Newsletter August 18, 2022

IN THIS ISSUE

ECONOMY

ON THE LOCAL FRONT

RETAIL THEFT & PUBLIC SAFETY

SAFETY

Overexertion responsible for 40% of retailers’ claims costs

Inflation slowed in July as U.S. dollar strengthened

The producer price index fell 0.5% in July, per the Labor Department, but prices are still up 9.8% year-over-year. Gas prices have dropped, which have offset gains in housing costs, but inflation is still at near 40-year highs, and future rate hikes by the Fed are expected.

As of this week, the federal prime rate is 5.5%, higher than it has been in years. Internationally, we are doing well by comparison. The U.S. dollar is up more than 10% in 2022 compared to other top currencies. That is great news for American travelers, but with most international businesses and governments paying in in U.S. dollars, their bottom lines are severely impacted. Some countries with vulnerable economies, such as Sri Lanka, are facing complete financial collapse. Considering Argentina’s interest rates are at 69.5% amidst 71% inflation, our Fed’s incremental rate adjustments seem measured rather than reactionary, which has helped stabilize our major trading indexes.

Despite inflation, consumers continue shopping

According to numbers released by the U.S. Census Bureau yesterday, consumers are still shopping. Retail trade sales were unchanged from June to July but were up 10.1% over last year.

“Retail sales were up considerably compared with a year ago even though consumers are more discerning in this economic environment,” NRF Chief Economist Jack Kleinhenz said. “Consumer spending was an encouraging signal as the economy kicked off the third quarter. Nonetheless, inflation is still disturbingly high even as it eases and is the most important challenge for consumers and retailers. The future path of inflation remains a key factor for the economy and monetary policy as the Federal Reserve works to bring price increases under control.”

Retailers see rise in beauty and cosmetics, signaling return of “lipstick index”

The “lipstick index” is a theory attributed to Estée Lauder heir Leonard Lauder when, back in 2001, during a recession, he noticed that lipstick sales and the economy’s health were inversely proportional. As the economy worsened, lipstick sales increased.

Despite soaring inflation, many consumers are opting for affordable luxury items like lipstick and cosmetics as a type of escapism. Beauty products are a rare bright spot for retailers prompting big chains like Target and Walmart to refresh and increase investments in their beauty departments.

Target began opening hundreds of Ulta Beauty shops inside its stores a year ago to include famous brands such as MAC Cosmetics and Clinique. They plan to add 250 more this year and eventually have shops at 800 stores, representing about 40% of their U.S. footprint.

At Walmart, new beauty displays were set up this summer at 250 of the company’s locations, featuring Mario Badescu, Patchology, and other brands typically found at specialty beauty shops or department store makeup counters. A more affordable display called “Beauty Finds” also began rolling to nearly 1,400 stores, offering shoppers lip glosses, lotions, and more for $3, $5, or $9.

High-income shoppers haven’t slowed their spending habits

Luxury retail shoppers seem impervious to inflation and worries of a recession, and their spending is increasing on luxury lifestyle, health, and wellness niches. That is the key takeaway from the most recent Saks Luxury Pulse, a periodic online survey of luxury consumers’ attitudes towards shopping, spending, and fashion trends during the current pandemic.

Survey respondents described their current mood as “hopeful” despite the pandemic. The survey found that higher-income earners, those making $200,000 and up, have continued to spend, prioritizing health and wellness. They plan to buy about the same or more luxury items in the next few months as they did in the past three months. When asked how they would most likely spend an extra $500, they said they would use it for vacation, leisure travel, shoes, accessories, and handbags.

Gautam Chandra, Senior VP of Luxury Retail for Kemper Development and The Bellevue Collection, helps to explain the phenomenon from an insider’s perspective. He explained, “Luxury Retail sales are generally insulated from economic conditions as their target segment are the super wealthy. This segment, with their abundant buying power, provides strong resilience to face the headwinds for the luxury sector.”

Chandra added, “The growing wealth disparity fueled by the pandemic is adding to the luxury retail sector’s strength. The disposable income of the super wealthy consumers has increased because less was spent on leisure, travel, and vacations.”

Seattle adopts rules for Independent Contractor Ordinance

The Seattle Office of Labor Standards has adopted final rules for the Seattle Independent Contractor Protection Act. The Seattle City Council approved the ordinance on June 21, 2021, which will take effect on September 1, 2022.

As the OLS website page for the ordinance states, this ordinance requires entities that hire independent contractors to provide:

A pre-work written notice that identifies the proposed terms and conditions of work and the terms and conditions of payment before starting work.

Timely payment in accordance with the terms and conditions of the pre-work written notice or contract.

If left unspecified, then provide payment within 30 days after the completion of services under the contract.

A written notice that gives specific itemized payment information each time that payment is made.

The OLS website has a fact sheet and other information regarding this ordinance.

Recovery uneven for Downtown Seattle retail

While some foot traffic areas of downtown Seattle are recovering past pre-COVID numbers, such as Capitol Hill or Pike Place Market, other corridors are not. Pike-Pine and Pioneer square areas are still full of broken windows and are dealing with crime and public safety issues.

“That’s an unfortunate reality that makes it harder to operate right now,” Downtown Seattle Association President and CEO Jon Scholes said.

Earlier this month, Amazon announced it had temporarily closed its Amazon Go store near 4th Avenue and Pike Street due to safety concerns for its customers and employees. Businesses nearby had been vandalized.

The good news is that the Pike-Pine corridor will soon receive cosmetic upgrades, improved landscaping and street lighting. Blocks away, business is bustling near Pike Place Market. Established businesses are busy again as they benefit from the return of tourists, business travelers, and convention center visitors. Capitol Hill retail space has filled fast as well.

Educators seek customer service credentials—Rise Up fits the bill

Gretchen Maliska, Shelton SD’s CTE Director; Teri Pablo, Yelm Community School’s CTE Director; Brad Hooper, North Thurston SD’s CTE Director; Paula Perryman, Olympia SD’s CTE Director; Rose Gundersen, WR’s VP of Operations & Retail Services. The red pins on the wooden Washington State map indicate the school district of each of the booth visitors.

WR and the National Retail Federation (NRF) Foundation participated at the Washington Association of Technical Education (ACTE) Summer Conference held in Spokane this week.

With retail as the second largest employment sector in Washington State, it is a top priority for WR and the NRF Foundation to reach teachers on the availability of RISE Up training options and the diverse pathways retail jobs can offer.

At the conference, Rose Gundersen, WR’s VP of Operations and Retail Services, took the opportunity to network with teachers and representatives of student organizations such as DECA and FBLA (Future Business Leaders of America.)

Business and marketing teachers from roughly 40 school districts visited the NRF/WR booth and gathered information on resources such as SAFEME certifications. Most of these teachers agree there is a need for credentialed courses, especially training on customer service and sales, which is foundational in all careers. There was also interest in the three additional courses through RISE Up . Those courses focus on Retail Industry Fundamentals, Business of Retail, and, Warehouse, Inventory & Logistics.

Tanya Torres Sheen, a Bethel School District CTE Business and Marketing Teacher, shared that over 20 of her students completed the Retail Industry Fundamentals course online. The Industry Recognized Credential (IRC) list released the week before the conference did not include RISE Up, which is unfortunate because only courses listed by the IRC can allow teachers to offer them to their students with funding support.

WR will continue partnering with the NRF Foundation to work with the Office of the Superintendent of Public Instruction (OSPI) to get RISE Up courses approved through the IRC process.

Prosecutors and retailers partner to combat retail crime

The National District Attorneys A ssociation (NDAA) and Retail Industry Leaders Association (RILA) have announced a first-of-its-kind national partnership to combat retail crime. The launch of the national partnership follows a successful summit held on June 30, 2022, bringing together leading retailers and prosecutors’ offices from around the country. The alliance aims to establish open communication lines, identify common challenges, share information on repeat offenders, and work together to identify criminal networks targeting local retailers.

“I look forward to continued discussions with the Retail Industry Leaders Association on how to uncover the criminals who profit from stolen merchandise, prevent thefts, and enhance public safety for all who shop and work at our nation’s retailers,” said Erie County District Attorney John J. Flynn, president of the National District Attorneys Association.

Bringing together prosecutors and retailers is essential to combating organized retail crime and keeping our communities safe. Law enforcement agencies at multiple levels, including the federal government, have established the nexus between organized retail crime and violence and broader criminal activity that includes human trafficking, cybercrimes, drug trafficking, domestic violence, and sexual assault. By sharing information and working together to identify the organized criminal networks operating in our communities, we can focus our resources on cases vital to public safety.

Kemper Development educates retail managers on ORT

Last week, Kemper Development, the developer, owner, and manager of The Bellevue Collection, hosted a breakfast meeting for its retail managers to discuss Organized Retail Theft. Alesha Shemwell, Director of Retail and WR Board Member, and Carl Kleinknecht, Kemper’s Director of Security, spoke about the organization’s 24/7 security coordination and collaboration with its retail stores.

During the presentation, each of the 100 managers in attendance received a copy of WR’s Guide to Navigating Public Safety & Retail Crime. Following the presentation, Shemwell expressed, “The specific guidance and approach to retail theft and public safety in the manual was timely and well-received. The more information we can provide to our retailers, the better we can work together to help prepare and prevent these crimes while keeping our employees and customers empowered and safe.”

Suspects accused of stealing $54K in merchandise appear in court

Last week, Bellevue police arrested suspects believed to be a part of three organized retail theft rings responsible for stealing over $100,000 in merchandise. In one of the cases, four suspects were charged, three of which had stolen over $93,000 in handbags from Louis Vuitton in Bellevue. The fourth was charged with selling the stolen bags.

According to investigators, the crew stole from the same Louis Vuitton twice in June 2022. After detectives found the stolen bags for sale online, they set up a buy and arrested one of the suspects. The three thieves were charged with Organized Retail Theft in the 1st Degree, and the fence listing bags for sale online was charged with Trafficking in Stolen Property in the 1st Degree.

On Monday, the four suspects accused appeared in court. According to charging documents, all four have extensive criminal histories. One, as a teenager, plead guilty to manslaughter for his role in the 2009 death of a local street musician known as Tuba Man. Court records show a second defendant had been convicted of second-degree murder in 1997. A judge decided Kendall could be released under the promise of returning to court.

“These suspects were aggressive and coordinated in their efforts and often physically confronted employees or security who stood in their way,” said Bellevue Police Captain Shelby Shearer. “These crew also caused significant damage to the stores during the thefts, causing some businesses to close for the day to clean up the mess.”

“We joined the state’s Organized Retail Task Force committed to cracking down on this crime,” said Shearer. “These cases involved regional collaboration and partnerships with other law enforcement agencies and the affected businesses. Arresting these suspects reduces crime not only in Bellevue but regionally.”

Is your store next?

In what seems to be an unending barrage of vehicular smash and grabs, retail stores are vulnerable to this dangerous reality leaving owners and management wondering, will they be next?

From coast to coast, the stories in the evening news have a similar plotline: A stolen vehicle rams through the front entrance of a retail store, and thieves make off with thousands of dollars in merchandise in a second stolen vehicle before police arrive. Depending on the time of day, these brazen thefts put employees, customers, and pedestrians at risk of physical harm.

In addition to the financial loss from theft, storefronts often incur expensive building repairs, which can exceed $100,000 and take weeks to complete. Businesses can prevent these types of crimes by taking measures to bolster their perimeter security. Use this link to download an excellent resource on this topic from the Department of Homeland Security.

Overexertion responsible for 40% of retailers’ claims costs

Work-Related Musculoskeletal Disorders (WMSDs) are caused by using high force, repetitive movements, awkward postures, or too much vibration on the job.

WMSDs can be painful, debilitating, and lead to lost work time. In Washington, 40% of compensable workers’ compensation claims are for WMSDs. These claims were most commonly caused by overexertion when lifting (33%), pulling or pushing objects (7%), and holding, carrying, turning, or wielding objects (7%.)

The most frequently injured part of the body is the lower back, accounting for 28% of all claims. Shoulder injuries rank a distant second at 17%.

WMSD claims in Retail Trade are costly in Washington state. These claims have an average cost of over $10,000 per claim and have resulted in an average of 50 days of time loss per claim.

Overexertion prevention safety practices:

Proper posture, body mechanics, and ergonomics can lessen overexertion injuries. Management and supervisors should consider adopting these safety practices: