Newsletter — February 29, 2024

IN THIS ISSUE

POLICY

ECONOMY

Retail sector poised for growth and adaptation

ON THE LOCAL FRONT

POLITICAL NEWS

TRENDS

SAFETY

A story on near misses and “luck”

WR endorses five important initiatives

WR has officially endorsed five important initiatives and has donated to the campaign to pass them.

In a historic first for the state, six initiatives qualified to be presented to the State Legislature for consideration:

I-2113: Reasonable Police Pursuits
I-2109: Repeal the Capital Gains Tax
I-2117: Stop the Hidden Gas Tax
I-2124: Opt Out of the Long-Term-Care Tax
I-2111: Banning State and Local Governments from Imposing an Income Tax
I-2081: Requiring Parental Notification

WR has endorsed the first five initiatives, all of which have significant impacts on retailers, their employees, and their customers. The Legislature has chosen to hear just three: Reasonable Police Pursuits, Banning State and Local Governments from Imposing an Income Tax, and Requiring Parental Notification. WR has expressed support for both I-2113 and I-2111. Over 5,000 citizens have signed in support of these measures, demonstrating significant public interest.

It remains uncertain whether the committees of jurisdiction and the entire Legislature will approve the three initiatives they heard. They have until March 7 to decide. If they take no action or vote no, the initiatives will be placed on the ballot in November for voters to decide.

The remaining three initiatives are slated for the November ballot automatically. Let’s Go Washington has launched a campaign to educate voters on supporting them, and WR has joined this effort.

These initiatives stem from several poor and damaging policy decisions made by the Legislature in recent years, directly impacting retailers, their employees, and their customers. WR is committed to working hard to see that all five endorsed initiatives are approved.

A.I. taskforce legislation advances

At the request of the Attorney General and prime sponsored by Senator Joe Nguyen (D-34), SB 5838 aims to establish an artificial intelligence task force. The proposed task force would assess uses and trends and offer recommendations to the legislature on the governance and application of artificial intelligence and generative AI technologies.

Since the introduction of SB 5838 this session, the composition of the proposed AI task force has undergone substantial changes, particularly with a noticeable reduction in representation from the business sector.

WR has proactively advocated for the inclusion of the retail industry within the task force. This includes delivering testimony at public hearings, engaging in strategic meetings with lawmakers, and ongoing dialogues with the Attorney General's office.

These efforts were instrumental in the adoption of an amendment by the House Appropriations committee during the bill's executive session on February 26, which secured a place for the retail sector in the task force.

Special acknowledgement goes to Representative Travis Couture (R-35) for his pivotal role in ensuring a more balanced and inclusive task force composition.

Washington's Toxic-Free Cosmetics Act: What businesses need to know

Washington State businesses are facing new regulations that could impact operations across the cosmetic industry. The recently passed Toxic-Free Cosmetics Act, set to take effect on January 1, 2025, introduces stringent restrictions on the manufacture, distribution, and sale of cosmetic products containing specific chemicals. Washington Retail Association (WR) is committed to keeping its members informed about this critical legislation and its implications.

Under the Toxic-Free Cosmetics Act, businesses must comply with regulations concerning nine chemicals or chemical classes outlined in the law. These include ortho-phthalates, perfluoroalkyl and polyfluoroalkyl substances (PFAS), formaldehyde and its releasing chemicals, ethylene glycol, mercury and its compounds, triclosan, m-phenylenediamine and o-phenylenediamine and their salts, and lead and its compounds. It's crucial for businesses in the cosmetic industry to familiarize themselves with these restrictions to ensure compliance and avoid potential penalties.

To assist companies in understanding and meeting these new requirements, the Washington State Department of Ecology (DOE) is offering technical assistance programs and engaging in a comprehensive rulemaking process. WR encourages its members to actively participate in providing feedback on these initiatives to ensure that regulations are practical and effective for businesses while meeting the intended goals of consumer safety and environmental protection.

Stay informed about the Toxic-Free Cosmetics Act by subscribing to DOE’s email list. Get updates, compliance guidance, and opportunities to participate in rulemaking. Visit the DOE's webpage or email ToxicFreeCosmetics@ecy.wa.gov for details.

What we are tracking — WR Legislative Hot List

Artificial Intelligence Bills SB 5838

Progress: Senate version heard in House Consumer Protection Committee Feb 20.
WR's Stance: More information is needed before the state begins regulating. Supports retail inclusion in a task force, seeks timeline extension; high-priority concerns. Believe a national solution would be preferable.
Status: In House Rules waiting for vote. Retail now included in task force.

Gift Certificates as Unclaimed Property HB 2095 / SB 5988

Objective: Unused gift card balances remitted to State after three years.
Progress: WS proposed amendment which was successful and stricken from budget.
Status: Failed to be voted on. Not likely to be further considered.

Unemployment Insurance (UI) for Striking Workers HB 1893

Allows for striking workers to collect unemployment insurance benefits.
WR is opposed to this bill.
Status: On Senate floor calendar waiting for a vote.

Retail Workforce Workgroup HB 6296

Objective: Establish retail workgroup to promote training opportunities
WR supports this bill.
Status: On House calendar - waiting for a vote.

Incentives for Return to Work SB5368 / HB2127

Changes: SB 5368 allows small businesses to partner with local nonprofits to provide light-duty return-to-work opportunities; HB 2127 increases the reimbursement rate for businesses that provide a light-duty return-to-work opportunity for an injured worker.
WR supports these bills.
Status: SB 5368 passed Senate 44-4 but failed to pass the House Labor and Workplace Standards Committee by 2/22. HB 2127 passed House 97-0; Public hearing in Senate Labor and Commerce Committee on 2/15 and passed by Committee on 2/19 and in Senate Rules waiting for a vote.

Repeat Offenders SB 5056

Proposal: Allows court to sentence a habitual property offender to an additional 24 months for a Class B felony, and an additional 12 months for a Class C felony.
WR supports this bill.
Status: Executive session was scheduled, but no action was taken in the House Committee on Community Safety, Justice, & Reentry Feb 20.

Multiple Accomplices HB 5160

Changes: A person commits second-degree organized retail theft if they - along with at least two accomplices - enter a store within five minutes of each other, and steal property worth $750 or more from a retail store.
WR supports these bills.
Status: Unanimously passed out of the Senate and was scheduled for a public hearing and executive session in the House Community Safety, Justice, & Reentry Committee. Failed to proceed.

Retail sector poised for growth and adaptation

Recent analyses from Marcus & Millichap and JLL paint an encouraging picture for the future of the retail sector in the United States. With the number of store openings surpassing closures and a projected increase in the consumer base, the retail industry is on track to become the most sought-after category in commercial real estate. Urban retail markets are demonstrating resilience, marked by strong tenant demand and steady rent escalation.

Despite facing challenges such as escalating levels of consumer debt and evolving consumer preferences, retailers specializing in discount goods, health services, and pet-related products are expected to thrive. This optimism is fueled by consumers' continued focus on essential purchases and experiences, as well as the anticipated growth in spending across various retail segments.

One noteworthy trend shaping the retail landscape is the integration of health providers and specialists into retail settings, contributing to a sustained period of positive net absorption in multi-tenant properties. Urgent care facilities, health systems, and even animal hospitals are increasingly occupying retail spaces, catering to the growing demand for convenient healthcare access and pet-related services.

Retailers are expected to adapt to changing consumer behaviors and market dynamics, leveraging opportunities for growth and innovation. As the retail sector continues to evolve, it demonstrates its resilience and capacity for transformation in response to emerging trends and challenges.

Burien City Council considers minimum wage legislation

On February 26, the Burien City Council took public testimony and, later, discussed potential changes to its draft minimum wage legislation.

Unlike some communities, Burien developed its minimum wage proposal after months of stakeholder engagement with businesses, worker advocates, and others. It’s estimated that 90% of Burien’s business community is made up of small businesses, so the stakes are high in getting this wage standard right.

At last night’s meeting, about 20 people offered public comment on the legislation. The retailer’s perspective was represented by Marisa Wulff, Co-CEO of Mud Bay (and WR board member), which has operated a store in Burien for the past 24 years. Marisa talked about her company and urged the Council to make three changes to the legislation:

Change the definition of "level 1 [largest] employer" to raise the minimum number of FTEs to more than 500. Currently, the legislation sets the employment level for the largest employer category at "more than 200" FTEs;
In determining employer levels, count only employees working in King County; and
Eliminate the private of right action, which relies on private lawsuits as the primary means of enforcing the wage law.

John Engber, WR Director, Retail Industry Coalition of Seattle, also offered public comment at the meeting on behalf of WR. He praised the City for the collaborative, thoughtful stakeholder process used to develop the legislation. He focused on the same suggested changes as Mud Bay CEO, Marisa Wulff.

Several owners of small Latino businesses also shared their views about the legislation. All of those business owners either opposed the establishment of a minimum wage or urged the Council to only consider it in the future.

Others who offered comments included the owner of Elliot Bay Brewery, a waitress who expressed concerns about passing the minimum wage legislation, a McDonalds franchise owner, Annie McGrath (President/CEO of the Seattle Southside Chamber), and several people who called for a stronger minimum wage law.

After the public comment period closed, the Council discussed potential changes to the legislation. While most of these decisions were pushed to a future Council meeting (giving the City Attorney time to gather information and draft potential amendment language), the Council did vote to remove the private right of action from the legislation.

Leadership in Olympia gather for 2024 TVW Gala

The TVW Gala, a highlight event during the legislative session, offered an opportunity for WR to join legislators, lobbyists, and community members to come together for some nonpartisan fun.

The event allowed attendees to mingle, win raffle prizes, and vote in real time for the best legislator "blooper" footage in a series of categories over dinner.

TVW, Washington's dedicated public affairs network, has been delivering nonpartisan, comprehensive coverage of the Washington State Legislature, the Washington State Supreme Court, and various public affairs events since 1993.

As a 501(c)(3) non-profit organization, TVW relies on events like the gala for fundraising, crucial for sustaining its mission to ensure transparency and inform the public about legislative activities.

Besides attending the gala, there are additional ways to support TVW's commitment to providing year-round legislative transparency. For more information on how to contribute, please click here.

WR encourages Congress to support workers’ comp improvements

Earlier this week, WR issued a joint letter to the House Committees on Energy and Commerce and Ways and Means, urging the chairs and ranking members to back HR 7368 – the COMP Act (Coordination of Medicare Payments and Workers’ Compensation Act).

This legislation aims to establish clear and consistent standards to safeguard injured workers, workers’ compensation plans, employers, and Medicare. Presently, injured workers eligible for Medicare who receive workers’ compensation settlements encounter confusion regarding medical expense payments. There is a pressing need for clarification regarding the law governing the determination of funds to cover items and services under workers’ compensation settlements and Medicare.

In particular, HR 7368 would:

Create certainty for calculating the amounts to be included in Workers' Compensation set-asides.
Provide appeal rights from reviews by the Centers for Medicare and Medicaid Services.
Provide an optional direct payment of set-aside amounts to Medicare.

WR encourages support for this important legislation.

Senator Cantwell talks AI with WR

While visiting Olympia, U.S. Senator Maria Cantwell engaged in discussion with WR's Senior VP of Policy & Government Affairs Mark Johnson, and Local & State Government Affairs Manager Crystal Leatherman on her efforts around artificial intelligence (AI).

Drawing from her experience in the technology sector, Senator Cantwell elaborated on her initiatives in AI, emphasizing the importance of addressing critical issues such as deepfakes, algorithmic bias, and digital privacy. As the chair of the Senate Commerce, Science, and Transportation Committee, she is at the forefront of developing a comprehensive legislative framework that addresses the multifaceted challenges and opportunities presented by AI, including national security, workforce development, and ensuring the global competitiveness of the U.S. in AI innovation.

In addition to her work on AI, Senator Cantwell is advocating for substantial funding for the National Oceanic and Atmospheric Administration (NOAA). This initiative aims to enhance public safety through improved weather forecasting. She is also dedicated to workforce development in Washington State, underscoring both current and emerging challenges of workforce shortages in a variety of sectors and industries.

Future retail trends shaping consumer behavior

At the NRF 2024 conference, industry leaders highlighted upcoming trends shaping consumer behavior and retail operations. They emphasized the demand for authentic physical experiences, the need for a balance between functionality and ambiance in stores, and the rise of age-agnostic products and services.

According to experts, consumers seek genuine experiences amid digital dominance, prompting a renewed focus on the authenticity offered by physical stores. Technology, particularly AI, is expected to revolutionize retail operations, with a shift towards anticipatory models and increased emphasis on truth and transparency.

Demographic shifts, including aging populations and changing family structures, will require businesses to adopt an age-agnostic approach to products and services. Economic and political dynamics are expected to create two-tier societies and stealth wealth, emphasizing the importance of addressing disparities and promoting equality.

In essence, the future of retail will be defined by authenticity, personalized interactions, and adaptive strategies to meet evolving consumer needs.

Tackling Return Policy Abuse

In a recent survey conducted by return management platform Loop Returns, concerning insights emerged regarding consumer behaviors in e-commerce returns. The findings indicate a significant challenge for retailers, with 39% of respondents admitting to either engaging in return policy abuse or knowing someone who has in the past year.

Of particular concern is the frequency of such behaviors, with 20% to 30% of shoppers admitting to habitual misconduct, such as wearing or using items with the intention of returning them weekly. Additionally, "bracketing," where shoppers order multiple items to determine size or fit, is a common practice for 54% of respondents.

Interestingly, charging a return fee could deter 37% of consumers from engaging in fraudulent activities. However, retailers should tread cautiously, as tightening return policies might not always yield desired outcomes. Despite 89% of retailers making returns more costly or restrictive, 59% reported increased return rates.

Understanding consumer motivations behind returns is crucial. The survey found that financial necessity, event-specific needs, and lenient return policies were significant factors.

The survey, conducted between Nov. 22 and Dec. 3, 2023, underscores the urgency for retailers to address return policy abuse comprehensively. By implementing strategies to mitigate abuse while enhancing the customer experience, retailers can navigate this complex landscape more effectively.

A story on near misses and “luck”

Jim hurried to retrieve a box from a shelf in the stockroom to assist a customer. Despite facing a challenge with the ladder due to a pallet blocking its ideal position, Jim opted to ascend anyway. As he descended with the box cradled in one arm, he sensed the ladder shifting. With quick reflexes, he balanced himself, averting further movement and ensuring a safe descent.

Commonly termed as a "close call" or a "near miss," such incidents can manifest in various workplace scenarios, serving as indicators of overall safety performance. Addressing "near misses" proactively is essential to prevent recurrence. Safety protocols exist to safeguard employees, ensuring they return home unscathed, thereby circumventing hospital visits or lifelong impairments.

Employees may have reservations about reporting near-miss occurrences, fearing ridicule, embarrassment, or reluctance to acknowledge errors. To counteract this, it's crucial to foster a culture of encouragement and recognition for reporting, thereby mitigating such concerns.

Maintaining a log of near misses and mandating safety leads regularly review them is pivotal in nurturing a resilient safety culture. Consistent scrutiny of these records should encompass assessment and adjustment of safety plans accordingly. Consistency will serve to prevent these close calls escalating into actual accidents.

Need help with improving your safety program? Check out our free Safety Ambassador Program, where we can help your safety programs to go from compliance toward quality safety practices. Contact us at safety@waretailservices.com to learn more.

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.

Washington Retail Staff

Renée Sunde, President/CEO — 360.200.6450 — Email

Mark Johnson, Sr. VP of Policy & Government Affairs — 360.943.0667 — Email

Crystal Leatherman, State & Local GA Manager — 360.200-6453 — ‬Email

Rose Gundersen, VP of Operations & Retail Services — 360.200.6452 — Email