Morning Brew - ☕ Retax? Don’t do it

Should secondhand products be taxed?
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May 14, 2024

Retail Brew

T-Mobile for Business

It’s Tuesday, and consumers are reportedly buying more chicken wings as they trade down from higher-priced beef. Great news for poultry companies, bad news for chickens, and good news for cows, making good on Chick-fil-A’s longtime slogan: “Eat mor chikin.”

In today’s edition:

—Andrew Adam Newman, Alex Vuocolo, Alyssa Meyers

E-COMMERCE

SHT happens

An ad by Ikea Canada that highlights that it is protesting the secondhand tax (SHT), which is how they characterize the fact that the used items retailers like them sell are not exempt from sales tax but rather are taxed when new and resold. In a recent promotion, it offset Canada's combined federal and provincial sales tax (known as harmonized sales tax, or HST), by reducing the sales price by the same rate. An ad by Ikea Canada highlights that it is protesting the secondhand tax (SHT). Ikea Canada

We’re not going to take this SHT anymore.

That’s been the sentiment recently from Ikea Canada, which has taken a stand against what it calls SHT, for “secondhand tax,” demonstrating the same adroitness for skirting censors as their fellow Canadians who brought us Schitt’s Creek.

“We want our federal and provincial governments to consider eliminating the tax from secondhand items, Canada-wide,” Ikea Canada stated in a March 22 Change.org petition aiming to end what they called the “double tax” on used items. “And if they say yes, we don’t have to do SHT.”

The petition had received 32,480 signatures toward its goal of 35,000 at the time of this article’s publication.

Note there is no dedicated “secondhand tax” per se, but Ikea Canada and its allies argue that the sales tax should not be applied to used items.

To mark the beginning of Earth Month, from April 2–11, Ikea stores throughout Ontario discounted items for its loyalty program members in its “As-is” marketplace, which includes used items, by 13%, the same percentage as the sales tax. (To fully appreciate Ikea Canada’s wordplay, the country’s combined federal and provincial sales tax, which is 13% in Ontario, is commonly called HST, for harmonized sales tax.)

Keep reading here.—AAN

   

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STORES

Creatures of habit

King of Prussia Mall Mark Makela/Getty Images

The Retail Monitor, a monthly survey from CNBC and the National Retail Federation (NRF), found that sales ticked up 0.26% from March to April. NRF CEO Matthew Shay attributed the modest increase to “a growing job market and real gains in wages,” but qualified that “consumers remain focused on value and price and are shifting their spending patterns where needed to make ends meet.”

This trend is playing out online as well: The latest data from Adobe Analytics found that online spending remained resilient between January and April, rising 7% year over year on the back of “stable spend in discretionary categories,” the research firm said in a press release last week, while also noting that consumers are trading down to the cheapest goods across several categories.

In a Q1 earnings call released May 11, Shopify CFO Jeff Hoffmeister echoed that the company sees “consumer spend in North America remaining resilient, but we have factored in headwinds related to FX from the strong US dollar and some softness in European consumer spending in our Q2 outlook.”

In summary, consumers are changing up their spending patterns, but how they’re doing so is arguably the more relevant question for retailers.

Keep reading here.—AV

   

MARKETING

Core strength

Katie Ledecky drinking Core Power Core Power

Core Power is diving into the deep end with its Paris 2024 marketing campaign: The protein-shake brand signed seven-time Olympic gold medalist Katie Ledecky to a multi-year deal that kicked off in mid-April.

Core Power has been the official protein drink of Team USA for almost a decade, but the campaign with Ledecky represents the brand’s “largest Olympics investment to date,” according to Erica Rosskamm, VP of brand marketing at Core Power parent company Fairlife.

Keep reading here on Marketing Brew.—AM

   

TOGETHER WITH THE TRADE DESK

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SWAPPING SKUS

Today’s top retail reads.

Laid off: Walmart will lay off hundreds of corporate employees and ask some staff members to relocate. (Yahoo Finance)

Denied: The National Retail Federation has denied a membership request from Chinese fast fashion brand Shein, which is trying to win over US lawmakers. (CNBC)

Get your hot dogs: Kraft Heinz is reportedly tapping Bank of America to gauge interest in a potential sale of hot dog and cold cut-maker Oscar Mayer. (the Wall Street Journal)

Retail reliable 5G networks: Give your network an upgrade with T-Mobile for Business. With T-Mobile’s nationwide 5G supporting your locations, you can optimize your operations and omnichannel experience simultaneously with purpose-built retail solutions.*

*A message from our sponsor.

JOBS

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