Retail Trends.

• Author: Olson, Adam

Is Retail Ailing?

Department stores are banking, grocery chains are gassing up, malls are at war, and e-commerce has cities shaking in their boots.

The retail industry in Utah isn't smooth sailing by any stretch of the imagination. And it's far from boring.

In retailing, the first fight is to survive. Darwinian theory holds true in Utah's survival of the fittest marketplace, whether referring to national chains wrestling for a share of the market or mom-and-pop stores scratching to find a niche. The recent surge in e-commerce, or "e-tailing," has only added to the ferociousness of the fight.

THE REAL FIGHT

But the real story in Utah right now goes beyond the first stop of the consumer's dollar in the Nordstrom or Smith's cash register, but rather to its second stop -- city sales tax coffers.

Utah's laws are currently structured so that a city's three sources of revenue are sales tax, property tax and fees. And according to Sandy Mayor Tom Dolan, also president of the Utah League of Cities and Towns, Utah cities depend heavily on sales tax.

"Our property taxes are limited in Utah," because education relies on them, Dolan says. "Municipal fees are capped by state law, so there's not much wiggle room there. Sales tax is our growth tax. We depend on it to provide basic services like police and fire."

On average, Utah cities receive 51 percent of their income from sales tax, since they get to keep about 50 percent of the state's 6.25 percent sales tax.

In fact, sales tax is at the heart of much of what is happening in Utah retailing. Not only is every retailer fighting for survival, but also every city. The winner? The city that gets the malls, car dealerships, top retailers and destination shopping centers.

MALL WARS

One of the most recent examples of the "fight for sales tax" phenomenon is also one of the most visible: the Grand Mall of Salt Lake, otherwise known as the Megamall or Rocky's Mall. Whatever its name, it will be a pot of sales tax gold. The roughly 100-acre, destination mall that developers expect will draw shoppers from surrounding states is a prize that could bring an estimated $1.1 million in sales tax after five years.

Since Salt Lake Mayor Rocky Anderson almost single handedly turned the mall away from that city, West Valley City has been beating down the door of mall developer George Riemer.

But Riemer says West Valley isn't the only city interested in landing the big one. Few Utah cities wouldn't want to at least sniff at...