Washington Retail Report

POLICY

Legislative Update

Tuesday, April 4, was Fiscal Committee Cutoff, the last day to read in opposite house committee reports from House fiscal committees and Senate Ways & Means and Transportation committees. Just 18 days would remain for the 2023 Legislative session, assuming it finished up on schedule. The WR government affairs team continued to work diligently on several bills of great importance to our members.

HB-1155 Health Data Privacy

House Bill 1155, which relates to health data privacy, continues to be a challenging bill for retailers this session. The bill seeks to protect sensitive healthcare data not currently covered by the federal HIPAA Law (Health Insurance Portability and Accountability Act). As presently written, the legislation is very broad and would unintentionally include many non-sensitive healthcare products and services, such as numerous over-the-counter medications, vitamins, health foods, health-related clothing, devices, and tools.

WR supports consumers having access to and control of their personal data. However, as currently drafted, this bill will be problematic for retailers to know what is and isn’t covered—leaving them exposed to unwarranted lawsuits and legal action.

SB-5352 Concerning vehicular pursuits

Senate Bill 5352 addresses the 2021 legislation HB-1054, which increased the criteria for police pursuits from reasonable suspicion to probable cause that an individual has committed specific crimes before initiating a chase. SB-5352 would allow law enforcement officers to begin a pursuit if they reasonably suspect that an individual in the fleeing vehicle has committed or is currently committing a violent crime, sex offense, vehicular assault, domestic violence, escape, or driving under the influence. The bill also includes amendments that require additional training for law enforcement officers and mandates better communication with local authorities during pursuits to protect bystanders. The bill does not cover retail theft. The bill has made it out of committee and has become significantly watered down, excluding property crimes. If the bill gets further weakened, law enforcement will likely oppose the bill. It remains unclear whether the bill will make it out of the House. WR supports changes to the bill to include property crimes which continue to plague retailers across the state.

Legislature advances budgets

WR is advocating for—and encouraging the legislature to include—funding for the Organized Retail Crime Task Force. The Governor and Senate have each included $2.2 million to bolster the task force with essential staff. The House has recommended $1.1 million. WR and its members support the higher Senate-proposed amount of $2.2 million and have urged policy makers to include full funding in the final budget.

De minimis benefits crucial for small and medium enterprises

In 2016, the U.S. de minimis threshold, which is the value below which imports are exempt from duties, was increased from $200 to $800. This change has greatly benefited businesses, particularly small and medium-sized enterprises (SMEs), by allowing them to access top-quality products at the lowest possible cost to fulfill their customers' needs. This is especially vital for small manufacturers who import components for assembly processes, as they can create products that are then sold domestically or exported. Small retail businesses also benefit from this policy, as they can import high-quality products at low prices for sale in-store or online.

Besides being exempt from tariffs, importers enjoy additional savings due to the simplified border entry process for de minimis shipments. This process eliminates the need for brokerage services and their associated costs.

The House Ways and Means Trade Subcommittee chairman's bill, the Import Security and Fairness Act, has inspired a coalition of opponents, including the U.S. Chamber of Commerce, the Express Association of America, National Retail Federation, and others. The coalition is working to preserve the U.S. de minimis statute.

Avoiding legal risks and costs for warehouse employers and operators

Warehouse operations are critical to businesses and consumers, and warehouse employers are committed to safe and healthy workplaces for their employees.

SHB-1762 imposes overlapping warehouse requirements to ensure safe working conditions and provide employee meals and rest breaks. These requirements are already actively enforced by the Department of Labor and Industries. SHB-1762 does not add new protections for employees’ safety, meal, and rest breaks, and only adds new opportunities for third-party lawsuits against warehouse employers. Please reach out to your State Senator and urge opposition to SHB-1762. 

ECONOMY  

Small Business Index declines amid weaker economic outlook

According to the latest MetLife & U.S. Chamber of Commerce Small Business Index, small businesses' concerns about inflation remain at record levels, and their view of the economy has weakened slightly. Despite this, the majority of small business owners continue to feel optimistic about their business health and cash flow.

Small business owners seem to be in a wait-and-see mode, with day-to-day operations and future expectations largely unchanged compared to the previous two quarters. The Index score for this quarter is 60.0, a slight drop from the previous quarter's score of 62.1, mainly due to a more pessimistic view of the national economy. The Index score is now closer to early 2021 levels and slightly lower than its post-pandemic peak of 66.8 in Q2 2022.

Inflation remains the top concern for 54% of small business owners, marking the fifth consecutive quarter it has topped the list of challenges. Other issues such as revenue, supply chain disruptions, and rising interest rates are considered secondary concerns.

Long-term perceptions of access to capital have significantly declined, with 49% of small business owners now reporting their current access to capital or loans is good, compared to 54% in Q2 2022 and 67% in Q2 2017.

Although most small businesses see the value in offering health insurance coverage, they often find selecting the right options to be a time-consuming task. A significant majority (89%) of small businesses believe offering employee healthcare is the right thing to do, and 85% agree it helps attract and retain employees. However, 65% find navigating healthcare options for their business to be a burdensome process.

Walmart has a path of opportunity for everyone

Walmart is committed to providing opportunities for individuals at every stage of their careers, with a focus on skills, experiences, and attributes acquired through various means, such as on-the-job experience, military and volunteer service, or education. The company offers a wide range of roles and benefits that enable individuals to reach their potential and pursue purpose-driven careers.

High school students can benefit from part-time roles at Walmart, gaining valuable skills for their future careers. In the United States, approximately 75% of Walmart's salaried store, club, and supply chain management employees began in hourly positions.

College students can gain retail experience through Walmart's expanding Home Office internship program. This program exposes interns to various career areas, such as supply chain, finance, tech, merchandise, and HR. The aim is for most interns to transition to full-time roles at Walmart upon graduation.

The company's new pilot program, College2Career, provides recent college graduates and current students nearing graduation with the opportunity to launch their careers by helping to manage a Walmart store. Participants receive comprehensive training, hands-on experience, and mentorship from company leaders. Top performers are offered the new management position of emerging coach, with a starting wage of at least $65,000 a year.

Secondhand industry booms

The secondhand industry is on the rise, with global sales reaching $177 billion in 2022, a 28% increase from the previous year, according to a report from online thrift marketplace ThredUp Inc. Factors attributed to the growth include surging inflation, the development of curated secondhand offerings by retailers, and increased awareness of sustainable shopping habits. The trend is set to continue, with ThredUp predicting that the secondhand industry will double to $351 billion in global sales by 2027.

ThredUp's co-founder and CEO, James Reinhart, believes that resale is not a passing trend but an increasingly crucial part of brands' sustainability agenda. He said that it is no longer a question of whether brands will be involved in resale, but rather how. By getting behind the continued use of their existing products through resale, fashion companies can reduce their greenhouse gas emissions, water usage, and plastic footprints, while also securing an additional revenue stream.

The rise of secondhand and other recycle business models has been primarily driven by younger generations, particularly Gen Z. According to a survey by GlobalData, 83% of Gen Z respondents said they had already shopped secondhand for clothes or were open to it.

For instance, Shein, a Chinese retailer that has helped supercharge the fast fashion model, launched its Shein Exchange site last year. In March, H&M announced it was launching an online resale platform with ThredUp, stating in recent annual reports that it expects climate-aware consumers to prefer more sustainable products in the future. The potential shift in consumer preferences could be a big hit to future sales or, quite possibly, an opportunity. Whether the rise of secondhand and other circular business models will lead to a reduction in the production of new items or in consumer demand for new goods remains to be seen.

SAFETY

Cultivating relationships is key to safe workplaces

According to a study by Intertek Alchemy, 66% of businesses report that employees fail to follow their safety program while working, and 59% say they don’t have enough time to develop a plan. In other words, the most significant challenges with workplace safety training are time and planning follow-through.

Motivating workers to achieve maximum productivity safely is the crucial duty of management in any organization. The Alchemy study shows that 75% of company leaders believe that boosting compliance with company safety programs would lead to a corresponding increase in productivity.

The development of a workplace’s culture is primarily driven by management. Every day, company leaders send a message to their workers regarding their commitment to safety or lack thereof. Therefore, management must communicate to the workers that safety is a top priority. By fostering a strong connection between workers and management—and investing time and effort to make safety relatable to everyone—management can reap significant benefits.

When employees feel their employers value their safety and team participation, it builds trust in the organization. When workers and management trust each other:

• Productivity increases

• Suggestions for improvements and changes are made

• Workplace injuries occur less frequently and with less severity

• Employee turnover is reduced

Maintaining a healthy relationship between staff and management is essential for the overall health of any company.