November 3, 2020

US retailers and a new president

Foot Locker store boarded up (photo: Yau Ming
Yau Ming
A new type of boardwalk: US retailers have had to protect their shops again, but this time not from a hurricane
As US voters continue to flock in record numbers to the polling stations, retailers are taking no chance, and many are boarding up their shops. After the recent race riots, they clearly fear another round of plundering and looting. Donald Trump has divided the nation more than any other president since the civil rights movement in the 1960's.

Regrettably, the cumbersome inauguration process in America means that disaffected citizens and frustrated politicians will have numerous chances to vent their displeasure up to January 20. Small wonder, then, that trade bodies FMI and NGA, retail multiples such as Walmart, Target, Aldi or Lidl USA, and even Trump's favorite whipping boy, Amazon, declined to comment on the current election.

They also know that their own members, staff and customers are as polarized as the country itself.

Given this understandable reticence, we asked industry experts Michael Sansolo and Jon Springer to take the pulse of US retail and how the trade will probably vote today.


"Retailers just want
less uncertainty!"


Gentlemen, whoever wins this presidential election, civil unrest is feared in various U.S. hotspots over the coming weeks. How are retailers protecting their shops?

Jon Springer*:
Here in the States we've seen stores and building managers in cities, where protests have been intense, board up windows to avoid any damage. 

Michael Sansolo**: I can only speak for what I see in the greater Washington, D.C. area, which is never indicative of the rest of the country. Retailers in many of the highly visible parts of town (near the White House and the upscale Georgetown area) are boarding up stores already. I've not seen this in the suburbs, but apparently similar things are taking place in many major cities including Philadelphia.

What are retailers likely to demand from a new government, regardless of who wins?

Springer: Covid has brought liability relief to the forefront. Businesses are very concerned about being made liable for damage from infections and want federal protection.

Other big federal issues include wages and labor; the protection of federal food benefits (the industry opposes moves by Trump to replace or augment such benefits – where local stores gain from subsidized food shoppers – to a system that would send food directly to shoppers); and the reform of the payment swipe fees which make the processing of credit card purchases more expensive.

Michael Sansolo at his favourite Wegmans store (photo: selfie)
Michael Sansolo
Michael Sansolo: "Traditionally retailers want little from the government"
Sansolo: Retailers traditionally want very little from the government beyond less interference and lower taxes. However, these aren't normal times. Right now, many are looking for the government to do anything possible to get Covid under control.

In addition, many would like to see more focus on Amazon to ensure the company is playing by the usual rules in terms of taxation at all levels. The main trade associations – FMI, NGA and such – always have a fairly simple agenda of pushing for fair competitive conditions and reduced taxes, especially those impacting family-owned businesses.

How much stricter would Joe Biden be on customers wearing masks than Donald Trump currently is?

Jon Springer, Executive Editor, Winsight Grocery Business (photo: Winsight)
Jon Springer
Jon Springer: "U.S. food retail is on a long march toward more price competitiveness"
Springer: Almost any other elected leader in the United States would likely be more stringent and effective than Trump. Biden has said he would support a national mask mandate. Trump has acknowledged masks at times but also strongly undermined them. He is likely worried that it would be perceived as a signal of weakness.

He's also casting the blame for confusion over the issue on federal agencies like the CDC (Centers for Disease Control and Prevention), which moved slowly to make recommendations. That was in part because they wanted to avoid a run on masks needed most for healthcare workers. I also believe that, at first, it didn't want the perception to get out there that mask-wearing was a kind of foolproof cure.

That kind of nuance is well beyond the president's interest or capability to express, it would seem. Many of these mask issues however are local and not national.

Sansolo: Well, anything would be more, to be honest. Biden has made the virus central to his campaign, so we have to imagine that he'd call for a national mask mandate immediately. Many retailers would probably prefer this so that their stores and employees cease to be the enforcement mechanism. 

How much more likely are lockdowns under Biden than with Trump?

Springer: It's hard to say, and it probably would depend on the situation/severity. As with masks, Trump has undermined these efforts for their perception and disguised this as support for things that might make him look better (as a champion of liberty, for example) and as an excuse for the economic issues the virus has unfortunately caused.

Any federal effort needs local support to execute this as well.

Sansolo: This gets tricky, as throughout 2020 Trump has ceded lockdown power to the individual States. It's likely that Biden would push for some kind of national lockdown to try to get control of Covid in one shot.

Many of the rural States have resisted the call to mandate masks and lockdowns, and they are doing badly right now.

By how much would Biden increase corporate taxation?

Springer: Biden would likely need House and Senate support to pass big tax reforms. Food retailers were thrilled with the Tax Cuts and Jobs Act passed under Trump, which cut corporate tax rate from 35 to 21 percent; Biden has proposed 28 percent.  But there are lots of other factors in the tax package which would take too long to explain here.

Sansolo: Yes, Trump cut the corporate rate substantially, and it's likely Biden would raise it a few percentage points to help pay for his programs.

Through the last decade, there seems to be a growing recognition that U.S. corporate tax rates were too high compared to the rest of the world. This has made American companies uncompetitive and has led to more jobs and companies moving offshore.

The Democrats are more likely to develop social programs than the Republicans. But the taxpayer usually has to pay for them. By how much would a Biden victory increase income tax in the middle- and higher income brackets, thus decreasing consumer spending power?

Springer: Biden has proposed not to cut taxes for those making less than $400,000 but the devil is in the detail. There are some things he would propose that could affect tax bills for those below that range, but to an extent it may come out in the wash. I don't believe the tax situation on the middle class would be significant enough a strain – on its own – to trigger big consumer behavior shifts and big changes on retailers.

That said, the U.S. is on a long march toward more price competitiveness in food retail, which will be emphasized in the difficult economic times we can expect here for the near term.

Sansolo: It is certainly true that Biden has pledged to roll back the tax cuts pushed through by Trump, as those seemed to benefit the very rich most. If taxes remain stable for the middle and lower classes, and the economy has a post-Covid rebound, then the biggest impact on supermarkets will be when people return to eating at restaurants. Otherwise, the tax situation should not create much of an impact.

One small item of note: Apparently, some of the Trump tax cuts were scheduled to expire in 2021, no matter who wins. If Trump wins, I imagine he'll push to make those permanent, while Biden will simply let them die. If they aren't renewed it will cause a tax increase for many Americans.

Any other comments on the possible outcome for retailers? 

Sansolo: Retailers, like all of us, just want less uncertainty. I've heard from retailers of late that they just want the election to end with a clear outcome which is quickly accepted.

While elections always have consequences for individuals, businesses and nations, uncertainty seems to be the least desired outcome. I would imagine that the worst consequence of Tuesday would be if a large portion of the population sees the outcome as fraudulent, leading to protests or worse and more uncertainty.

Meanwhile, everyone just wants to the virus to go away. The big fear beyond the election is that Covid numbers are rising everywhere in the U.S. and globally, which raises the possibility of enormous problems through the coming winter. 

Springer: As a general statement, the food retail industry is watching politics particularly closely at the moment because the composition of the House and Senate as well as the presidency are on the line this week.

Usually, the industry is reluctant to take a public stance supporting candidates or parties over another. Instead, they pivot to frame their issues based on the winners.

It would seem that, in general, food retailers support market-based solutions, fewer business regulations, and costs wherever possible. Also, one should not forget that many of the political issues U.S. retailers face day-to-day are local in nature.

*Jon Springer is executive editor of Winsight Grocery Business in Chicago; **Michael Sansolo is a retail industry consultant based in Washington, D.C.

Lebensmittel Zeitung with digital sister (photo: LZ)
Our German retail B2B newspaper, Lebensmittel Zeitung, in print & digital
Read in German: 'US-Wahl macht Händler nervös' by international editor Mike Dawson on Lebensmittel Zeitung's website (paywall)

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