Political Factors That Affect Department Stores

Written by micah mcdunnigan
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Political Factors That Affect Department Stores
Clothing is standard department store fare. (Photos.com/Photos.com/Getty Images)

Department stores are a fixture of the American consumer market. While often associated with clothing stores that have small sections for housewares or home appliances, they are technically any store with multiple departments for different goods. The nature of the goods department stores sell, and the work force they employ, make them sensitive to a number of political factors.

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Minimum Wage

Department stores offer many new entrants to the workforce a first job. Department stores primarily need sales people to help customers find items, and try to sell customers on additional merchandise. They also require customer service representatives to handle returns and exchanges, and cashiers to help customers pay for the items they want to buy. These jobs, which make up the bulk of a store's staff, frequently start off at the minimum wage. Consequently, the politics and resultant policy decisions surrounding the minimum wage determine the minimum amount department stores will spend on payroll. Even companies that pride themselves on paying their employees more than the minimum wage still use it as a reference point; increases in the minimum wage put pressure on that company to increase their compensation accordingly.

Trade Policies

It is rare to see an item in a department store that is made entirely of materials produced in the United States, and entirely assembled in the United States. Consequently, the prices of most products, be they vacuum cleaners or dress shirts, are subject to the current trade policies of the country in which the store is based. Any governmental trade barriers, such as tariffs, on the items a store stocks, or any of the materials that constitute the product, will increase the base price of the item. By extension, this means that stores will have to either raise the price they sell the item for or accept cuts in their profit margins.

Certification Requirements

Department stores receive bulk shipments of goods from their suppliers, and store large amounts of inventory that is not currently on the store's sales floor. Moving large palettes of goods around and accessing shelving units requires the use of a variety of different equipment, some of which can cause severe injury or death. For this reason, government agencies that protect workers' rights establish safety standards for warehouse environments and licensing requirements for operating heavy machinery. The regulations and requirements of this nature that are in force at any given time establish the minimum amount of money department stores must spend on compliance.

Taxes

As the old saying goes, there are only two guaranteed things in life: death and taxes. The current politics that surround setting tax rates affect a department store's business volume and bottom line. The higher the sales tax that local or state governments have in effect at any given time, the more expensive it is for customers to go shopping, and the less inclined people may be to shop. This will ultimately affect how many purchases customers make at the store. The taxation rates the local, state, and federal levels of government establish for businesses determine the bottom line, which is how much the department store itself has to pay in taxes.

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