Newsletter — January 15, 2026

You’re invited: Legislative retail reception

You’re warmly invited to a special reception where you will have the opportunity to connect with your Washington State legislators.

Join us on Wednesday, February 4, 2026, from 5:30 p.m. to 8:00 p.m. at the Lord Mansion in Olympia. This reception offers a valuable opportunity to discuss the challenges and opportunities facing the retail industry, including navigating a rapidly changing landscape while keeping businesses thriving, employees safe, and customers engaged.

This event is designed to foster open and constructive conversation between retailers and policymakers about issues impacting retail across Washington.

Don’t miss your chance to be part of the conversation shaping the future of retail. Please RSVP by emailing kdavies@washingtonretail.org or calling (360) 790-0359.

We look forward to seeing you there.

IN THIS ISSUE

POLICY

ECONOMY

POLITICAL NEWS

RETAIL THEFT & PUBLIC SAFETY

Kroger store closures raise questions for workers and communities

IN THE NEWS

TRENDS

What we are tracking — WR Legislative Hot List

WR is closely monitoring the bills that have advanced through the legislative process. Each week, we’ll spotlight our weekly “hot list” key legislation that could have the most significant impact on WR members.

Commercial Electronic Mail Act (CEMA) (SB 5676/HB 2274)

Washington’s Commercial Electronic Mail Act (CEMA) is being aggressively exploited following a recent Washington Supreme Court decision (Brown v. Old Navy), which ruled that certain routine marketing email subject lines can be considered misleading. The law allows $500 per email violation, does not require proof of actual harm, and carries a four-year lookback, creating massive financial exposure for businesses.

Since the ruling, Washington has seen a sharp spike in lawsuits—many driven by out-of-state trial firms—targeting commonplace marketing language (e.g., “last chance,” “up to X% off,” holiday promotions). Each email counts as a separate violation, creating multimillion-dollar—and potentially billion-dollar—liability risks, especially for Washington-based companies or those with marketing operations in the state. Similar abuse of privacy statutes in California has resulted in over 1,500 lawsuits, underscoring the urgency.

Retailers report these cases are extremely difficult to dismiss early, forcing costly, fact-intensive litigation even when companies believe they complied with the law. This disproportionately harms mid-sized and Washington-based businesses and undermines the state’s business climate.

In response, the Washington Retail Association and partners are pursuing a legislative fix to close the loophole while preserving legitimate consumer protections. A bipartisan strategy is underway, with Senate and House sponsors identified, coalition-building across industries (retail, airlines, cruise lines), and rapid bill drafting aimed at introduction in the 2026 session. Key challenges include the short legislative session, the need for rapid lawmaker education, and anticipated resistance from trial attorneys.

Position: WR supports this bill.

Textile EPR (HB 1420)

This bill proposes a textile Extended Producer Responsibility (EPR) program and closely mirrors California’s law, making it particularly relevant for retailers operating in both states. Sponsored by Rep. Reeves, the bill has been developed through a collaborative interim process and is expected to be introduced as a substitute bill based on stakeholder feedback. Despite these efforts, the sponsor and key legislators agree the bill is not ready this session, and WR cannot support it at this time. While there is interest in a future version that could align with California’s assessment model to reduce costs, momentum appears limited this session.

Position: WR opposes this bill.

Immigrant Workers Protection Act (HB 2105)

Though this bill models California’s Immigrant Worker Protection Act passed in 2017, the initial bill version would greatly expand both compliance requirements and penalties well beyond California’s model, including private right of actions and high fines that are multiplied by the number of WA-based employees.

Position: WR has concerns with this bill.

ORC Sentence Enhancements (HB 2209)

Rep. Mari Leavitt (D-28) introduced a replacement Organized Retail Crime bill, building on last session’s HB 1276, adding sentencing enhancements tied to the aggregate value of stolen goods. WR has worked closely with the sponsor and stakeholders to address prior concerns and build support, including from King County. WR, alongside WFIA, Northwest Grocers, and WARCA, continues proactive education and lawmaker engagement on ORC and retail theft.

Position: WR supports this bill.

Medical Provider Network (SB 5847)

If implemented, this bill will reverse some of the Medical Provider Network reform in 2011 -- shift medical benefit management toward much greater provider discretion, increased worker access out of network, very tight Utilization Review deadlines, long-tail medical obligations, and for self-insured employers, greatly increased risk of "Good Faith and Fair Dealing" strikes over allegations of directed care.

Position: WR opposes this bill.

SB 5796 and HB 2274 are critical to protect Washington retailers from Commercial Electronic Mail Act abuse

Washington’s Commercial Electronic Mail Act (CEMA), enacted in 1998, regulates commercial email sent from a computer located in Washington or to Washington residents. For decades, the law generated minimal litigation. That changed dramatically following an April 2025 Washington Supreme Court decision.

Under current law, RCW 19.190.020 prohibits commercial emails that contain false or misleading information in the subject line. Each violation carries $500 in statutory damages, subject to treble damages totaling $1,500 per email per recipient. Plaintiffs do not need to prove actual damages; the statute of limitations is four years, and CEMA violations are treated as per se violations of the Consumer Protection Act (CPA).

In Brown v. Old Navy (April 17, 2025), the Washington Supreme Court ruled that any false or misleading information in an email subject line violates CEMA—regardless of context, materiality, or whether the recipient relied on the email. Since that decision, dozens of lawsuits have been filed targeting routine retail subject lines such as “up to” discounts, limited-time offers, and “free gift” promotions. Because liability is calculated per email per Washington recipient, even a single campaign can result in massive financial exposure.

To address these unintended consequences, lawmakers introduced SB 5796 and its House companion, HB 2274. The legislation would revise RCW 19.190.020 so that a subject line violates CEMA only if it is likely to mislead a reasonable recipient about a fact material to the transaction, and only if the subject line was material to the recipient’s decision to complete the transaction. SB 5796/HB 2274 would also remove CEMA subject-line violations as per se CPA violations, limiting remedies to CEMA’s statutory damages. Importantly, the legislation would apply both prospectively and retroactively to existing claims.

For Washington retailers, SB 5796 and HB 2274 represent a critical effort to restore balance, curb abusive litigation, and realign CEMA enforcement with traditional consumer protection standards. To learn how you can get involved, contact Crystal Leatherman, WR’s Director of Policy and Government Affairs, at cleatherman@washingtonretail.org.

HB 2218/SB 5847 would alter workers’ compensation medical guidance and access

Washington’s workers’ compensation system underwent significant reform in 2011 with the adoption of the Medical Provider Network (MPN), which aligned care for injured workers with evidence-based treatment guidelines and recognized best practices. Since then, the Department of Labor & Industries (L&I) has supported these goals through committees and programs focused on improving medical quality and return-to-work results.

During the current legislative session, lawmakers are considering HB 2218 and SB 5847, which would expand provider discretion and worker access to care.

Key provisions include allowing attending providers to depart from established treatment guidelines whenever they determine those guidelines are not medically appropriate, without additional standards or review requirements. The legislation would also restrict employers from “inducing” workers to seek care from specific medical providers, with substantial penalties for violations. These restrictions could limit employers’ ability to share information or offer modest incentives encouraging care from providers with demonstrated recovery outcomes, including those participating in the Center of Occupational Health and Education (COHE) program.

In addition, the bills would permit workers to access out-of-network providers if no in-network provider is available within 15 miles, a distance commonly traveled by many Washington residents, including those in urban areas.

The proposals were introduced without formal input from L&I, and stakeholders continue to assess how the changes may interact with existing reforms and affect system costs, care coordination, and long-term outcomes as the legislative process continues.

Textile EPR legislation discussions continue in Washington

Extended Producer Responsibility (EPR) for textiles remains an active and evolving policy discussion in Washington. HB 1420, sponsored by Rep. Kristine Reeves (D-30), was introduced during the 2025 legislative session and has returned for consideration in 2026.

During the interim, WR, along with key stakeholder groups, engaged with legislators and policy staff to help deepen understanding of the complexity of textile waste, global supply chains, and potential program design. WR appreciates Rep. Reeves’ collaborative, stakeholder-driven approach, which has helped improve the proposal and advance the conversation. However, significant concerns remain, and WR believes additional time is needed before Washington moves forward with a statewide textile EPR program.

Learning From California

California was the first state in the nation to enact a textile EPR law (SB 707). As implementation begins, the state is encountering challenges standing up the program, highlighting the complexity of textile EPR and the potential for unintended consequences. Washington has an opportunity to learn from California’s experience, both what works and where challenges have emerged, before advancing a similar framework.

HB 1420 Still Needs Work

While the changes in HB 1420 reflects meaningful stakeholder engagement, key questions remain around:

Program feasibility and cost impacts
Administrative complexity
Infrastructure readiness and market capacity
Potential impacts on consumers and small businesses

Given these unresolved issues, in addition to the time constraints of a short 60-day session, WR believes Washington should pause and learn from California’s rollout before moving ahead and do more robust stakeholder work after.

Looking Ahead

WR will continue to engage constructively on HB 1420 and appreciates Rep. Reeves’ thoughtful approach. Ongoing dialogue and real-world lessons from other states will be essential to ensuring any future textile EPR policy is workable, effective, and avoids unintended consequences.

HB 2209: A targeted response to organized retail crime

Organized retail crime (ORC) and large-scale retail theft continue to threaten worker safety, community access, and Washington’s economy. WR is proud to support HB 2209, sponsored by Rep. Mari Leavitt (D-28), which offers a thoughtful and balanced response to this pervasive problem affecting the state.

HB 2209 reflects Rep. Leavitt’s extensive work to understand the scope and complexity of ORC. That work included direct engagement with retailers, asset protection and loss prevention experts, law enforcement, and prosecutors. As a result, the bill is grounded in real-world experience, credible data, and effective enforcement strategies, and that collaborative approach is reflected throughout the legislation.

What the Bill Does

HB 2209 modernizes Washington’s sentencing framework to better address organized, high-dollar, and repeat retail crime, and aligning state law with national best practices.

The bill is narrowly tailored to focus on serious criminal activity.

Key provisions include:

Targeted sentencing enhancements for theft, robbery, possession of stolen property, and trafficking stolen goods when losses exceed $20,000
Stronger tools to disrupt organized theft rings and fencing operations
Preservation of judicial discretion for youth offenders, balancing accountability with rehabilitation

Why This Matters for Washington

ORC is not petty theft. It is coordinated, often violent criminal activity that places retail workers at risk, increases costs for consumers, reduces access to essential goods, and undermines public safety. Unfortunately, Washington continues to be one of the leading states in the nation for retail theft rates, with billions in stolen goods and hundreds of millions in lost state tax revenue. These impacts are felt across urban, suburban, and rural communities, affecting retailers of all sizes.

By targeting organized and large-scale criminal enterprises, HB 2209 strengthens accountability while protecting workers, customers, and communities.

What’s Next

Once HB 2209 is scheduled for a hearing, WR will engage its advocacy network and encourage supporters to sign in PRO.

Click here to sign up for WR action alerts and stay informed as the bill moves forward.

Policy updates on cash transactions and carryout bags

Two policy areas under review this session could affect retail operations across Washington, including cash handling practices and carryout bag requirements.

HB 2334 would allow retailers to round the final total of cash purchases to the nearest five cents, reducing the need to handle pennies. The proposal responds to ongoing penny shortages and the fact that producing one-cent coins now costs more than their face value. Electronic payments would continue to be processed to the exact amount, so the change would apply only to cash transactions. Under the bill, totals ending in one, two, six, or seven cents would round down, while totals ending in three, four, eight, or nine cents would round up. The Washington Retail Association is monitoring the proposal and seeking clarification on audit compliance to ensure tax calculations remain accurate and that retailers have clear guidance related to existing consumer protection laws.

Several bills also address carryout bag policies, offering different approaches. SB 5965 and HB 2233 would ban plastic carryout bags starting January 1, 2027, and increase the paper bag fee from $0.08 to $0.20. HB 2284 proposes extending the current four-cent fee on thicker plastic bags, removing a scheduled expiration on thickness standards, and allowing compostable alternatives. SB 6030 would repeal bag thickness requirements and fees entirely, citing research from Washington State University showing a 50 percent reduction in plastic carryout bag use following the original $0.08 fee.

Except for SB 6030, these measures are scheduled for hearings in the Senate and House environment committees during the first week of the session.

Image: Nick Wagner / The Seattle Times, 2025

WA lawmakers, make this the year to draw a line on spending

Published in the Seattle Times

By the Seattle Times Editorial Board

January 11, 2026

New year, same fiscal conundrum. Washington state lawmakers once again face a legislative session that will be dominated by one task: cobbling together the money to pay for an ever-expanding state budget.

Instead, they should seek ways to live within their means, and discontinue a habit of overspending tax revenues.

Gov. Bob Ferguson’s recent budget proposal is essentially a hole-plugging exercise, relying on revenues from the Climate Commitment Act, and drawing down state reserves, to fund state government through June 2027. Ferguson has also backed an impending bill this session to tax millionaires’ incomes as a way to help put an end to the protracted financial imbalance beyond the current two-year budget cycle.

Legislators now have 60 days to put their own imprimatur on the budget. As they weigh the dollars and cents, they must not lose sight of two painful realities. One, that the state’s cost of living, among the highest in the nation, is crushing many Washington families. And two, that the Legislature, by passing a buffet of last-minute tax increases last year — the largest such hikes in state history — is partly to blame for making this a peculiarly expensive state.

Hard to believe that just four years ago, lawmakers sat on a $15 billion surplus. Some of it — one-time federal COVID-19 relief — was plugged into ongoing programs. And the Legislature’s undisciplined habits led to Ferguson to sign more than $12 billion in quickly passed new taxes last year. Those included a sales tax on services approved in just nine days.

The governor, for his part, is drawing an important line in the sand. He is resisting raising sales, property or business-and-occupation taxes — a signal to legislators that more tax revenue is an unacceptable outcome this year.

Ferguson has also backed a 9.9% income tax on earners making more than $1 million a year, introduced by Senate Majority Leader Jamie Pedersen, D-Seattle. But the governor also insists that a new income tax must be paired with reductions in other parts of the tax code to reduce the burden on Washington families and businesses. That is, should it survive likely challenges in court and at the ballot box. Don’t forget, enough voters sent Initiative 2111 to the Legislature, a measure that banned state and municipal governments from imposing a state income tax. And the Legislature approved it in 2024.

Study highlights challenges for new business survival in Washington

A recent national study places Washington at the bottom of the country for new business survival, raising questions about the factors shaping the state’s small business environment. The analysis, conducted by Ringy, followed businesses launched in 2019 and tracked whether they were still operating in 2024.

Nationally, about 51 percent of new businesses remained open after five years. In Washington, that figure was notably lower at 41.1 percent. Of the 22,326 businesses that opened in the state in 2019, only 9,183 were still operating five years later. This ranked Washington last among states reviewed, behind Missouri and the District of Columbia.

The findings suggest that a high volume of new businesses does not necessarily translate into stronger long-term survival. California, for example, saw more than 139,000 new businesses start in 2019 and retained over half of them. Alaska, despite having far fewer startups, posted a similarly strong survival rate. Washington appears to fall between, with many new ventures launching, but a smaller share making it through the early years.

Ringy Chief Operating Officer Carlos J. Correa noted that location plays a significant role in business outcomes. States with higher survival rates often benefit from lower operating costs, reduced competitive pressure, or policies that are perceived as more supportive of small businesses. He emphasized that reaching the five-year mark is a critical milestone, as businesses that do so have typically developed stable customers and more efficient operations.

For Washington retailers and entrepreneurs, the study underscores the importance of careful planning and sustained support during the early years of operation.

Image: The Olympian

Governor outlines priorities and bipartisanship in State of the State

Governor Bob Ferguson delivered his first State of the State address on January 13, saying Washington remains strong despite recent challenges and pointing to community resilience following December’s historic flooding. He thanked first responders and local officials for assisting thousands of residents affected by widespread damage, describing the response as a reflection of the heart and spirit of Washingtonians.

Ferguson outlined priorities for the 60-day legislative session, including investments in infrastructure, continued efforts to address housing affordability, and changes to make the state’s tax system more fair. He reiterated support for a tax on individuals earning more than $1 million annually, with a stated goal of returning a significant share of the revenue to Washington residents. He also highlighted proposed transportation and housing investments and early results from executive orders aimed at reducing permit and license processing times and increasing completion of the FAFSA.

The governor addressed external pressures affecting the state, citing shifting federal policies at the Centers for Disease Control and Prevention and the presence of Immigration and Customs Enforcement in U.S. cities. He expressed support for bipartisan legislation that would prohibit law enforcement officers from wearing masks and require clearly displayed identifying information.

Democratic lawmakers largely applauded the address, while Republican leaders expressed concern about its tone and focus. Some Republicans objected to the governor’s remarks on ICE and federal health agencies, while also acknowledging his attention to flood recovery efforts.

Ferguson emphasized bipartisan cooperation, noting that about half of last year’s bipartisan proposals became law. He closed by urging lawmakers to shape the state’s future together, saying Washingtonians are active participants in making history.

A transcript of the address is available here. The full address can be viewed here .

Federal guidance outlines unemployment insurance standards during strikes

The US Department of Labor has issued formal guidance reaffirming federal requirements for unemployment insurance eligibility in the context of labor disputes. In a January 8 memorandum to state unemployment insurance administrators, Michelle Beebe, administrator of the Employment and Training Administration Office of Unemployment Insurance, clarified how federal law applies when states consider providing benefits to individuals engaged in a strike.

While states retain flexibility in administering their unemployment insurance programs, participation in the federal system is conditioned on compliance with core statutory requirements. Among these is the requirement that claimants be able to work, available for work, and actively seeking work for each week benefits are claimed. The Department emphasized that states may not adopt blanket exemptions from these requirements for striking workers.

The guidance explains that providing benefits to individuals who are not genuinely seeking alternative employment or who have withdrawn from the labor market may place a state out of conformity with federal law. A finding of noncompliance could jeopardize federal administrative funding for state unemployment insurance programs, as well as employer eligibility for federal unemployment tax credits.

The memorandum also addressed the limited circumstances under which union hiring hall arrangements may satisfy work search requirements. These provisions apply only when a collective bargaining agreement requires workers to seek employment exclusively through a hiring hall. The Department underscored that this exception is narrow and does not broadly apply to all union members or strike situations.

This clarification is particularly relevant as several states, including Washington and Oregon, begin implementing new laws related to unemployment benefits during strikes. Federal officials indicated they will continue to monitor state implementation to ensure alignment with federal standards.

The Department encouraged states to request technical assistance as needed and reiterated the importance of maintaining compliance to preserve the integrity and stability of the national unemployment insurance system.

Kroger store closures raise questions for workers and communities

Kroger, the nation’s largest grocery chain, plans to close about 60 stores nationwide over the next 18 months, affecting an estimated 6,000 to 9,000 employees. The closures represent roughly 2 percent of the company’s footprint and span at least eleven states, including Washington, where six Fred Meyer and QFC locations are scheduled to shut down by October.

Company leaders have cited ongoing challenges with store performance and retail shrinkage as contributing factors. Industry data from the National Retail Federation estimates total retail shrinkage reached $112.1 billion in 2022, although that figure includes theft as well as operational and vendor losses. Only a portion of shrinkage is attributed to external theft.

Local officials in some communities have questioned whether crime trends fully explain the closures. In Everett, police reported a significant decline in shoplifting at one affected location over the past several years. Kroger has said it continues to invest heavily in safety and security but maintains that certain stores are no longer sustainable.

The restructuring follows leadership changes and the collapse of Kroger’s proposed $24.6 billion merger with Albertsons, which was blocked by state and federal courts over competition concerns. The two companies are now engaged in legal disputes related to the terminated deal, including a $600 million termination fee.

Kroger has stated that employees at closing stores will be offered transfer opportunities, though unions note that transfers can involve longer commutes or changes in hours and seniority. Community leaders have also raised concerns about reduced access to groceries in neighborhoods that may lose their only full-service store.

At the same time, Kroger plans to open approximately 30 new stores, expand digital operations, and invest up to $3.8 billion in capital improvements in 2025. The company characterizes the strategy as a realignment toward long-term efficiency and growth, while communities continue to assess the local impacts.

You’re invited tonight to The Future of Washington Commerce — A Small Business Success Celebration

WR is proud to co-host an exclusive reception with TikTok this evening, celebrating the success of Washington’s small businesses and the growing impact of the digital economy. This special event brings together local business leaders and successful TikTok Shop sellers to highlight innovation, share insights, and explore the future of digital commerce in our state.

Guests will enjoy networking and conversation while learning how digital platforms are helping local entrepreneurs grow, compete, and thrive. Join us as we celebrate small business success and advocate for continued economic opportunities across Washington.

When:

January 15, 2026 | 5:30–7:30 PM

Where:

Heritage Room (Octapas)

604 Water Street SW

Olympia, WA 98501

RSVP:

Please RSVP by email to julia.montiel@tiktok.com or register online

WR joins NRF for its State Legislative Leadership Experience

WR had a strong presence at NRF’s Big Show this year. WR Director of Policy and Government Affairs, Crystal Leatherman, and Interim CEO, Alesha Shemwell, attended the NRF State Legislative Leadership Experience in New York from January 9–11 on behalf of WR. For the first time, Washington state was also represented by two state legislators - Rep. Kristine Reeves (D-30) and Rep. Mari Leavitt (D-28).

The experience began with the NRF University Challenge, which brought together more than 1,000 college students to compete and share innovative ideas. Participants were impressed by the students’ enthusiasm, creativity, and passion for the retail industry. That same day, the group visited Best Buy’s Teen Tech Center, where the Washington legislators saw firsthand how retailers invest in and positively impact their communities.

Day two focused on retailer store tours. Lowe’s, Walmart, Gap/Old Navy, and Brooks Brothers hosted the first round of visits. Shemwell and Rep. Leavitt attended the Brooks Brothers tour, learning about the company’s history as the oldest retailer in the United States and discussing key legislative issues, including tariffs and organized retail crime (ORC). Leatherman and Rep. Reeves toured Gap/Old Navy, where conversations centered on the impact of tariffs on the retail industry as well as sustainability and circularity efforts.

The entire group later gathered at Macy’s flagship store on 34th Street. Macy’s leadership shared the company’s top initiatives and provided a behind-the-scenes tour of both front- and back-of-house operations, highlighting the complexities of managing high-volume brick-and-mortar retail alongside online fulfillment and logistics. These store tours, combined with a lunch with retailer CEOs, gave legislators valuable opportunities to ask questions and gain deeper insight into the retail industry.

The final day coincided with the opening of NRF’s Big Show. Participants heard from Michael Rubin, Founder and CEO of Fanatics; Sundar Pichai, CEO of Google and Alphabet; and John Furner, President and CEO of Walmart U.S. The State Legislative Leadership Experience concluded with a tour of the Big Show exhibit floor, underscoring the critical role technology will continue to play in the future of retail.

The experience was highly valuable for all who attended, and WR hopes to expand participation by welcoming more legislators in the future.

Retail outlook for 2026 amid change and uncertainty

Retailers enter 2026 facing a landscape shaped by rapid technological change, evolving consumer expectations, workforce pressures, and ongoing economic uncertainty. Industry experts note that success will depend less on doing everything and more on clearly understanding core customers and delivering experiences that reflect their priorities.

Artificial intelligence is expected to play a central role in the year ahead. Investments continue to grow as retailers use AI to improve forecasting, personalize customer interactions, manage inventory, and strengthen supply chains. Rather than experimentation, AI is increasingly viewed as an essential infrastructure, with a focus on practical applications that support efficiency, margins, and customer trust.

Large-scale retailers continue to raise competitive expectations. Walmart’s expansion of digital tools, store modernization, and same-day fulfillment illustrates how integrated physical and digital strategies are becoming the norm across the industry.

Physical retail spaces are also evolving. Shopping malls are seeing renewed interest as destinations for entertainment, dining, and social connection, reflecting consumer demand for experiences that go beyond transactions. Experiential concepts and pop-ups help drive foot traffic and engagement.

Shifts in health and wellness are influencing purchasing behavior. The growing use of GLP-1 weight loss medications is affecting apparel sizing, resale activity, and food consumption, prompting retailers and brands to adjust assortments and product development.

Generational change remains a defining factor. Gen Z and Gen Alpha are reshaping expectations around authenticity, technology, flexibility, and values, while also driving changes in social media use and brand engagement.

Looking ahead, retailers are likely to see continued leadership turnover, increased focus on data-driven marketing, and greater reliance on technology to connect with consumers across channels. Adaptability and clarity of purpose will be critical as the industry navigates another year of transition.

NRF.com

Walmart expands drone delivery footprint

Walmart plans to significantly expand its drone delivery service over the next two years, marking a notable development in last-mile fulfillment for large-scale retailers. Through an expanded partnership with Wing, a drone operator owned by Alphabet, Walmart expects to add drone delivery at 150 additional stores in 2026, with a longer-term goal of reaching 270 locations nationwide by the end of 2027.

The retailer currently offers drone delivery at select stores in Texas and the Atlanta metro area. The planned expansion would extend service to markets including Los Angeles, St. Louis, Cincinnati, Ohio, and Miami, with additional locations to be announced. Wing estimates the broader rollout could make drone delivery available to more than 40 million Americans.

Customers interested in the service can use the Wing app to check whether their address falls within the delivery range of participating stores. Walmart has previously indicated that eligible orders may arrive in as little as 30 minutes, offering an option for rapid delivery of groceries and other everyday items.

Commercial drone delivery has gradually expanded since the Federal Aviation Administration authorized aerial package deliveries in 2019. Alongside Walmart, companies such as Amazon and DoorDash are also testing or deploying drone delivery in select markets, reflecting continued experimentation across the retail and logistics sectors.

For retailers, Walmart’s announcement highlights the growing role of emerging technologies in meeting consumer expectations around speed and convenience. While drone delivery remains limited by geography, regulation, and infrastructure, the planned expansion suggests that major retailers continue to invest in alternative fulfillment models as part of broader omnichannel strategies.

January emerges as a critical month for retail operations

For many retailers, January is no longer a slow period following the holidays. Instead, it has become a second peak driven by the volume and cost of product returns. Merchandise sold during November and December increasingly flows back to retailers in early January, placing pressure on logistics, staffing, and margins at a time once considered relatively quiet.

U.S. retail returns are projected to reach $849.9 billion in 2026, representing about 15.8 percent of total retail sales. Returns from online purchases account for a disproportionate share, with an estimated 19.3 percent of e-commerce sales expected to be sent back. While return rates have eased slightly from last year, the total dollar impact remains significant

Holiday sales amplify the challenge. The NRF expects U.S. holiday retail sales to exceed $1 trillion for the first time, with roughly 17 percent of those purchases returned. That equates to about $170 billion in merchandise reentering supply chains shortly after peak season. Carriers report that return volumes typically crest in early January, coinciding with extended peak season shipping surcharges.

Retailers are also navigating higher processing costs, shipping fees, and broader economic uncertainty. Return fraud adds another layer of complexity, with the NRF estimating that approximately 9 percent of returns are fraudulent. Many retailers are responding by investing in technology and reevaluating return policies.

Industry practices are evolving toward lower-cost return options, such as in-store returns, consolidated drop-off locations, and incentives for exchanges or store credit. As return volumes remain elevated, January has become a recurring operational test. Retailers that plan for returns as a core part of their business strategy are better positioned to manage costs while meeting customer expectations.

What retailers are watching in the new year

As retailers look ahead to 2026, National Retail Federation experts point to a year shaped by evolving consumer behavior, rapid technology adoption, and continued policy and economic uncertainty.

Artificial intelligence remains a central theme. Experts expect AI to further transform supply chains, marketing, customer engagement, and fraud prevention, while also introducing new governance and cybersecurity considerations. At the same time, AI is changing how consumers discover products and make purchasing decisions, influencing search, reviews, and personalization across channels.

Consumer behavior is another key focus. Spending levels have not always aligned with consumer confidence in recent years, prompting retailers to look more closely at the motivations behind purchases, including family priorities, community connection, and the search for value and enjoyment. Economic pressures, particularly for lower-income households, could test consumer resilience in the year ahead.

Sustainability and circular retail practices are expected to expand as retailers respond to consumer interest, cost pressures, and regulatory requirements. Efforts such as resale, repair, and recycling can reduce return costs, create new revenue streams, and help address product stewardship laws.

Workforce and supply chain challenges also remain prominent. Automation and demographic shifts are reshaping retail jobs, driving continued investment in training, flexibility, and compensation. At the same time, uncertainty around trade policy, tariffs, and immigration pathways may affect staffing and sourcing decisions.

Finally, retailers are watching food affordability, organized retail crime, and broader economic signals such as hiring trends and wage growth. Together, these factors suggest a complex but opportunity-rich environment as retailers adapt to serve customers and communities in 2026.

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Washington Retail Staff

Alesha Shemwell, Interim CEO — 360.200.6450 — Email

Crystal Leatherman, Dir of Policy & Government Affairs — 360.200-6453 — ‬Email

Rose Gundersen, State and Local Gov't Affairs Associate — 360.200.6452 — Email