By Bertrand Courtois Suffit, Chair of the ICSC European Public Affairs Committee
Without physical stores, would retailers sell so much on-line? And what will the move to purchase on-line mean for employment across Europe? These issues are being debated heatedly across the region as shopping centre asset managers and retailers see the traditional shop format being eroded by on-line sales.
Over the last three years, the ICSC European Public Affairs Committee, which I chair, has been making the case for the shopping centre industry at the heart of the European Union, and we have had success in ensuring that the European Parliament understands our industry and the unique role the industry plays. Now we are calling for the European Commission to fully recognise and harness the huge contribution the sector makes to the region’s economy as it develops its future strategy for retail focusing on job creation, reducing the regulatory burden and promoting competitiveness across the EU Retail Sector.
A study published by ICSC back in 2008 highlighted, for the first time in the industry’s history, the true extent of shopping centres’ contribution to the wider European economy. At that time nearly a quarter of retail sales in Europe were estimated to occur in shopping centres. The study also found that shopping centres directly employed 4 million workers across Europe – equivalent to a fifth of retail employment.
Since then on-line sales have soared and the EU is keen to encourage e-commerce and on-line business with their huge potential for cross border trading. However, it’s not just the shopping centre industry which is debating this approach, member countries are less willing to promote harmonisation if it means consumers/citizens losing their national systems and rights.
This summer, the European Parliament’s Working Group on e-commerce set out its policy recommendations, highlighting existing barriers to e-commerce such as unequal tax and consumer protection regulations which need to be overcome. The report, prepared by Members of the European Parliament (MEPs) recognises that traders operating cross-border can face up to 27 different sets of rules which can discourage them from offering their goods and services in other countries. To combat this, MEPs have called for the establishment of a special regime for e-commerce in the internal market and are pushing for a Single E-Commerce Act alongside the new Single Market Act that aims to help the internal market function better.
As members of ICSC’s European Public Affairs Committee, we welcome efforts to promote retail in all its forms as a key driver of recovery and growth in Europe, but we strongly believe that the potential of such a regime needs to be properly assessed and ICSC members want to ensure that the promotion of on-line trade does not damage employment, businesses or consumer protection in the broader retail sector.
Our industry has a responsibility too, of course. We must make sure that shopping centres embrace technological evolution where it delivers benefits for consumers in terms of new and cost effective ways of retailing. Harmonising technology with retail outlets that offer physical experience of the product is what shoppers want most.
The challenge for the European Parliament is to ensure fairness between both physical retail and on-line retailing, particularly considering the importance of the retail sector to employment.
E-commerce can certainly be an opportunity for shopping centres, but there needs to be more fairness in the treatment of physical versus on-line stores, the latter of which are often exempt from some sales taxes and don’t have property taxes or the costs of maintenance and other expensive property upkeep. On-line stores can charge lower prices but shoppers often use the physical stores to view the goods first, creating a free rider problem.
Some shopping centres are embracing the opportunities by offering an on-line environment of ‘virtual malls’ to create higher sales and footfall, but their physical presence remains and so do the costs.
ICSC will be looking at what regulatory framework is required to boost this market without hindering the competitiveness of existing retail shops. A new strategy is being called for, but to what extent should rules differ between both retail systems? ISCS will be engaging with the key EU policy makers over the coming months, working with retailers to ensure that the voice of the shopping centre industry is heard in the debate and that a future EU Retail Strategy brings positive benefits across the retail sector.
As always, simple solutions must be found as the rules of the game are changing at ever increasing speed and flexibility must be allied to fairness.