Taxtaker:

California taxes are the highest in the country.

Largest increase 2 years ago.

Tax raise expired on July 1.

Instead of cutting pensions and benefits, education was cut.

So if I pay taxes it goes to someone else's pension. Think I'll keep my money. Call us all the names you want.

Sorry about the local stores closing. Lower the taxes so they can compete.


Posted by internet taxer, a resident of another community
on Jul 10, 2011 at 5:59 pm

Identifying criminal behavior is not "name-calling".

So in your mind it's okay to cheat the community and break the law?

Why don't you move to a no-tax state? Break their laws if you like, rather than harm the good upstanding folk of California. Good riddance.

You rationalize your anti-social criminal behavior like the wall street banksters who broke laws and thought it was okay cuz they got theirs. Like you, no one is prosecuting them either.

The scariest thing? you petty thieves are probably teaching your kids the same lack of morals.


Posted by John, a resident of Meadow Park
on Jul 10, 2011 at 6:06 pm

Taxtaker: cry all you want, facts aren't going to change.


Posted by Mrmoral, a resident of St. Claire Gardens
on Jul 10, 2011 at 6:21 pm

Yes you are Mr Moral£¬everyone should listen to you then


Posted by internet taxer, a resident of another community
on Jul 10, 2011 at 6:25 pm

Tears over your dishonesty? Hardly.

Concern? Yes, that a morally bankrupt person like you, one who sees no problem rationalizing tax cheat behavior may have influence on some poor kid. That would be a second "crime."

Our community doesn't need another like you.

You need to quite whining and move away. The great state of California is better without freeloader hypocrites like you.


Posted by internet taxer, a resident of another community
on Jul 10, 2011 at 6:27 pm

Mrmoral:

It's not a good idea, it's the law.

Do you condone others cheating our community?

I don't, and it's not such a big deal until they then rationalize about how things are messed up, while all along not paying their fair share.

The hypocrisy stinks.


Posted by John, a resident of Meadow Park
on Jul 10, 2011 at 6:30 pm

Whoa taxtaker settle!

You'll get your pension and wages.

Stores will close, employees laid off, education is cut, but you'll get yours, don't worry.

At least the sales tax did go down July 1. More decreases like that we may return to the stores.


Posted by internet taxer, a resident of another community
on Jul 10, 2011 at 7:05 pm

John:

What on earth are you talking about? I have a 401, not a pension, fwiw.

But you'll try anything to deflect from your hypocrisy of not paying legally due taxes and then rationalizing it on something else.
[Portion removed by Palo Alto Online staff.]


Posted by Internet User, a resident of Professorville
on Jul 10, 2011 at 7:05 pm

@internet taxer wrote:

"Pay local rent, local wages, still match the lowest sell price in the country and then just eat another 8% paying the tax? Please show your math on how that works."

You can rant and rave all you want about Internet sales tax, but it won't change things much and so won't do a bit of good.

Local rents are sky high and local wages are higher than in most other parts of the country. Even if Internet retailers charge sales tax, Palo Alto brick and mortar establishments are still at a significant disadvantage. If we want local businesses to thrive, then our city needs to be as business-friendly as possible. Given the number of "moving because we lost our lease" signs on papered over windows downtown, that part of the equation clearly needs to improve. Allowing the construction of additional retail space should help moderate rental costs. Tax breaks and incentives, at least until the economy improves, would also be helpful and can be implemented immediately.

This is the new reality we all helped create. Deal with it. Bill Burruss stated "You can't stop progress, so you better learn to live with it and use it to your advantage". Right now, he seems to be among the few actually doing the math.


Posted by John, a resident of Meadow Park
on Jul 10, 2011 at 7:18 pm

Good point. It's reality. We will continue to avoid excessive taxation.


Posted by internet taxer, a resident of another community
on Jul 10, 2011 at 7:19 pm

User:

"Pay local rent, local wages, still match the lowest sell price in the country and then just eat another 8% paying the tax? Please show your math on how that works."

"You can rant and rave..."

That's not a rave. That's a request to have the other poster do the math and see how a local can't simply match prices and remain profitable, due to many of the reasons you and I outlined.

The other part of the thread IS a rant about hypocrites like John that admit they don't pay a legally due tax, yet feel qualified to preach about problems the rest of us face.

Why should K&L in the city be required to charge me sales tax when they ship a bottle opener over to me, yet amazon doesn't?

Where's the libertarians on that one? Free marketeers? Level playing field?


Posted by internet taxer, a resident of another community
on Jul 10, 2011 at 7:21 pm

John:

"We will continue to avoid excessive taxation."

What's a fair tax level to get you to not rationalize and cheat our community?

7%?

6%?

0%?

You admitted breaking the law.

Go away.


Posted by John, a resident of Meadow Park
on Jul 10, 2011 at 7:35 pm

4%. Meantime it amazon.com.


Posted by where, a resident of St. Claire Gardens
on Jul 10, 2011 at 7:49 pm

Where can poor John go


Posted by internet taxer, a resident of another community
on Jul 10, 2011 at 7:52 pm

You're cheating your community, breaking the law because you THINK sales tax should be 4 bucks per hundred instead of 8 bucks?

Should everyone break the law if they think the numbers aren't quite to their personal liking?

Too bad you don't care for your community and the LAW.

Move away to another state.



Posted by John, a resident of Meadow Park
on Jul 10, 2011 at 7:54 pm

John just went to internet to buy a refrigerator. A better deal than in Palo Alto, that's right, store's driven out of Palo Alto. Maybe Fry's has them.
Free shipping and a $112 tax break!


Posted by where, a resident of St. Claire Gardens
on Jul 10, 2011 at 7:57 pm

No£¬John£¬do not listen to him


Posted by internet taxer, a resident of another community
on Jul 10, 2011 at 8:00 pm

I don't care where he buys it, only that the cheat pays his legally required tax, as the law states.

And not brag about turning his back on our great community.


Posted by John, a resident of Meadow Park
on Jul 10, 2011 at 8:07 pm

Taxtaker. If your so concerned pay the tax for us.
Meanwhile you don't do a thing about the small business your taxing out of business. You mantra is move to another state. all that will be left are taxtakers.


Posted by Internet User, a resident of Professorville
on Jul 10, 2011 at 8:35 pm

@internet taxer, I understand your 'people in glass houses shouldn't throw stones' viewpoint. A failure to pay Internet sales tax does not necessarily invalidate one's claims, however. If it did, then we could also invalidate any claims made by businesses who employ illegal aliens. Maybe it is just me, but I don't see the logical connection. That is not meant to endorse non-payment of Internet sales taxes, though.

Excessive state and local taxation and fees just make it that much harder for struggling retailers to stay in business. This is particularly true for local taxes and fees, as Palo Alto stores are competing against other nearby businesses, not just Internet storefronts. Brick and mortar stores can counter the Internet pricing to some extent with excellent customer service. That tactic will not work if it is matched by the local competition.

I also question the "People come into stores, try on shoes, and then buy them online at a discount" claim in the article. They did the math and have numbers to back up this claim? I have heard other store owners say the same thing after some customers looked at items and then left without making a purchase. So everyone who looks at merchandise and does not make a purchase turns around and buys it online? If not, then what is the percentage of people who do turn around and buy said merchandise online? If nobody knows for sure, then what we have is guesswork by the retailers.

@John, there is no guarantee we will be able to avoid excessive taxation. Hopefully we will, both online and when purchasing from Palo Alto stores. That is up to government officials and ultimately up to their handlers (i.e. us). If our elected officials get out of line, we need to participate, crack the whip and bring them to heel. The playing field should be leveled.

If customers are responsible for paying Internet sales tax, they, not the shopkeeper, should also be responsible for paying sales tax for in-store purchases. Better yet, just eliminate the sales tax to encourage sales.


Posted by Internet shopper, a resident of Barron Park
on Jul 11, 2011 at 12:38 am

Internet taxer says:

"I treat you the way you deserve to be, going online as if you know something about the subject. Pontificating on SP structure and maintaining a fair profit, as if you know something about it."

No, you treat me the way you do because you have a self-satisfied air of being "right" and "knowing it all". You have no respect for others or their opinions. You live in your own little world of "I am right". You then feel that this gives you the right to engage in name´calling and the use of derogatory comments aimed at those that dare to question your view of the subject. You are so full of righteous indignation that you have decided how people deserve to be treated. Talk about nerve!!!

"And not brag about turning his back on our great community."
But based on yourpostings you are not part of the Palo Alto community!!!!


Posted by The-Next-Wave-Is-Here, a resident of Another Palo Alto neighborhood
on Jul 11, 2011 at 10:53 am

> Lower the taxes so they can compete.

Sorry .. but the culprit here is high rents, more than sales taxes. Since Jim Baer came to town, a couple of decades ago, there has been a constant push on the rents to the point that some properties were costing $12/sq. ft. a few years ago. There is only so much that a small business can take, and Jim Baer's "take" is more than most of these outfits can handle.

Look at the stores in Downtown that have moved out over the years--almost all of them were retail, with few new retailers replacing them.

The Internet is disruptive. Maybe it's only one little word, but it is one little word with the power to change the way we all do business. Retailers need to wake up and stop thinking that all they have to do is "open their doors and the dollars will just walk in".

As broadband becomes more ubiquitous, we can expect to see even greater changes in how goods and services are made available over the Internet/web. We are just getting started, so it's hard to guess what changes we'll see in just ten years.

The internal combustion engine changed the world starting around 1900. The Internet will do the same this century.


Posted by Concerned Retiree, a resident of Midtown
on Jul 11, 2011 at 11:08 am

Intelligence is accurately defined by one's ability to adapt. Footwear, in Palo Alto and Los Altos, does well and I shop there. Good service, good sales reps and reasonable prices. Lots of shoe shops still thrive. I tried Krohn's several times and found both their selection and their personnel not on a par with the other brick and mortar shoe shops.


Posted by Millie, a resident of Embarcadero Oaks/Leland
on Jul 11, 2011 at 11:09 am

Good article but it's more than internet sales that's destroying our retailers.

Try greedy landlords and ridiculous traffic patterns, especially in and around Town & Country Shopping Center. The traffic backups ON Embarcadero are bad and will only get worse. Within the T&C shopping center, you can't even back out of parking spaces as cars get backed up waiting through multiple lights.

Web sales have nothing to do with the closing of Bistro Elan; that's the greedy landlord problem.


Posted by merrill, a resident of Crescent Park
on Jul 11, 2011 at 12:21 pm

Probably the only way out of the tax issue is a national sales tax on internet sales charged by the seller and remitted to each state. The tax rate would have to arbitrary - say 4% - to apply to the whole country. At last it would get collected.
I only shop internet after trying local stores, myself. I even try to stay away from the big box stores, liking the service from the locals.


Posted by Dorothy, a resident of Menlo Park
on Jul 11, 2011 at 1:03 pm

I'm still an old-fashioned woman, and plan to stay that way. I have never bought anything on-line, and don't intend to start. When I buy anything, I want to see how it feels, see how it fits, see what
appeals about that product over some other. If it doesn't please my esthetics, I look at another store---but not on-line.

I grew up in ranch country, 20 miles from the nearest town. We ordered things from the Sears, Roebuck Catalog, because the little town only had a 5 and 10 Cent store; a small grocery store with only the basics like flour, sugar, lard, salt, baking soda, soda pop, and candy bars....little else; a service station; and a post office. I had my fill of ordering things I couldn't try on, and I'm not going back to buying anything that way ever again.


Posted by Give us a break, a resident of Monroe Park
on Jul 11, 2011 at 2:24 pm

Internet taxer: You do realize that the California use tax is not simply about purchases you make online, but you are required to pay use tax on any purchase you make anywhere, other than the state of California. This means overseas, in another state while on vacation, etc. At present, one percent of individuals in this state report and pay use tax. The primary target of use tax has been businesses, until quite recently, when government became even more desperate for revenue than usual. By all means, if you want to report use tax on your purchases, go right ahead. You will be part of a very small population, and in your case, an extremely self-righteous one.

By the way, our current Treasury secretary of the United States, Tim Geithner, was a tax cheat. Didn't stop him from making rules for others that he doesn't follow himself. Wonder how many California state legislators report all their use taxes?


Posted by Joe, a resident of Another Palo Alto neighborhood
on Jul 11, 2011 at 3:21 pm

> you are required to pay use tax on any purchase you make
> anywhere, other than the state of California

Not exactly true. You have to pay this tax if you bring the item(s) into California. If you want to send them to someone in another State, then the tax is not imposed.

This seems like one of those taxes that should be illegal, since it implies that the State has control of you outside its physical boundaries--which is truly an offensive idea.


Posted by TimH, a resident of Old Palo Alto
on Jul 11, 2011 at 4:13 pm

Talking about sales tax is only a forest-for-the-trees interpretation. Business is definitely about business, and consumers seek best quality for the lowest price. Anyone who is willing to pay more money for the same product out of preference is not a shopper, but someone who is using a shopping as an entertainment pastime. If not for nostalgia, the passage of time would completely erase most businesses from the public's memory.

As the expert states in this article, "People come into stores, try on shoes, and then buy them online at a discount...". Exactly! This obviously works for other commodities as well, with books being one of them. With the right return policy, why not everything else? Even cars and homes are sold this way; of course the buyer will try as many things out in person as possible. The travel industry learned this lesson long ago. With regard to shoes, only a portion of buyers try a new brand and style every time, so they know what they like and want the best price. Smart consumers use all available tools and resources to gain the best price; it is not within a shopper's fiscal or social responsibility to consider merchant profits. People don't have time or tolerance to drive around to get a good deal, and it can be submitted that the age of assisted retail as a preferred shopping method has played itself out. Even the self-checkout (in) stores, while not the Internet, is seeking to pass the assisted checkout very soon at your local grocer.

Independent stores like booksellers once complained about drug stores selling paperbacks and magazines for less, then big bookstores, then multi-discounters (Costco) before they turned on the Internet. The truly interesting discussion is about what will eclipse the Internet marketplace and how, if at all, can social networking play a role? Palo Alto stores have generally lived in a benevolent, slowly crumbling walk-up retail world long past the relevance of "MSRP" level pricing. New "tipping points" exist daily and require new levels of thinking to recognize and respond.


Posted by quality shoe lover, a resident of Old Palo Alto
on Jul 11, 2011 at 4:15 pm

Back to the subject: I am sorry to hear about Krohn's closing. We used to shop there for the tall shoes back in the 1970s - Get There's and High There's. I was looking for the store just last week as I wanted to get a pair or two of quality shoes for my aging, barking dogs and, as hard as I tried, I could not find it. No wonder! Thanks Krohn's for many years in Palo Alto. You will be missed.


Posted by Walter_E_Wallis, a resident of Midtown
on Jul 11, 2011 at 4:19 pm

Walter_E_Wallis is a registered user.

The delivery mode pays all local taxes.


Posted by Amazon-Forever, a resident of Another Palo Alto neighborhood
on Jul 11, 2011 at 4:24 pm

Seems Amazon has raised the ante a bit --

---
Web Link

SAN FRANCISCO -- Amazon.com Inc. wants California voters to decide whether to overturn a new law that forces online retailers to collect sales taxes there.
---


Posted by retailer, a resident of Crescent Park
on Jul 11, 2011 at 9:40 pm

I am a retailer in Palo Alto, so I do have a bias in this story, but in the discussion of online vs. brick and mortar, there are a few things to consider beyond the points already made about price comparisons and tax vs. no tax that I have not seen anyone mention. That is the value that local retailers, especially independent retailers, bring to the community beyond what they are selling, and beyond even the portion of the sales tax which goes back into our local community services, value that you don't see from most online sellers. We hire locally; we tend to use other local services, such as banks, accountants, and attorneys, rather than going out of the area; we make donations to the innumerable local organizations, schools, and non profits that are holding fundraisers; we often volunteer for local business, civic and service organizations, such as Chambers of Commerce, or Rotary, Kiwanis, or Lions. All of these benefit the community we have chosen to live in. To some consumers these intangibles bring no added value, but they still deserve to be part of the buying decision.


Posted by still need the brick-and-mortar, a resident of Greenmeadow
on Jul 11, 2011 at 9:48 pm

Internet businesses to some degree often are freeloading on the local brick-and-mortars. Many people try things on at their local brick-and-mortar, then once they have a fit, go bargain-hunting on the internet. Zappos does include free shipping and free returns, but it's not practical to try on 10 pairs of shoes in various sizes that way. It will be interesting to see whether that manages to equalize out somehow, possibly with internet businesses paying a tax one way or another to redistribute their free-loading to the retailers on which they depend, or whether everyone will just end up wearing poorly fitting apparel.


Posted by Nayeli, a resident of Midtown
on Jul 11, 2011 at 9:59 pm

@ internet taxer:

WOW -- I had never even heard of the "use tax" or "FTB!" So, on top of all of the other RIDICULOUSLY HIGH taxes, fees and tolls in this state, a bunch of tax-happy legislators have decided to tax purchases online from businesses located outside of the state?

I had no idea that California wants people to voluntarily pay taxes on items purchased online where the US Supreme Court said the states have NO RIGHT to collect (see Quill v. North Dakota).

I agree with other shoppers: It is very convenient and much more affordable to shop online MOST OF THE TIME. I can purchase a camera at Amazon.com with FREE SHIPPING (including FREE 2 DAY SHIPPING if you are an Amazon Prime member), Tiger Direct, or free SITE-TO-STORE shipping at Wal-Mart and save more than if I shopped at a local camera shop. It is all about the competition.

Yes, I understand that it hurts the small business owner. However, they are NOT a charity and must evolve with changing demands.

Moreover, it is not advantageous to purchase some things online. I cannot buy shoes...or jeans...or dresses...or other apparel items online. Why? Sizes are difficult to "guess." For jeans, I can walk into one store and be a size 1 or another store and need a size 3 or another store and be a size 5. The same can be said of shoes. So, it is a risk to purchase clothing online UNLESS I can take them to a local store for an exchange.

I told my husband that a good way for small local businesses to "adapt" would be to form a "co-op" shopping experience that would rival big sellers (like Wal-Mart or Target). If an eclectic group of sellers got together in one location (or under one roof), they could offer a diverse range of products that could compete with those big stores. They may not be able to compete with prices, but they could compete with diversity of product, superior quality and availability.

However, small businesses need to evolve with the changing market.


Posted by The-Next-Wave-Is-Here, a resident of Another Palo Alto neighborhood
on Jul 12, 2011 at 5:58 am

> That is the value that local retailers, especially independent
> retailers, bring to the community beyond what they are selling,
> and beyond even the portion of the sales tax which goes back
> into our local community services, value that you don't see
> from most online sellers.

> We hire locally;

Well, within an hour's commute. This becomes a double-edged sword, in that over time local retailers have trouble hiring people who live close to work, so they begin to agitate for government-provided "affordable housing" for their employees--shifting their business costs onto the local taxpayers.

> we tend to use other local services, such as banks,
> accountants, and attorneys,
> rather than going out of the area;

This may, or may not, be true. It stands to reason that a good business person will tend to use the services he/she needs, wherever those services can be found. However, these are typically B2B services, and don't directly affect your consumers. These local services, do however, reflect the local "cost of doing business", and may have a direct impact on the cost of goods/services you must charge your customers.

> we make donations to the innumerable local organizations,
> schools, and non profits that are holding fundraisers;

Marvelous! And in addition to the already high cost of goods/services, we now have to deal with the fact that the business owner is passing along his "contributions" to local "charities" as higher costs to the customer--and wanting to take credit for his "good act" at the same time. Just how stupid, Mr. Retailer, do you think your customers really are?

> we often volunteer for local business, civic and service
> organizations, such as Chambers of Commerce, or Rotary,
> Kiwanis, or Lions.

These organizations are generally open more to business owners, than not. Moreover, these organizations actually do very little for the "community", while providing their members opportunities to "network". Volunteering at any events sponsored by these organizations benefits you, Mr. Retailer, more than anyone else.

> All of these benefit the community we have chosen to live in

Yes, a few dollars sometimes drift into the "community", but by-and-large, these organizations benefit their members more than the "community".

> To some consumers these intangibles bring no added value,
> but they still deserve to be part of the buying decision.

You're right about this. However, customers also have a right to buy the items they want at the price they want to pay.

Local businesses also create problems. They generate trash for the landfill, and they generate traffic that requires hiring a lot of people on the public's dime to monitor, and mitigate, if possible. Most retailers are either oblivious to, or believe themselves justified in creating, the problems they bring to a community. Most hide behind incorporation, so that their owners are not personally liable for any problems they create.

Before we get carried away by this "retailer's" romanticism, we need to remind ourselves that all businesses are in business for one thing--to make money. Any business that loses sight of that goal soon ceases to be a business--and becomes history. Business owners that don't focus on their bottom lines daily, are not long for this world. The rise of Internet retailing will help to cull the herd of any number of badly run businesses which have been "holding on", rather than thriving. To that end, the customer will benefit from purchasing from outlets that are effectively operated, offering the highest quality good for the lowest prices--which really is all that intelligent people should be concerned about when they engage in transactions with retailers.

This "retailer" has managed to provide us with some interesting "spin"--but when his words are deconstructed, it's clear that his claims ultimately benefit himself more than his customers.


Posted by T, a resident of Old Palo Alto
on Jul 12, 2011 at 11:35 am

shouldn't it be "soul" not "sole"


Posted by Palo Parent, a resident of Greenmeadow
on Jul 12, 2011 at 11:53 am

T: It's a pun, read the story first.


Posted by Internet User, a resident of Professorville
on Jul 12, 2011 at 2:33 pm

"Many people try things on at their local brick-and-mortar, then once they have a fit, go bargain-hunting on the internet."

Does anyone have numbers to back that up?


Posted by Mike, a resident of Crescent Park
on Jul 12, 2011 at 4:50 pm

Regarding our laws and the need to enforce them-when residing in the US are also required to have a valid visa if you are not a US citizen. But that law is not only unenforced here in Ca and much of the rest of the US, there is moral outrage from the left whenever it is or its enforcement is even discussed. I imagine a lot of the people posting on this topic who are outraged at not paying tax on internet purchases fall into this group.

Perhaps the unwillingness to pay online sales taxes comes from the same spirit that manifests itself by fighting a law that you do not believe just.


Posted by Toady, a resident of Old Palo Alto
on Jul 12, 2011 at 9:44 pm

This is the same as all the local retailers complaining about category killer stores like Walmart and Home Depot.

The key is providing added value beyond what those stores (or the internet) can provide. Best in class service? Easy returns? Focus on things that people want to touch/try before buying?

Otherwise it's just people stuck in the old ways and not evolving with the times. This is Silicon Valley. We don't buy Osborne computers anymore.


Posted by Desident, a resident of Crescent Park
on Jul 13, 2011 at 10:38 am

Let's make PA a use tax "sanctuary city."

I'm an undocumented user, not a use tax cheat.


Posted by jb, a resident of Leland Manor/Garland Drive
on Jul 13, 2011 at 11:49 am

I HATE the "E-e-e-v'ry body's doin' it, doin' it, doin' it" response that proponents of the all-electronic lifestyle advocate! Just because you hate to be pulled away from Facebook to buy new underwear, doesn't mean you represent anyone else in that abdication of self-care.

The last time I was in my favorite shoe store, the salesman vented to my, "How are you today?" "All these women just want to come in a try on shoes! No one wants to buy."

Of course. They are all going back to Zappos to order once they know their sizes. Well, once the stores are gone, the online shoppers will have to put up with ordering bracketing pairs of shoes and returning the ones that don't fit. Otherwise, return and try another pair. Some stores that carry very expensive merchandise are instituting a $50 try-on fee that the shopper can apply to the price of any purchase.

I am surprised that in this fast, fast, fast world of want and get, customers don't realize that the fastest service is the one you turned down when you walked out without buying.

But how silly of me! I forgot, the calls of the Shopperae americanae sound thus: cheep, cheep, cheap, cheap, cheap.


Posted by Nayeli, a resident of Midtown
on Jul 13, 2011 at 1:01 pm

@ jb:

When I was 12 years old, I lived in Michigan performing migrant farm work. It was a difficult time, but our family pulled together and did our best because we realized that our efforts were for the long term benefit of our family.

During that time, some local children made of me because my dad purchased many of our belongings from K-Mart (when we were blessed enough to have extra money).

I complained to my dad about being teased. My dad told me something that, when translated into English, went like this: "Anyone who doesn't want to save money when they can is an idiot."

People should not be worried about offending local businesses simply because they are trying to save money. Local businesses are NOT charities. While it is nice to have some local options, it isn't a necessity. If I can buy a WiFi printer online for $79, pay no CA sales tax and have it shipped right to my door, then why should I spend $149 in Palo Alto, plus the cost of taxes and gas money?

Like I said, there are some items that aren't as practical to purchase online. Clothing or shoes that typically needs to be sized (or seen in a mirror) will probably continue to be purchased through physical stores. However, many other things are much more economically viable to purchase online.

BTW, you can make returns with Amazon quite easily. I ordered an item that was somewhat defective. I immediately called Amazon's customer service. They sent me a replacement and I received it the very next day!

Again, this is not an "all-electronic" lifestyle. It is about cost effective way of taking care of the needs of your family. Remember: Sales taxes and gasoline cost affects lower income families more than others. Believe it or not, there are quite a few low-to-middle class families living in Palo Alto.


Posted by Anon, a resident of Another Palo Alto neighborhood
on Jul 13, 2011 at 10:19 pm

taxes writes:

"Raise your hand - who would be in favor of cutting local sales taxes in half and charging the same sales tax rate on internet sales?"

I'll see you, and lower it. Let's abolish regressive sales taxes altogether. It will help local businesses like Krohn's (where I have sometimes shopped), and, be better for employment and the economy all-around by removing retail-store-job-killing sales taxes.

Replace the lost sales tax revenue with a revenue-neutral increase in property tax and income tax. Back when I was young, property taxes were the way to go-- that still works for me, although I prefer a split between income and property tax. Abolish sales taxes.


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