Newsletter — August 24, 2023

• WR joins National Retail Association Conference

POLICY

• WA Cares Fund approaches first employer reporting period

ECONOMY

• U.S. retail sales exceed forecasts while consumer spending shows signs of slowing

RETAIL THEFT & PUBLIC SAFETY

• Washington State Crime Prevention Association to host 45th annual conference
• AG ORC Task Force convenes 4th meeting
• INFORM Consumers Act: A joint FTC-state initiative to combat ORC
• National media misinterprets the current state of retail thefts

IN THE NEWS

• Target boosts sales with Starbucks curbside pickup

SAFETY

• Disengaged workers face a greater risk of injury

WR joins National Retail Association Conference

The Washington Retail Association executive team, Renée Sunde, President and CEO, Rose Gundersen, Vice President of Operations, and Mark Johnson, Senior Vice President of Policy and Government Affairs, attended the Council of State Retail Associations (CSRA) national conference held last week in San Diego, California.

WR was joined by associations from across the country and representatives from many of our association member companies. The three-day event provides opportunities for attendees to hear from top national presenters on issues and trends that directly impact the retail industry.

Guest presenters covered the economy and economic outlook, politics and the elections, insights on how to better tell the retail story, and pharmacy issues. A round-robin of company-specific issues were discussed, affecting states, whether they tend to be red, blue, or purple. 

WR is excited and pleased that our President and CEO, Renée Sunde, was elected by her peers to serve as the Vice President of CSRA. She had previously held the position of treasurer. 

The team spent much of their visit sharing and exchanging ideas and resources with fellow associations and returned with tools to help WR better represent our member companies to all levels of government. 

The event's main sponsors were our national partners, the National Retail Federation, and the Retail Industry Leaders Association. Next year’s conference will be held in Stowe, Vermont.

WR was a founding member of CSRA over 17 years ago. 

WA Cares Fund approaches first employer reporting period

The WA Cares Fund was adopted by the Legislature in 2019 and, after an 18-month delay, went into effect in July 2023. The program intends to give working Washingtonians access to long-term care coverage when they need it.

Workers contribute 0.58% of each paycheck during their working years to access a $36,500 lifetime benefit (adjusted annually for inflation) to help pay for long-term care services when needed. Workers began contributing to WA Cares on July 1, 2023, and benefits will become available on July 1, 2026. To access benefits, employees must meet a contribution requirement and requirements for care.

With the program going into effect in July, employees now contribute 0.58% of each paycheck to the program. Significantly, employers will report employees’ wages and pay premiums for WA Cares quarterly using the same process they currently use to report Paid Family and Medical Leave premiums. The reporting system for Paid Family and Medical Leave will be updated so that employers can report for both programs at the same time.

The first report and payment that includes WA Cares premiums will be due October 31, 2023, for July, August, and September 2023 payroll. Employers with no payroll expenses during a quarter will still need to submit that quarter’s report.

The following link, WA Cares FAQ, provides additional information on program requirements and benefits for employees and employers. 

U.S. retail sales exceed forecasts, but consumer spending shows signs of slowing

U.S. retail sales in July showcased the resilience of American consumers, surpassing expectations with a 0.7% increase. This rise in sales, as reported by the Commerce Department, was buoyed by gains across various sectors, including sporting goods, clothing outlets, and restaurants. A robust labor market and escalating wages have empowered American households to bolster the economy, even amidst rising interest rates. However, this strength might prompt the Federal Reserve to adopt a more aggressive stance if inflationary pressures persist.

On the other hand, there has been a gradual deceleration in consumer spending growth. While the economy demonstrated unexpected resilience in the first half of the year, the pace of consumer spending is now slowing.

In a recent post, Jack Kleinhenz, Chief Economist at the National Retail Federation (NRF), noted that consumers, although still spending, are feeling the financial pinch. They are adjusting their purchasing habits, transitioning from goods to services. The savings accumulated during the pandemic, which previously fueled spending, are depleting.

The growth of consumer spending, which constitutes about 70% of GDP, has dwindled from 4.2% in the first quarter to 1.6% in the second. While retail sales, excluding certain sectors, grew by 3.1% year-over-year in the second quarter, this was below the 4% growth observed in the first half of the year.

In response to inflation, the Federal Reserve recently raised interest rates, which now stand between 5.25% and 5.5%, the highest since January 2021. This move, while aimed at controlling inflation, also raises concerns about a potential economic slowdown.

While U.S. retail sales have outpaced forecasts, indicating a resilient consumer base, there are clear signs that the growth in consumer spending is tapering off. The interplay of economic factors, including interest rates, inflation, and the labor market, will shape the trajectory of consumer spending in the coming months.

Washington State Crime Prevention Association to host 45th annual conference

The Washington State Crime Prevention Association (WSCPA) is gearing up for its 45th Annual Crime Prevention Conference, scheduled for September 19-20, 2023, in Olympia. This event, co-sponsored by the Washington Retail Association (WR), promises to be a significant gathering of law enforcement professionals, community leaders, and experts in the field of crime prevention. Olympia Police Department Deputy Chief Shelby Parker will inaugurate the conference.

Olympia Police Department Deputy Chief Shelby Parker will inaugurate the conference.

A highlight of the event will be the keynote address by Seattle City Attorney Ann Davison, a prominent figure in the realm of public safety and retail crime with significant law enforcement and community partnerships. Also, Mark Johnson, WR Senior Vice President of Policy & Government Affairs, will join in on a business crime prevention panel to discuss best practices and trends.

Participants can look forward to diverse workshops, including Active Bystandership for Law Enforcement (ABLE), cryptocurrency scams, first responder wellness, violence prevention, and Crime Prevention through Environmental Design (CPTED).

Several notable speakers from local law enforcement agencies, the Department of Homeland Security, and FBI will share their expertise.

For those interested in attending or learning more about the conference, additional details are on the WSCPA website.

This conference is a testament to WSCPA’s commitment to fostering a safer community through education, awareness, and collaboration. Don’t miss this opportunity to be part of the conversation on the future of crime prevention in Washington State.

AG ORC Task Force convenes 4th meeting

Washington Retail is a member of the AG’s Organized Retail Crime (ORC) Task Force and took part in the August 15 meeting, along with a large number of WR members and, several of their asset protection team members, and state, local, and federal law enforcement agency representatives.

Tienny Milnor, the new lead for ORC in the AG’s internal ORC unit, gave an overview of the team she is building, and thanked everyone for their efforts in securing funding for the ORC team in the 2023 legislative session. The ORC Task Force now has 300 members and is averaging over 100 attending each meeting.

Two online retail platforms, eBay and Mercari gave detailed presentations on their efforts to identify stolen goods and shut down the sellers. Both companies use algorithms to find potentially stolen goods.

Milnor announced that some future meetings of the ORC Task Force will be open only to members of law enforcement (including asset protection teams from retailers) as they take deeper dives into how they can work more effectively together to fight organized retail crime across the state.

INFORM Consumers Act: A joint FTC-state initiative to combat ORC

The newly enacted INFORM Consumers Act presents a valuable opportunity for the FTC and state authorities to work together in protecting consumers from illicit goods sold online stemming from organized criminal activities.

Last week, the Retail Industry Leaders Association (RILA) filed comments urging the Federal Trade Commission (FTC) to work closely with state AGs to help facilitate the nationwide implementation of the INFORM Consumers Act. The letter to the FTC can be read here.

The INFORM Consumers Act aims to increase transparency in online transactions, preventing criminals from selling stolen, counterfeit, or unsafe items online. Criminal organizations exploit online platforms to sell stolen goods, laundering nearly $70 billion annually from organized retail crimes. This not only harms consumers but also legitimate businesses.

INFORM mandates online marketplaces to collect and verify specific information about high-volume third-party sellers. This data must be verified yearly, and sellers with unverifiable information should be suspended. Additionally, online marketplaces need to disclose certain details about high-revenue third-party sellers. INFORM also necessitates online platforms to have a clear reporting system for suspicious activities.

Congress has directed the FTC to collaborate with state attorneys general for enforcement to facilitate effective implementation. Many state attorneys general have already been fighting organized retail crime, and the INFORM Act strengthens their hand.

RILA provided the FTC with several recommendations to support INFORM, including:

• Prioritizing INFORM Consumers Act enforcement, given its clear consumer protection benefits.
• Enhancing public reporting mechanisms for suspicious marketplace activities.
• Adjusting the FTC's reporting system to better cater to non-consumer entities, like businesses, who might spot suspicious activities.
• Proactively sharing information with state attorneys general about potential INFORM violations.
• Establishing a Working Group on INFORM to facilitate collaboration and information sharing.

The INFORM Consumers Act is a crucial instrument to shield consumers from scams. As directed by Congress, proper enforcement by both the FTC and state attorneys general is essential.

National media misinterprets the current state of retail theft

Retailers have been sounding the alarm for years about the escalating costs tied to habitual theft and organized retail crime (ORC). The expansion and growth of online marketplaces in the past decade has significantly amplified organized theft because stolen items can be resold online anonymously. This has exponentially grown the situation at an alarming rate. This ease has also emboldened criminals, leading to more brazen and violent acts.

A joint report from Homeland Security Investigations and the Association of Certified Anti-Money Laundering Specialists underscores the severity of ORC. It points out that these criminal activities lead to violent attacks in retail stores, with many of these criminal rings also dabbling in other grave offenses. Disturbingly, some of these organized theft groups exploit undocumented migrants, compelling them to steal as repayment to their smugglers.

The retail industry and law enforcement have been proactive in their response. National and State Retail associations along with major retailers supported the INFORM Consumers Act, which promotes transparency in online marketplaces. This law, which came into effect in June 2023, is a testament to the industry's commitment to tackling the issue. Furthermore, initiatives like the Organized Retail Crime Task Forces and the Vibrant Communities program have been launched to foster collaboration and address systemic challenges.

CNBC's recent series on retail theft offers a perspective that might not fully capture the complexity of the situation. While they hint that retailers could be emphasizing the ORC issue to shift focus from internal challenges, it's essential to consider the evidence from Homeland Security Investigations that suggests otherwise. It's important not to overlook the genuine challenges retailers face daily, including those beyond potential internal issues like employee theft.

Target boosts sales with Starbucks curbside pickup

Target, is set to enhance sales by introducing Starbucks drinks and food to its curbside pickup service nationwide. This strategic move will be implemented in over 1,700 Target stores that already feature Starbucks cafes and the Drive Up curbside service. The company aims to complete this rollout by October, covering the vast majority of its nearly 2,000 locations.

This initiative is a part of Target's broader strategy to enrich the shopping experience and foster customer loyalty. With consumers now prioritizing experiences like concerts and dining over purchasing discretionary items, Target has been innovating. The retailer has introduced mini Ulta Beauty shops, faster shipping, and even curbside returns.

The collaboration between Target and Starbucks isn't new. Target has a licensing agreement with the coffee giant, and the baristas in Target stores are its employees. The idea of Starbucks curbside pickup was piloted in a few stores last fall, allowing customers to add Starbucks items to their online curbside orders. Popular choices included the Iced brown sugar oat milk shaken espresso and the iced caramel macchiato.

Drive Up, Target's curbside service, played a significant role in boosting the company's e-commerce sales during the Covid-19 pandemic. The service has shown that customers using it for the first time tend to spend 20%-30% more than before. This success has led Target to expand its curbside offerings, now including items like beer and wine.

Meanwhile, Starbucks has been adapting its business model. The coffee chain has been focusing on mobile orders, drive-thru services, and even exclusive cafes for mobile orders. Starbucks' presence in grocery and Target stores has been beneficial, driving sales for both the coffee brand and the retailers.

Disengaged workers face greater risk of injury

An insightful study published by the American Society of Safety Professionals (ASSP) sheds light on the factors contributing to employee engagement, and its impacts can vary in different business settings.

The ASSP study underscores the link between engagement and safety outcomes, urging organizations to cultivate a culture of engagement that transcends work tasks and extends to quality safety practices. Investing time and money into employee engagement requires thoughtfulness and strategy, which pay dividends.

Engaged employees have fewer accidents. Injury rates are 60% higher among disengaged employees, meaning engagement is as essential to their safety as the safety program itself.

There are distinctive characteristics among engaged workers who did not have job-related injuries. These engaged employees consistently exhibited the following behaviors:

• 95% adhered to safety procedures was almost universal
• 92% properly used personal protective equipment (PPE)
• 92% demonstrated strong support for new policies and procedures
• 89% had a proactive approach to addressing unsafe behaviors, including nonconforming co-workers
• 79% regularly reported unsafe behaviors

Conversely, workers who reported job-related injuries displayed lower levels of engagement and had worked at the business for over five years. Of these disengaged workers:

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