By Ric ChapmanScene & HeardLike the reports of Mark Twain’s demise it might be argued that the death of the Bermuda retail sector has also been ‘greatly exaggerated’.Certainly the recent figures from the Department of Statistics showing a month-on-month decline in retail sales volume would suggest the patient is sick, but the disease doesn’t appear to be fatal as of yet.Which isn’t to say that it could not become so. And the symptoms of the sickness — tourism shortfall, job losses, exorbitant rents, a dwindling expatriate population, and the global recession — have all been pointed to as the main cause.However, a rarely mentioned element of the worsening health of the retail sector is e-commerce and the impact it might be having on the Island’s businesses. Difficult to pin down because of a lack of accurate figures regarding duty, we still know that major retailers such as AS Cooper & Sons, Gibbons Group, and Calypso Group have experienced a 30 percent decline in total business since 2008.Couple that with a worldwide increase in internet shopping, where countries such as Australia have seen a 44 percent rise in buying online, which equates to some AS$6billion of spending a year and 5.5 percent of overall consumer spending, and it’s not hard to see what impact it might have.While the strength of the exchange rate between the Australian and US dollar during the past two years has contributed to these numbers, research from PricewaterhouseCoopers has suggested that Antipodean consumers were attracted to online shopping because the prices were lower, it was convenient and there was access to a wider range of products.This last reason is something that rings true with Bermuda’s retailers, who aren’t entirely convinced that the internet is the thing cracking the foundations of their bricks and mortar operations.“Our figures show that 90 percent of all items brought in through us are items you cannot buy in Bermuda,” said Steve Thompson, who owns courier service Mailboxes. “So there must be other factors affecting the retail downturn. And I say the largest part of that is the exodus of expatriates from Bermuda.“That’s the real issue we need to address, because that is the segment of our society that really spends a lot of money.”Somers Cooper, managing director of AS Cooper & Sons, offered some sobering thoughts on this too. “It is impossible to tell exactly how internet shopping is affecting ‘bricks and mortar’ retailers in Bermuda as there are no stats on duty collected via courier services related to personal purchases versus commercial imports,” he said.“We do have government stats which show that the core group of major retailers here have seen a 30 percent decline in total business since 2008. A lot of that is recession driven but internet shopping must have had an effect as it has become so accessible and prevalent.”Eventually Mr Thompson believes that the internet will have a damaging effect on his Mailboxes business, but only as a by-product of the change in duty rates that rose some import costs by up to 400 percent, with a flat 25 percent rate charge.“I know that until April 1 this year consumers in Bermuda were using us [Mailboxes] to buy small items in the US — but even that is drying up now,” said Mr Thompson. “With the rate it’s falling, my type of business will not be here in a few years.“I have seen a 30 percent decrease in business already, taxing us to save the retailers here has not worked.”According to Mr Cooper though things could be far worse, and he pointed to Government’s payroll tax relief for retailers as a policy that had saved the jobs of 100 staff in his shops alone. Still able to exist, while not making a profit, Mr Cooper said his company was still pumping millions of dollars into the Bermuda economy, an outcome he believes Government intended.Perhaps then it’s not so much the rise of internet shopping that is the problem here, but retail prices and the lack of a point-of-sale tax. It could be argued that heavy import duties, and taxes imposed at the dock for the retail owners, have resulted in higher prices for consumers.Why not streamline it by getting rid of that, and impose point-of-sale taxes instead?Stuart Joblin, owner of Makin Waves, favours a GST-style tax and said prices would be lower in store if retailers paid taxes on items they sell here and not every item they bring into Bermuda. Mr Thompson argued that making this move would lower prices and stimulate growth without hurting Government coffers.So, is GST a cure, a short-term solution, or merely a Band Aid?Changing the tax system might not go down well politically, and is unlikely to stem the growth of internet shopping, but with a retail sector in ill-health, it might be the shot-in-the arm that businesses on the Island need right now.As for the death of the sector, just look at the post office. Years after e-mail was supposed to kill the letter demand for parcel services has never been higher, but then they do deliver the goods you buy online.