Newsletter — October 5, 2023 | |
|
POLICY
ECONOMY
RETAIL THEFT & PUBLIC SAFETY
TRENDS
SAFETY
| |
|
WR is pleased to announce the appointment of Crystal Leatherman to its Policy and Government Affairs Team in the capacity of Local and State Government Affairs Manager, a newly established position.
Crystal brings an extensive background in government relations to WR, with expertise in grassroots mobilization, fostering relationships between entrepreneurs and legislators, event coordination, and data-driven storytelling. Her professional journey includes a tenure with the Washington State Auto Dealers Association (WSADA), where she served as a Grassroots Coordinator and consultant. At WSADA, Crystal honed her skills in grassroots advocacy, event planning, and directing special initiatives. A notable achievement during her time there was the orchestration of the annual lobby day in Olympia, where she aimed to maximize legislative interactions for business stakeholders.
In addition to her role with the Auto Dealers Association, Crystal contributed to the Department of Children, Youth, and Families as a Data Governance Coordinator. She also gained legislative experience during her internship, serving two members of the House of Representatives.
Academically, Crystal earned a Bachelor’s degree with a concentration in political science and communications. She furthered her education with a Master of Public Administration, emphasizing public policy, and secured an endorsement in Geographic Information Systems (GIS).
In her current role, Crystal will collaborate closely with Sr. VP of Government Affairs Mark Johnson, Contract Lobbyist Bruce Beckett, and RICS Director John Engber to enhance her advocacy competencies and deepen her understanding of retail sector challenges.
Outside the office, Crystal cherishes quality time with her family and enjoys movies and board games, especially strategic classics like backgammon and chess.
| |
|
WR recently led a call to action that garnered widespread attention within the retail sector. The call asked retailers to actively participate in a 2024 priority survey—a critical initiative aimed at steering the Association's focus as we approach the upcoming legislative session. The survey explored a range of pressing issues, from ranking each organization's top priorities to understanding the profound impact of Washington State laws on businesses.
Key Insights from the Survey:
Top Priorities and Issues
When participants worked on the task of ranking the issues from most to least important, a clear consensus emerged. Crime and public safety were the top priority, with over half of the respondents placing it as their number one concern. Following closely behind were concerns about inflation and the overall state of the economy. Tied for the third position were minimum wage compliance with local ordinances and the persistent supply chain challenges that have become a defining feature of recent times. Transportation and delivery claimed the fourth spot as a significant area of concern, while rounding out the top five was the growing influence of technology, specifically Artificial Intelligence (AI).
Legislative Goals and Priorities
When asked about their respective organizations' legislative goals and priorities, a striking consensus was apparent through the responses—there is an urgent need to strengthen laws related to crime. One respondent emphasized, "Crime and public safety will always be front and center. If we can't provide a safe environment for customers and employees, it affects other areas of business." Building and strengthening the Association's relationships with legislators from both sides of the aisle emerged as another common goal. Respondents stressed the importance of educating lawmakers about the retail industry's significant role in Washington State—highlighting its role as a provider of good jobs with clear career paths and its status as a major economic generator. Additionally, there was a resounding call to mitigate the increase in taxes and other expenses that are currently impacting businesses' ability to thrive.
Impact of Washington State Laws
Read the rest of the article
| |
|
WR participated in the kick-off of the Vibrant Communities Initiative organized by our national partner, the Retail Industry Leaders Association (RILA), in Seattle last week.
The initiative seeks to unite various decision-makers and stakeholders in public safety, retail theft, and organized retail crime to develop best practices and strategies to deploy throughout the country. In addition to WR, the meeting included prosecutors, law enforcement, loss prevention, asset protection, diversion, and treatment professionals from around the region, focused mainly on Seattle and King County.
The issue received particular attention with the unfortunate announcement by Target it will be closing two Seattle stores over concerns with safety and retail theft.
Seattle and King County were selected partly because of the unique partnership shared by the Seattle Attorney's Office and the King County Prosecuting Attorney's Office. In particular, the focus by these offices is on the high utilizers – or repeat offenders – to begin to lessen the impact of these crimes on our communities and to provide the services needed to those living with mental illness or substance abuse disorders to break the cycle many these individuals are facing. Sadly, many retail thieves are recruited and preyed upon by the organized retail crime rings plaguing our state and cities. These ORC rings are often multi-state and multi-national operations. Recently, a crime ring from Columbia was apprehended in Bellevue with nearly $80,000 worth of stolen clothing.
WR applauds RILA for convening Vibrant Communities in our state. We are excited about the potential for developing tools that will benefit cities and states across the country. Many of these strategies and recommendations are highlighted in the Seattle Auditors report on organized retail crime, including enhancing and upgrading technology in the fight against crime. Standardizing reporting, filing, and prosecution across retail companies, law enforcement agencies, and prosecutors will speed up the process, volume, and accuracy and lead to more efficient use of all parties' limited resources while yielding more significant results.
Stay tuned for further updates and discussions as subcommittees and pilot projects conduct their work. This nearly year-long project hopes to wrap up its findings and recommendations in the summer of 2024.
| |
|
Washington’s Department of Labor and Industries (LNI) announced that Washington’s minimum wage will increase from $15.74/hour to $16.28/ hour beginning January 1, 2024. The 3.37% increase is based on state law, which requires the state’s minimum wage to be adjusted annually based on the Consumer Price Index for Urban Workers (CPI-W).
Washington State’s minimum wage continues to be the highest in the nation. Cities, however, can establish a minimum wage higher than the state. SeaTac, Seattle, and Tukwila have higher minimum wages than the state, with additional cities considering similar policies.
The federal minimum wage remains at $7.25 per hour.
The state minimum wage applies to workers 16 years of age and older. For workers ages 14-15, employers can pay 85% of the state minimum wage under certain circumstances.
The adjustment in the minimum wage also triggers adjustments to the minimum salary requirements for executive, administrative, and professional workers to be exempt from overtime compensation. For 2024, the minimum salary for overtime-exempt employees for both large and small employers will be two times the minimum wage, an increase to $67,724 per year. Under rules adopted before the pandemic, LNI is increasing the overtime exemption threshold annually to reach 2.5 times the minimum wage by 2028 for all employers. In 2025 and 2027, smaller employers (with 50 or fewer employees) will have slightly lower salary exempt thresholds than larger employers ( 50 or more employees).
| |
|
Washington’s Economic and Revenue Forecast Council released its quarterly economic and state revenue forecast. The September forecast initiates the budget writing process for the 2024 session by providing legislators and the Governor with the basic data they need to prepare 2024 budget proposals. Earlier in the year, the Council forecast a mild downturn in the economy and employment that would be driven by interest rate hikes and uncertainty over the war in Ukraine.
Surprisingly, this forecast shows stronger-than-expected revenue collections and employment growth. For example, the forecast now predicts $663 million of additional revenue over the 2023-25 biennium and $437 million for the 2025-2027 biennium. Additionally, the data continues to show strong employment growth, with the unemployment rate now at an all-time low of 3.6%.
According to the forecast narrative, the growth in personal income has driven consumer spending—hence the continued growth in tax collections during this period.
The forecast does not include revenue generated from carbon auctions under the newly implemented Climate Commitment Act. Revenues from carbon auctions are distributed to several specific accounts, with half of the revenue dedicated to transportation. The 2023 budgets assumed about $2.2 billion of auction proceeds over the biennium; however, actual collections are more than double the predicted amount. If the trend continues, legislators will have more than $2 billion of unexpected revenues from carbon auctions alone in the 2024 session.
| |
|
Retail crime has become a pervasive issue, escalating to unprecedented levels and culminating in an astounding $112.1 billion in industry losses in 2022, a significant increase from the $93.9 billion recorded in 2021, according to the 2023 National Retail Security Survey. This surge in retail theft and associated financial losses is not merely an economic challenge but also a safety concern, as retailers, regardless of size or sector, contend with the violent nature and safety risks posed by these criminal activities.
The survey, which encompasses insights from 177 retail brands, accounting for $1.6 trillion of 2022’s annual retail sales and representing over 97,000 retail locations across the United States, reveals that the average shrink rate in FY 2022 escalated to 1.6%, up from 1.4% the previous year. Internal and external theft were the primary culprits, accounting for nearly two-thirds (65%) of retailers’ shrink.
Organized Retail Crime (ORC) again was reported as a significant concern, with more than two-thirds (67%) of survey respondents witnessing an escalation in violence and aggression from ORC perpetrators compared to the previous year. This impacted the financial bottom line for retailers and forced them to alter operational strategies. For instance, 28% of retailers have had to close specific store locations, 45% have reduced operating hours, and 30% have modified in-store product selections as a direct consequence of retail crime.
Additionally, the types of products targeted by shoplifters have diversified, ranging from high-price, high-fashion items to everyday products with quick resale capability, such as outerwear, batteries, energy drinks, designer footwear, and kitchen accessories. The top five cities/metropolitan areas most impacted by ORC in the past year were Los Angeles, San Francisco/Oakland, Houston, New York, and Seattle.
In response to retail crime’s evolving and sophisticated nature, retailers have been forced to adapt and enhance their prevention efforts. This includes a 34% increase in internal payroll to manage risks, a 46% rise in the use of third-party security personnel, and over half (53%) increasing their technology and software solution budgets in the past year. With violence emerging as a paramount concern, 54% have amplified or are in the process of enhancing employee workplace violence training.
Read the rest of the article
| |
|
Earlier this year, we reported on the staggering frequency of vehicular smash and grabs. In most cases, stolen cars are driven through a retail business’ storefront doors, giving thieves access to the store’s goods. Stolen vehicles are a much more substantial “tool” to access a retail business than bolt cutters or a hammer. The good news is that business owners have preventative options.
As outlined in the Guide to Navigating Public Safety & Retail Crime, a free resource WR offers, bollards can prevent vehicles from ramming into buildings. If cities or counties don’t approve bollard installations, removable barriers, such as rock-filled gabion wire cages, can support a planter or bench seat while effectively stopping a moving vehicle.
Recent cannabis shop smash and grabs have spotlighted property owners’ intent versus effectiveness. These owners were well-intentioned, having bollards in place, but set too widely apart.
The world’s smallest production car was only 41 inches wide, but today, most small and sub-compact cars on the market are over 5 feet wide—meaning, bollard poles should be set at no more than 5 feet on center. Bollard poles should ideally be made of concrete-filled 6-inch galvanized steel or concrete-filled plastic PVC pipe. PVC pipe bollards should be reinforced with several pieces of rebar penetrating the entire tube length and embedded in a concrete footing that sits 18 inches to two feet below grade.
| |
|
Apparel retailers are gearing up for one of the busiest shopping seasons of the year, but this time, they’re doing it with significantly slimmer inventories. This shift is driven by various factors, including disruptions in the supply chain due to the ongoing pandemic and challenges in sourcing raw materials.
Abercrombie & Fitch, for instance, revealed in its recent earnings report in late August that it had reduced its inventory by approximately 30% compared to the previous year. G-III Apparel Group, the owner of brands like DKNY and Karl Lagerfeld, also reported a 23% reduction in year-over-year inventories. Guess has joined the trend, announcing its plans to trim inventory by 10% this year.
The initial buildup of inventory by retailers was a response to supply chain disruptions and the fear of running out of stock during the holiday seasons of 2020 and 2021. However, this strategy backfired as supply chain delays persisted, and consumer demand took a hit. As a result, apparel retailers found themselves burdened with excess inventory. Consequently, they have been diligently working to reduce their stock levels ever since. Industry analysts anticipate the apparel sector preparing for fewer discounts this year and bracing for a slower holiday sales season.
The improved shipping times associated with leaner inventories bring several advantages. Retailers can achieve better profit margins and reduce the need for deep discounts. According to Sky Canaves, a senior analyst at Insider Intelligence, constant markdowns can condition consumers to wait for sales or resist paying full price. Retailers are willing to accept the risk of potential sales losses due to out-of-stock items to safeguard their profit margins.
For apparel retailers like Abercrombie and Kohl’s, maintaining lower stock levels also offers the advantage of agility in responding to emerging fashion trends and sourcing highly sought-after products. Kohl’s, for example, reduced its inventory by 14% in the recent quarter and expressed its commitment to optimizing its apparel assortment to align with customer preferences. Abercrombie executives have highlighted their sourcing team’s ability to swiftly respond to demand signals, emphasizing their agility in adapting to what’s working in the market.
In response, apparel retailers are strategically reducing their inventory levels in response to evolving market dynamics and challenges in the supply chain. This shift allows them to enhance profit margins, reduce the reliance on heavy discounts, and stay agile in a rapidly changing fashion landscape.
| |
|
Costco reported earnings last week that surpassed Wall Street predictions, primarily driven by a surge in grocery sales despite declining high-value item purchases. CFO Richard Galanti revealed that while shopper visits to Costco increased, average spending per visit decreased, attributed to weaker sales of non-food items in the U.S. and the impact of reduced gas prices on overall revenue. Globally, foot traffic increased by 5.2% year-over-year, with a 5% rise in the U.S., while the average transaction amount declined by nearly 4% globally and 4.5% in the U.S.
The fiscal fourth quarter saw Costco’s net income rise to $2.2 billion, or $4.86 per share, compared to $1.87 billion, or $4.20 per share, in the previous year. Comparable sales for the company increased by 1.1% year over year, with a mere 0.2% growth in the U.S. Excluding gas price changes, the metric rose by 3.8% overall and 3.1% in the U.S.
In the past three years, Costco experienced substantial growth due to increased home cooking and millennials moving to larger suburban homes during the pandemic. Inflation also drove shoppers to sign up and renew memberships at warehouse clubs. Costco ended the quarter with 71 million paid household members, an almost 8% increase from the previous year, outpacing the rate of new store openings, which increased by just under 3%.
Costco also encouraged more members to opt for its higher-tier Executive Membership, priced at $120 annually, offering additional perks. By quarter-end, Costco had 32.3 million paid executive memberships, an increase of 981,000 from the previous quarter, constituting over 45% of all paid memberships and accounting for about 73% of global sales.
Despite elevated grocery bills and housing costs causing consumers to cut back on big-ticket and discretionary items, impacting Costco’s digital sales, some discretionary items like appliances surged by over 30% year over year in the quarter. Furthermore, groceries continued to be the primary sales driver at Costco, prompting the introduction of small-ticket items and an early launch of Christmas items.
In the U.S., sales trends slowed down, with comparable sales roughly flat in the pasz two quarters. Investors anticipated a membership fee increase, which has not yet occurred. The last fee hike was in June 2017, and according to typical practice, another was due in early 2023. Galanti confirmed that a fee increase is a matter of “when, not if.”
Costco plans to open ten new stores in the next three months after adding 23 new locations in the fiscal year. The company’s stock has performed well, with a 21% increase so far this year, outpacing the S&P 500’s 11% gains. On Tuesday, the stock closed at $552.96, down about 1%.
| |
|
Safety is often referred to as a “priority,” not a value. Priorities can change in response to situational demands. When safety is a primary value, it becomes a natural way of performing a job instead of being a “priority.”
When we tell employees that safety is a priority and present them with the rules, policies, and procedures the business has established and then threaten the employees with write-ups, suspensions, or termination for ignoring them, we create an atmosphere of “we are the boss, and you will do as we say.”
We lose so much important information about weaknesses in our system because we shoot the messenger. Should we hold people accountable? Yes, absolutely, but rather than disciplining them for making mistakes, hold them responsible and task them with identifying the best way to prevent others from making similar mistakes.
Helping employees make safety a value takes work, but it can be done, especially when it isn’t presented as a threat. Making safety a personal issue for the employee is often a successful tact. Help the employee see how their actions could affect the safety of others.
By making safety personal, it becomes a core value. And when all levels of the company practice what is preached, we can make safety a positive issue instead of a negative one.
There are several good videos on this topic on RS SafetyTV.
Our safety team is available to help members improve their safety program beyond compliance with 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.
| |
|
Renée Sunde
President/CEO
360.200.6450
Email
| |
|
Rose Gundersen
VP of Operations
& Retail Services
360.200.6452
Email
| |
|
Mark Johnson
Senior VP of Policy & Govt. Affairs
360.943.0667
Email
| |
|
Robert B. Haase
Director of
Communications
360.753.8742
Email
| | | | |
