Newsletter January 19, 2023

IN THIS ISSUE

The Voice of Retail is alive and well in NYC

POLICY

ON THE LOCAL FRONT

Hollingsworth announces run in Seattle’s 3rd Council District as Lewis launches his reelection campaign in the 7th

POLITICAL NEWS

Will the ‘Fair Tax’ be given consideration?

ECONOMY

2022 Holiday Sales Grew 5.3% to $936.3 Billion

RETAIL THEFT & PUBLIC SAFETY

Now that the INFORM act has passed, what’s next?

TRENDS

Google Cloud introduces shelf inventory AI tool for retailers

SAFETY

Safety for all is everyone’s responsibility

The Voice of Retail is alive and well in NYC

Renée Sunde, WR President & CEO

The NRF Retail Big Show is back in person in NY, and I’ve had the pleasure to join over 35,000 retail leaders and innovators who gathered at the Javits Center this week. Throughout my career, I have always had a strong connection to retail. Yet, each time I experience the “Big Show,” I’m reminded of the scope and reach of the industry not only as a significant job creator but as a driver of innovation. The industry continues to meet the changing physical and digital demands of today’s consumers and serves on the frontlines of our communities.

Sunday evening, I joined several NRF partners and colleagues from State Retail Associations across the country who came together to support the amazing work of the NRF Foundation at their Honors Gala. As WR expands our focus to address the demands facing Washington State’s retail workforce, I was inspired by the incredible success stories of people of all backgrounds who found opportunities in an industry that is a great place to start and grow a career.

Especially inspiring was the story of Marvin Ellison, Chairman and CEO of Lowe’s Companies Inc., who received The Visionary award for his stewardship to drive positive change within the retail industry and leadership in transforming Lowe’s into a world-class, omnichannel retailer. Marvin’s professional and civic leadership has earned him many accolades. Marvin and his wife, Sharyn, are committed to being of service within their faith and community, primarily through the support of organizations that promote higher education, self-empowerment, and excellence for minority youth.

Joining WR Board member Meredith Perloh and the leadership team at Lowe’s, I had the pleasure of attending an Anti-Theft Technology dinner for private networking and further discussing the important topic. The diverse group of leaders ranged from technology, manufacturing, retail, and government for a discussion moderated by Loss Prevention Research Council. We took away new approaches that utilize technology to curb organized retail crime and expanded our connections with subject matter experts dedicated to the issues of public safety and retail crime.

A special thanks to Macy’s Charles Miller and Opio Dupree, WR Board member who led an informative tour of Macy’s Herald Square, the flagship of Macy’s department store, as well as the Macy’s, Inc. corporate headquarters, in Manhattan, New York City. The building’s 2.5 million square feet, which includes 1.25 million square feet of retail space, makes it the largest department store in the United States and among the largest in the world. Their team offered a behind-the-scenes look into the operations, technology, and logistics that make a world-class store like Macy’s, a leader in department stores.

In addition to an impressive line-up of featured sessions, including retail leaders such as Nordstroms, Pete Nordstrom, Macy’s CEO Jeff Gennette, and Walmart’s John Furner, innovation and the future of retail have been on full display. A hologram of NRF President and CEO Matt Shay greeted Expo attendees to the Innovation Lab. The lab featured the latest technologies transforming the retail industry. From artificial intelligence, augmented reality, machine learning, robotics, and the latest in Web 3, retailers are looking forward to creating new efficiencies while leading in the technology space.

Photo: Pete Nordstrom, President and Chief Brand Officer, Nordstroms, and Domenico De Sole, Chairman, Tom Ford International

Legislative Update

Today marks the 10th day of the 105-day session, and WR is continuing to review bills closely. As of today, 1,320 bills have been filed.

This week, WR is engaging on the following bills:

HB 1363 and SB 5352 will allow vehicle pursuits by law enforcement if there is reasonable suspicion to believe that a person in the vehicle has committed or is committing a crime. WR supports this bill and will testify to its merits. These revised provisions to the current laws will help make the public safer, protect the community, and assist in efforts to apprehend retail thieves and members of organized retail crime syndicates. Both bills are waiting for hearings to be scheduled.

HB 1155 and SB 5351 are purported to protect health data privacy relating to collecting, sharing, and selling consumer health data, which WR supports. However, WR has significant concerns about these bills as currently written because their language—especially as they define covered data—are too broadly written, will likely lead to unintended consequences, and will be difficult to comply with and enforce. Both bills are awaiting hearing dates.

HB 1131 and SB 5154 would enact the Packaging Extended Producer Responsibility—also known as the WRAP Act—and create a beverage container reimbursement (BCR) program. WR appreciates the sponsors’ willingness to work with stakeholders on improving the legislation. In particular, the definition of who is a producer is key to retailers’ interest in the WRAP Act. Under the BCR program, WR supports the voluntary nature of the takeback sites. Both bills were heard yesterday and WR testified with suggested improvements.

HB 1137 and SB 5368. These bipartisan bills provide broader and more equitable access to Return-to-Work programs by injured workers. Options for temporary light-duty jobs would be extended to include volunteering at approved non-profit organizations. WR enthusiastically supports this bill which would benefit the employee, employer, and community non-profits, a triple win. Prime sponsors for HB 1137 are Rep. Gina Mosbrucker (R-14) and Rep. Liz Berry (D-36), and SB 5368 is prime sponsored by Sen. Karen Keiser (D-33) and Sen. Curtis King (R-14). The House bill was heard yesterday and WR testified in support. The Senate version is waiting for a hearing date.

State of US business remains strong as economy weakens

Last week, Suzanne P. Clark, President and CEO of the U.S. Chamber of Commerce, delivered the Chamber’s annual State of American Business address. The presentation streamed live from the Chamber’s Washington DC headquarters.

In her opening remarks, Clark’s message was that the state of business is strong, but the state of the economy is fragile. “Fears about the economy, compounded by doubt in Washington, push businesses to act in a way that turns those concerns into reality.”

Clark was clear about the current state of the U.S. government and its need to set conditions that strengthen businesses. Among the recommendations offered to achieve success included:

Bolster America’s strength by building infrastructure
Pass meaningful permitting reform
Upskill workers
Address worker shortages by fixing the immigration system and securing the border
Improve access to childcare and get parents back into the workforce
Incentivize work and require capable adults drawing government benefits to work
End the bias toward higher education being the only pathway to success by expanding access and financing to training programs that lead to good jobs
Expand American energy production by accelerating permitting for new exploration and production, and finalize a 5-year offshore leasing
Boost trade and deepen strategic partnerships
Address the “explosive growth of third-party litigation
Local and state governments to enact policy changes to help law enforcement and prosecutors to go after criminals and keep our communities and businesses safe

Read Clark’s entire address

Washington Research Council says state should avoid tapping reserves while revenues are growing

By: WRC

A potential recession is a major risk to the state revenue forecast, but Washington’s strong budget sustainability practices—including the budget stabilization account (BSA, or the rainy day fund)—will help the state through a downturn. However, in 2021, despite not facing a revenue shortfall, the Legislature swept the BSA. (Pursuant to the constitution, this required only a simple majority vote because employment growth was expected to be less than 1%.)

Of the BSA funds, $1 billion was transferred to the new Washington rescue plan transition account (WRPTA). Although the stated intent was for the WRPTA to serve as transition funding for programs as federal pandemic relief money ramps down, the state now considers the WRPTA to be a reserve account like the BSA. The credit rating agencies have also recognized the WRPTA as a reserve account. They point to Washington’s healthy reserves—including the WRPTA—as a credit strength for Washington.

WRPTA funds are estimated to make up 71.6% of total reserves in 2021–23 and 61.6% in 2023–25. Although reserves are expected to grow in 2023–25, they would still be well below 2019–21 reserve levels.

Nevertheless, Gov. Inslee has proposed transferring the WRPTA balance to the state general fund and using it to help pay for his 2023–25 spending proposals. Given the state’s low level of traditional reserves and the high economic uncertainty, legislators should not follow suit. Instead, they should continue to treat the WRPTA as a reserve account and avoid using it until such time as revenues actually fall short of expectations.

Read the report here.

Hearings held for packaging and beverage container bills

Hearings were held on January 17 for Senate Bill 5154, prime sponsored by Senator Christine Rolfes (D-23), and its companion, House Bill 1131, prime sponsored by Rep. Liz Berry (D-36). These bills establish packaging extended producer responsibility (EPR) and beverage container reimbursement (BCR) programs, known as the Washington Recycling and Packaging Act, or WRAP. WR testified at both hearings.

WR appreciates the sponsors reaching out to our members to share the initial legislation and goals of the programs. Retailers have been at the forefront of establishing environmentally sound packaging and recycling programs for a range of products, such as expired and unwanted prescription medications, obsolete or broken electronic devices and TVs, and rechargeable batteries, to name a few – often at the retailer’s own cost.

Our members appreciate the inclusion of language to clarify that retailers may voluntarily serve as container collection sites rather than a mandate that they take back the used containers at their stores. We also support that the bill seeks for the packaging program to be funded by packaging producers – as was the case with the previously enacted Senate Bill 5022 from 2019. Unfortunately, the Department of Ecology, named as the administrator and enforcer of both SB 5022 and the proposed WRAP Act, has misinterpreted the legislature’s intent as to who should be considered a “producer.” The legislation had been carefully negotiated and drafted with many retailers’ store brands’ input taken into consideration. WR will work closely with the sponsors and stakeholders to ensure the definition of “producer” is clearly written in the proposed bills which will help alleviate ambiguities in the definition by the agency charged with implementation and the businesses required to comply.

Further improvements for the legislation would include conducting a needs assessment before target percentages are put into statute. The recently released January 2023 DOE Paper and Packaging Study is a good first step but more is needed. Extending the timeline for getting the program up and running and allowing the agency the resources and the businesses the compliance support needed to ensure success would be advisable. The current timeline is very aggressive and too short and potentially could lead to the program not achieving the desired results. Flexibility in labeling requirements as it relates to the “chasing arrows” need to be included and maintained. Manufacturers in our world economy are often unwilling to label products specific to one state. Our experience with other similar programs is that having a single statewide administrator, as opposed to several, leads to more economies and likelihood of success.

WR believes the BCR section can be improved with the recognition that both safety and security concerns should be addressed relating to the return locations since the returned containers have both an inherent economic value—coupled with sanitary concerns—which impact both employees and our retailers’ customers. The number of collection sites should not be set in rigid statutes, but give some flexibility to adjust as the program warrants.

WR is committed to working with the sponsors and other stakeholders on this important issue.

Equitable access to Return to Work bill heard in the House

HB 1137 had a public hearing in the House Labor and Workplace Standards Committee on Tuesday. This bill introduces a flexible option to match injured workers to temporary volunteering positions with community service organizations to perform light-duty work approved by workers’ healthcare providers. California has over 7,000 nonprofit agencies receiving 6.4 million hours of volunteer time. While the hours are “volunteer,” the injured workers are paid by their own employers for their time. The model is practiced widely in most other US states, including Ohio—a state with a monopolistic worker’s comp system like Washington’s.

The Washington Trucking Association, the Washington State Dental Association, the Building Industry Association of Washington, the Work Bridge Group , and ReEmployability joined Washington Retail Association Vice President Rose Gundersen in support of the bill. ReEmployability—an organization that has assisted in these off-site light duty arrangements for 20 years—testified about how they arrange meaningful volunteering light duty positions with nonprofits, resulting in life-giving benefits to both the injured workers and their communities.

Over twenty business organizations, including the Ironworkers’ Union, Build Back Black Alliance, and individuals signed in support. A recent study shows that volunteering light duty contributes to injured workers’ mental health recovery and physical rehabilitation.

Unfortunately, the Washington Association for Justice (WAJ)—aka, trial lawyers—and the Washington State Labor Council (WSLC) testified in opposition to the bill, despite WR’s unsuccessful attempt to reach both organizations several weeks ago. WAJ and WSLC testified to employers’ apparent “abuse” of the current Return to Work program, citing hearsay examples of workers being relegated to reading manuals and other non-productive assignments. The two organizations said that extending the opportunity to nonprofits would accelerate “abuse” by employers while workers would lose training benefits.

WR would like to extend our gratitude to the prime sponsor of HB 1137, Rep. Gina Mosbrucker (R-14), and the Co-Sponsor, Rep. Liz Berry, Chair of the House Labor and Workplace Standards Committee. WR anticipates a similar bill—SB 5368—to be heard in the Senate Labor and Commerce Committee. We will provide updates as work on these bills progresses.

Hollingsworth announces run in Seattle’s 3rd Council District as Lewis launches his reelection campaign in the 7th

Following retirement announcements from Councilmembers Lisa Herbold and Alex Pedersen—and rumors Council President Debora Juarez does not plan to run for reelection—candidates are beginning to declare their candidacies for Council district seats.

This week, Councilmember Andrew Lewis launched his reelection campaign to continue representing the 7th Council district, covering downtown, Queen Anne, and Magnolia. Elected at 29 years old (the youngest Councilmember elected in Seattle history) in 2019, Lewis identified crime as the most important issue for Seattle. He called for fully staffing and funding of the Seattle Police Department. Lewis is the first incumbent to announce their reelection campaign.

In District 3, Councilmember Kshama Sawant drew a serious challenger this week in Joy Hollingsworth, a local business owner and granddaughter of Dorothy Hollingsworth, a prominent education and civil rights advocate. In her announcement, Hollingsworth decried the absence of Black and LGBTQ voices on the Council, pledging to bring both perspectives to the Council. She also committed that “[t]he biggest thing I want to bring is unifying all the neighborhoods, all the voices.”

Will the ‘Fair Tax’ be given consideration?

Some GOP lawmakers have demanded the “Fair Tax” as a condition for supporting McCarthy's bid for speaker. The legislation has not been taken seriously for almost 20 years.

The Fair Tax Act, introduced by Rep. Buddy Carter, R-GA on January 10, would abolish the Internal Revenue Service (IRS) and replace the federal income tax with a national consumption tax.

“Instead of adding 87,000 new agents to weaponize the IRS against small business owners and middle America, this bill will eliminate the need for the department entirely by simplifying the tax code with provisions that work for the American people and encourage growth and innovation,” Carter said in a press release.

The effective national sales tax of 30% or more would be required on all consumed goods, including housing, medical care, prescription drugs, groceries, gas, and cars. To make the proposal revenue neutral as a replacement for the income tax, the rate would need to be as high as 60%, per a 2004 report by the Brookings Institution.

A consumption tax “…would have a devastating impact on consumer spending and retail jobs.”

2022 Holiday Sales Grew 5.3% to $936.3 Billion

Retail sales during 2022’s November-December holiday season grew 5.3% over 2021 to $936.3 billion, less than forecasted amid continuing inflation and high interest rates. Despite missing holiday growth expectations, sales for the year grew 7% over 2021 to $4.9 trillion, meeting expected growth of 6% to 8% for the year.

Over the past two years, retail sales have been unprecedented and thought by many to be unsustainable. Retail has had impressive annual sales and a positive holiday season despite historic levels of inflation and interest rate hikes intended to cool the economy. Retail sales growth in 2022 shows the resilience of consumers and the creativity of retailers amidst high inflation and continued cost pressures.

Now that the INFORM act has passed, what’s next?

By Retail Industry Leaders Association

The INFORM Consumers Act, a law that will insert transparency and accountability into online marketplace transactions, takes effect in June 2023. Planning for implementation and ensuring the Federal Trade Commission (FTC) and State Attorneys General are prepared to enforce the law immediately is now a top priority for retailers.

To aid in the fight against ORC, the Retail Industry Leaders Association (RILA) is supporting legislation to enact a federal ORC task force that brings federal law enforcement, including the Department of Homeland Security, Department of Justice, Federal Bureau of Investigations, and United States Postal Service, together to help disrupt and prosecute criminal rings targeting retail stores. RILA anticipates legislation to this effect to be reintroduced in both the Senate and House early in 2023.

“Seeing the INFORM Act become law was a tremendous accomplishment, but our work battling organized retail crime is far from over,” said Michael Hanson, RILA senior executive vice president of public affairs. “Establishing a federal task force that pulls together all of the respective agencies that have jurisdiction over organized retail crime is necessary to enhance collaboration and transparency in the fight against sophisticated crime rings. Many of these criminal syndicates are using the profits derived from the sale of stolen goods to fund additional violent criminal activity in our communities such as human trafficking, gun smuggling, narcotics and terrorism—it makes collaboration between agencies more important than ever.”

RILA will also continue to partner with state attorneys general and local district attorneys to set up state ORC task forces and educate law enforcement on how to identify and prosecute criminal actors.

“We strongly believe that marrying the transparency of INFORM with a more coordinated effort at the state/local level to investigate and prosecute organized theft rings is vital to addressing this problem in communities across the country,” said Lisa LaBruno, RILA senior executive vice president of retail operations.

Read the entire article from RILA

Google Cloud introduces shelf inventory AI tool for retailers

Wall Street Journal

By Isabelle Bousquette

Google Cloud reported that it has developed a new artificial intelligence tool designed to help “big-box retailers” better track the inventory on their shelves, improving on technology that hasn’t worked well in the past.

Last Friday, Google said its algorithm is able to recognize and analyze the availability of consumer packaged goods and products on shelves using videos and images provided by the retailer’s own ceiling-mounted cameras, camera-equipped self-driving robots, or store associates. The tool—now in preview—will become broadly available in the coming months.

Alphabet Inc.’s cloud business unveiled the technology, along with a series of artificial intelligence tools aimed at e-commerce, ahead of this week’s National Retail Federation conference in New York City.

“Lack of timely, accurate information about shelf inventory is a major problem for retailers and so difficult to manage that it is industry standard to just make guesses,” said Robert Hetu, VP analyst for retail at IT research and consulting firm Gartner Inc. Having that information would help retailers pad their lines in a variety of ways, including giving them the chance to replenish out-of-stock items faster, and lose fewer sales opportunities, according to Carrie Tharp, Google Cloud’s vice president of retail and consumer.

“If every retailer just knew what they had in their stores and how much was left on the shelves, their lives would be so much simpler,” she said.

The idea of computer vision-enabled shelf-checking technology has been around for several years, but has not taken off in that time. In part, retailers have been deterred by the cost and complexity of large-scale camera deployment, said Mr. Hetu.

Data has also been a problem, said Ms. Tharp. Retailers have not historically had access to thorough, organized and labeled data on all their product offerings, she said. Another challenge has been building the AI model itself, which needs to understand how to recognize a product in imperfect, real-life conditions, including from different angles, in different lighting and when seasonal packaging changes, Google Cloud said.

Read the rest of the story

Safety for all is everyone’s responsibility

Hazards happen no matter whose shift it is. Spills remain slippery until properly mopped up. All workers need to take ownership and responsibility to address hazards in their work community. This might mean cleaning up spills, picking up and putting away left out tools, or setting up warning signs for potential workplace trip hazards. This includes the need to notify coworkers of potential risks.

Workers are often worried about receiving blame for housekeeping hazards. A common reflexive response is “it wasn’t me” or “that’s not my job,” but the reality is, watching out for the safety of others is a full-time job for all workers. Employees should work collectively to address potential dangers as they are encountered rather than leaving the hazard for the next worker.

There’s a good reason the adage “if you see something, say something” is a universally-held safety team slogan worldwide. Management must encourage workers to either rectify hazards or notify someone who can fix dangerous situations before dangers become accidents. The National Safety Council reported that in 2020 work-related illnesses stemming from injuries were responsible for an astonishing 65 million lost working days and $163.9 billion in total economic impact in the United States—not including accompanying pain and suffering.

It takes a collaborative effort to maintain a safe workplace, and coworkers should encourage each other not to walk past hazards and leave the potential danger for someone else to deal with. If you see something, Don’t Walk on By. You might just save a life, and it could be yours.

Our safety team is available to help members with safety plans and topics for safety meetings. Contact us 360-943-9198 x122, or safety@waretailservices.com.

WR diversity statement

WR is committed to the principles of justice, equity, diversity, and inclusion. We strive to create a safe, welcoming environment in which these principles can thrive.

We value all people regardless of race, ethnicity, gender, religion, age, identity, sexual orientation, nationality, or disability, and that is the foundation of our commitment to those we serve.