Newsletter August 25, 2022

IN THIS ISSUE

POLICY

Washington’s Paid Family and Medical Leave (PFML) program forecasting large increases in premiums

ON THE LOCAL FRONT

RETAIL THEFT & PUBLIC SAFETY

TRENDS

SAFETY

Tapping the talents of the aging workforce while keeping them safe

Look for the next Inside Washington Retail newsletter coming September 8.

Council of State Retail Association executives meet in Minneapolis for annual conference

The Council of State Retail Association (CSRA) met for its annual conference in Minneapolis Minnesota this past week. President and CEO, Renée Sunde and Mark Johnson, Sr. VP of Policy and Government Affairs attended this year’s event along with approximately 155 attendees including retail association executives from across the country and a broad range of national member retailers.

Topics explored the future of retail’s workforce, ORC and retail theft, packaging and plastics recycling and, corporate social responsibility and its implications across the states. As the industry responds to new challenges, the work of State Retail Associations has never been more important and valuable to retailers of every sector.

The conference included a visit to two of WR’s member headquarters. Both the Target Corporation and Best Buy have headquarters located in the heart of Minneapolis. State executives were welcomed with an impressive keynote address from Best Buy CEO Corey Barry named the 5th CEO of the company and the 8th female to run a Fortune 100 company.

Barry talked about how Best Buy’s commitment to enriching lives through technology has never been more important during the past several years during the pandemic. Damien Harmon, Executive VP of Omnichannel discussed the continued integration of digital and physical retail and the challenges impacting today’s retail workforce. Diversity and inclusion remain a top priority for leadership, with over 30% of their workforce women and approximately 40% minorities.

The event included a warm reception from the Target leadership team at their well-appointed state-of-the-art headquarters. Targets, Kent Wilson, Director of Government Affairs currently serves on WR’s Board of Directors and is slated to step in as the 2023 Board Chairman.

CSRA elects Sunde to the executive committee as 2023 Board Secretary

WR’s President & CEO Renée Sunde was elected at the Council of State Retail Associations (CSRA) Annual Meeting as an Executive officer and will step in as the 2023 Board Secretary. Sunde will serve alongside fellow officers Chairwoman, Erin Segrist, President of the Vermont Retail and Grocers Association; Incoming Chairman, Scott Shalley, President/CEO of the Florida Retail Federation; Outgoing Chairman, Bruce Nustad, President of the Minnesota Retailers Association.

CSRA acts as a portal for communications between state retail associations across the country primarily concerning state legislation and regulations affecting the retail industry. The association helps create opportunities to share legislative strategies, successes, and coalition members; arming leaders with the information necessary to support key policy and decision-makers regarding legislation most impactful to the industry.

Washington’s Paid Family and Medical Leave (PFML) program forecasting large increases in premiums

During the 2022 legislative session, the Employment Security Department (ESD) alerted the Legislature that Washington’s PFML program was projected to go insolvent before the end of the biennium. In response, the Legislature appropriated $350 million to prevent program insolvency, with a caveat that the funds could only be used to pay benefits in the event of a deficit. Additionally, the Legislature authorized several actuarial and task force reviews of the program intended to inform the Legislature on reforms necessary to maintain PFML solvency.

Recent ESD data shows that the PFML program was, indeed, in a deficit for half of July, and projections now indicate the program will again be in a deficit in September and October.

ESD is also forecasting that premium rates, which were 0.4% of taxable wages in 2021, will need to increase to 0.9%-1.0% to maintain PFML solvency into the near future. Premiums had already increased from 0.4% to 0.6% at the beginning of 2022. Accordingly, if ESD’s projected premiums are implemented, the premium rates will increase by about 150% between 2021 and 2023.

PFML premiums are shared between employers and employees. Employers pay 55% of medical leave premiums. Employees pay 100% of family leave premiums and 45% of medical leave premiums.

When the PFML program was initiated in 2019, the initial split was one-third of the total premium for family leave and two-thirds for medical leave. Beginning in 2022, the statute requires the premium to be divided based on actual usage data. For 2022, the usage split is now 51% family leave and 49% medical leave.

Based on the actual usage data, employees will bear most of the projected increase in premium rates.

ESD reports that benefit payments have exceeded premium collections in nearly every quarter. Moreover, benefit levels also exceeded the baseline projections for the program when it was adopted. According to ESD, both the number of claims and average benefit level per claim have exceeded earlier estimates.

Seattle’s downtown office population dropped in July, but signs point to recovery

Office workers are starting their return to downtown Seattle, though the trend faltered last month, according to the Downtown Seattle Association.

As reported by KOMO4 News, the city of Seattle, as a whole, ranked near the bottom 57 out of the 62 cities included in the study from the University of California at Berkeley.

Narrowing the focus just to downtown, Seattle's rank rose to No. 40 on the list, but that data is from March through May.

“Downtown Seattle from June onward—the summer recovery has been really strong," said Jon Scholes, with the Downtown Seattle Association. "And, we’ve seen some of the top hotel occupancies across the country."

Scholes says Seattle is outperforming many other downtowns, thanks to sports, concerts, and the arts offerings in its centralized downtown core.

Data from the Downtown Seattle Association sheds new light on feelings about the pandemic recovery and the return to work.

“When we look at our West Coast peers, San Francisco, LA, Portland, we’ve got more people coming back to the office in downtown Seattle than those peer cities,” Scholes said.

But the number of workers returning to downtown Seattle stands at just 42 percent of normal as of August 7, according to data the Seattle Downtown Association tracks.

Port of Everett in the midst of massive development undertaking

Formed in 1918, the more than century-old Port of Everett acts as the economic heartbeat of Snohomish County. Its international seaport is Washington’s third largest container port, and cargo activity there supports more than $21 billion in annual trade value, ranking Everett’s exports customs district 2^nd largest in the state. It also operates the largest public marina on the West Coast with 2,300 slips. Currently, Port operations support 40,000 jobs in the region and contribute $433 million in state & local taxes—but more is coming. Much more.

The Port of Everett is modernizing its working waterfront area to increase its efficiency and capacity. 2021 saw an increase of over 400% in container volume year-over-year and opening of the new 40-acre Norton Terminal will take place in late-November. The most significant changes, however, are coming to the Port’s adjacent recreational waterfront area at Waterfront Place.

In the massive expanse of property encircling the private boat moorage slips, a tapestry of hotels with over 264 rooms and 266 new apartment homes has emerged. This adds a new marketplace – the first time in history the Port has had housing on the waterfront.

In the center of it all a new hub of new mixed-use is in the works, including, among others, two new areas of destination retail dubbed the “Wine Walk” and “Restaurant Row” that will connect Marina Village, where Anthony’s Restaurants, Lombardi’s Italian and the new -Everett Yacht Club are located, to Fisherman’s Harbor at the center of Waterfront Place.

When complete, the project will offer retail shopping and numerous restaurants pleasing nearly every palate with offerings ranging from hamburgers and ice cream to high-end seafood, steakhouses and even international flare, including dim sum. The new “Wine Walk” will add a cluster of 8 to 9 tenants, including wineries, distilleries, and craft brewers with water views and among “a big, beautiful park-like setting.”

WR advises on catalytic converter theft policy

The Legislature passed a catalytic converter theft bill this past session to stem the growing number of crimes. WR supported the bill prime sponsored by Rep. Cindy Ryu (D-32nd District – Shoreline.)

The Washington State University Division of Governmental Studies and Services was selected to conduct an assessment and make recommendations to the Legislature this fall. WR has been invited to serve on the advisory committee for this work.

The goal is to describe the nature of the problem and review existing state laws related to these crimes, including national efforts. The advisory committee will then determine what is working and what needs improvement and offer options to deter theft and reduce impacts on victims of theft.

The workgroup will also examine creating a model pilot program and the estimated cost of administration.

Catalytic converter thefts impact individuals and businesses alike. Thieves steal these items from delivery trucks and rental vehicles, often rendering them inoperable. Unfortunately, many WR members, employees, and customers have been victims. Potential recommendations presented will need to carefully consider and protect law-abiding businesses such as metal recyclers, that operate in the industry.

WR appreciates the Legislature putting a much-needed focus on this growing problem and looks forward to supporting solutions that help address the issue.

Seattle City Attorney Ann Davison releases positive progress report

Last week, Seattle City Attorney Ann Davison released a 50-page report detailing her office's significant strides over the previous eight months. The report says the department is making quicker filing decisions and prosecuting misdemeanors more often.

In a statement last week, Davison said she was proud of the results of this approach so far. "Since taking office, I have been committed to re-centering victims in the public safety system in Seattle, and the data in this report proves that we are making significant progress in delivering on this promise," Davison said.

The report said the median time to make a filing decision in criminal cases took over four months between 2017-2021. Since taking on the city attorney role a year ago, Davison said her office reduced filing times by 98%, bringing misdemeanor charges down from 129 days to just 3.

Davison's office credited the Seattle Police Department and the community for increasing efficiency and better reporting stating there has been a 124 percent increase in cases filed.

The report also indicated the department is:

Improving victim participation in cases and reducing the number of cases declined or dismissed as a result (69% drop in cases declined due to victim/witness non-cooperation);
Decreasing the overall number of cases declined from almost 48% (2017-21) to 37%, and,
Continuing to reduce the 5,000-case backlog leftover from the prior administration.

Spotting counterfeit cash

One aspect of organized retail crime (ORC) that isn’t making news has to do with criminals paying for goods at a retail store with counterfeit bills. Most retailers either inadvertently pass the bills along during the normal course of business to unsuspecting customers, or get notified by their bank that the previous evening’s night deposit contained fake bills. The business takes the loss, and the counterfeit bills are forwarded to the authorities.

Most retail cashiers are not experts in spotting counterfeit cash and most businesses rely on inexpensive “counterfeit pens” which can be purchased from a local office supply store.

According to the Secret Service, “Counterfeit detecting marker pens are worthless.” The reason is that modern-day counterfeiters are bleaching the ink off $1 bills and printing $100 bill graphics onto the paper. The marker pens will only verify if the paper is legitimate, not the printing, so when the cashier’s pen “verifies” the note’s authenticity, they usually accept the bill regardless of print quality.

In 1990, vertical security threads were embedded into the new $100 Federal Reserve Notes (FRN,) and by 1993, all FRN denominations received the threads, except for the $1 and $2 versions and each denomination has a unique thread position.

The best tool a business can use to determine whether a bill is real or not is to use an ultraviolet (UV) light. When a UV light is held to the security strip, the bill’s denomination appears, and the strip glows a unique color. UV lights are widely available.

You’re invited to the October 6 WAORCA meeting in Tukwila

The Washington State Organized Retail Crime Association, in partnership with Tukwila Police,

will be hosting a round table discussion focused on organized retail theft in the valley and they are inviting retailers to join in person.

Please feel free to bring pictures of your most prolific offenders, or cases you want to discuss.

To RSVP, please email: Robert.Mosley01@store.lowes.com

Date: October 6, 2022

Time: 10:00 AM

Location:

Tukwila Criminal Justice Center

15005 Tukwila International Blvd

Tukwila, WA, 98188

Executives say “this” is their biggest risk

The most recent PwC Pulse Survey shows that the recession, inflation, and interest rates are not at the top of executives’ risk-worries. The top spot goes to cyber-attacks.

According to the PwC report, 40% of all respondents list cyber-attacks as a serious risk (and another 38% cite it as a moderate risk). Virtually all roles in the C-suite ranked cyber-attacks high on their list of risks, including tax leaders (with 47% citing it as a serious risk), CFOs (44%), and CMOs (41%).

An even bigger signal of the growing concern around cyber-attacks is that 51% of board members cited it as a serious risk (and another 35% as a moderate risk) — more than any other category of business leader.

In March 2022, the SEC proposed to enhance and standardize cybersecurity disclosures, requiring that the registrant’s board of directors oversee cybersecurity risk. The proposal would also require annual reporting or certain proxy disclosure about the board of directors’ cybersecurity expertise. As a result, board members are becoming increasingly attuned to cyber threats and their role in overseeing cybersecurity risk management.

Cybersecurity — including the related realms of privacy and data protection — is also becoming a growing policy concern of business leaders. Not surprisingly, 84% say they’re either monitoring closely or taking action on potential regulatory changes.

The importance of cyber reflects two things. First, virtually all companies are now digital companies, with a heavy reliance on data and analytics and a growing reliance on mobile and cloud. Second, cyber threats continue to grow and become more sophisticated.

What your company can do:

How retailers can attract on-the-go customers

Retail Dive recently released a report in partnership with the GPS company Waze that provides three insights retailers can use to connect with shoppers on the go.

Physical storefronts continue to play a leading role in the omnichannel customer journey. When the pandemic restrictions loosened, consumer preferences shifted back to brick-and-mortar retail as nothing replaces the feeling of getting to hold and touch an item before immediately taking it home after purchase. Waze data shows navigations to retailers rose by 4.7% in the 1st quarter of 2022 compared to a year ago.
In-store shopping drives unique value and significantly impacts customer spending, engagement, and loyalty. Retail leaders agree on the advantages of physical stores and their ability to deliver instant gratification to customers, for customers to discover or test new products/services, enhance customer interactions with brands, increase the lifetime value of customer loyalty, and deliver personalized care to customers. 61% of shoppers are more likely to buy from a brand online after a positive in-store experience, and a majority of shoppers, about 71%, spend more in-store versus online. Physical stores help increase revenue, reduce product returns, and improve customer engagement and retention.
An omnichannel approach is critical to retailer success. Setting goals to increase in-person visits to physical stores and in-store purchases this year is essential. An effective way for retailers to market to on-the-go consumers is thru in-car advertising such as Waze. For example, a recent Waze campaign helped drive more than 10.6 million store visits to both Target and Walmart to purchase PAW patrol toys.

Tapping the talents of the aging workforce while keeping them safe

The U.S. Bureau of Labor Statistics projects that by 2024, 13 million people aged sixty-five and older will still be working. These older workers will form the fastest-growing segment of the workforce in the decade ahead. While the total number of workers will likely increase by five percent over those years, the number of workers ages 65 to 74 will swell by 55 percent.

Older workers represent a never-before-seen opportunity for employers. In this economy, retaining older workers can give employers a competitive edge by allowing them to continue taping a generation of knowledge and skill. This knowledge and skill can be leveraged to help younger workers. New employees are not always as perceptive of potential risk or may not pay attention to their surroundings as do workers with experience. By using the buddy principle, older workers can share with younger workers ways to prevent injuries from happening.

The mature worker has also experienced some physical changes that can be easily addressed. Items like:

Providing step ladders with handrails to assist with balance. When stocking shelves, they can feel safer by having the ability to grasp with one hand while working on merchandise.

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.