December 17, 2018
MnRA's new government relations manager Savannah Sepic tours the Minnesota State Capitol on Monday.
November Retail Sales Increase 5 Percent Over 2017, Putting Holiday Spending On Track To Meet NRF Forecast
From the National Retail Federation, December 14, 2018

November retail sales were up 0.7 percent seasonally adjusted from October and increased 5 percent unadjusted year-over-year, completing the first half of the holiday shopping season with spending on track to easily meet the National Retail Federation’s forecast, NRF said today. The numbers exclude automobile dealers, gasoline stations and restaurants.

“Consumers have the capacity and confidence to spend this holiday season,” NRF Chief Economist Jack Kleinhenz said, citing the influence of stronger employment, improved wages, tax cuts and increased net worth. “This is a good start to the holiday season and consistent with our outlook. Consumer spending remains solid and clearly provides evidence that the economy is healthy as we head into 2019.”

NRF’s forecast predicts that holiday retail sales during November and December will increase between 4.3 and 4.8 percent over the same period in 2017 for a total between $717.45 billion and $720.89 billion.

As of November, the three-month moving average was up 4.3 percent over the same period a year ago. The November results build on improvement seen in October, which was up the same 0.7 percent monthly and 5.6 percent year-over-year.

NRF’s numbers are based on data from the U.S. Census Bureau, which said today that overall November sales – including auto dealers, gas stations and restaurants – were up 0.2 percent seasonally adjusted from October and up 4.2 percent unadjusted year-over-year.

Specifics from key retail sectors during November include:

  • Online and other non-store sales were up 12.1 percent year-over-year and up 2.3 percent month-over-month seasonally adjusted.
  • Electronics and appliance stores were up 5 percent year-over-year and up 1.4 percent month-over-month seasonally adjusted.
  • General merchandise stores were up 4.2 percent year-over-year and up 0.4 percent month-over-month seasonally adjusted.
  • Clothing and clothing accessory stores were up 4.1 percent year-over-year but down 0.2 percent month-over-month seasonally adjusted.
  • Health and personal care stores were up 3.6 percent year-over-year and up 0.9 percent month-over-month seasonally adjusted.
  • Building materials and garden supply stores were up 3.5 percent year-over-year but down 0.3 percent month-over-month seasonally adjusted.
  • Grocery and beverage stores were up 3.3 percent year-over-year and up 0.4 percent month-over-month seasonally adjusted.
  • Furniture and home furnishings stores were up 2.9 percent year-over-year and up 1.2 percent month-over-month seasonally adjusted.
  • Sporting goods stores were down 7.8 percent year-over-year but up 0.4 percent month-over-month seasonally adjusted.
Meet Savannah Sepic, MnRA's New Government Relations Manager
The Minnesota Retailers Association is excited to welcome our new government relations manager, Savannah Sepic.

Savannah was born in Rochester, Minnesota but has spent much of her life in Madison, Wisconsin. This past May, Savannah graduated from the University of Wisconsin-Eau Claire with a double major in political science and advertising.

Savannah recently moved to St. Paul and is already enjoying exploring Minnesota and all it has to offer, including our vibrant retail community.

Savannah served as a legislative intern at the Eau Claire Area Chamber of Commerce where she organized Chippewa Valley Rally, a grassroots member activity similar to MnRA's annual Retail Day at the Capitol. In addition, Savannah researched chamber policies and helped members engage with elected officials.

Following graduation and through the 2018 election, Savannah ran a field office for a political party in Hudson, Wisconsin.

Politics and membership organizations are second nature to Savannah as she grew up accompanying her father--a veteran of the chamber of commerce and association industry--to board meetings.

"I am excited to learn the ins and outs of the association, along with diving into the issues important to our members," said Savannah. "I look forward to meeting everyone and the start of the 2019 legislative session."
Retailers Embrace Payment Apps To Sidestep $90 Billion In Swipe Fees
From Bloomberg News, December 7, 2018

Retailers have been trying for years to escape the clutches of the credit card companies, which this year will levy more than $90 billion in swipe fees on an industry already struggling to navigate the shift online. Some believe the answer lies in payment apps.

While shoppers have largely shunned mobile payments offered by third-party providers like Apple Inc., , No. 2 in the Internet Retailer 2018 Top 500, retailers are trying to persuade customers to embrace the technology by dangling discounts and other perks. Several chains, including Walmart Inc. (No. 3), Starbucks Corp. and Kohl’s Corp. (No. 18), have had some success by baking the apps into their loyalty programs—and more than half of companies surveyed recently by the National Retail Federation said they’ve implemented “branded digital wallets” or are considering it.

Besides cutting out the credit card companies, in-house payment systems enable retailers to collect more data on their customers. “In the past, payments was viewed as a necessary evil and a cost of doing business,” says Beth Costa, a partner in Oliver Wyman’s payments and retail banking consulting practice. “Today, merchants and retailers are seeing payments as a strategic lever.”

Retailers are charged a fee each time a consumer uses a card at checkout. The core fee is set by Visa and Mastercard and ultimately divvied up between those networks, the merchant’s payment processor and the bank that issued the consumer’s card.

Retailers are increasingly bypassing Visa and Mastercard by tapping into the Automated Clearing House network, which was set up by U.S. banks more than 40 years ago to replace checks and send money electronically between bank accounts around the country. Consumers and businesses now send nearly $50 trillion each year over the network, compared with the roughly $15 trillion sent over Visa’s and Mastercard’s networks.
How To Navigate The 90-Day Tariff 'Cease-Fire'
From Supply Chain Dive, Shefali Kapadia, December 12, 2018

Higher tariffs, lower tariffs. More tariffs, fewer tariffs. Steel tariffs, auto tariffs. The ongoing saga of the U.S.-China trade war feels like Dr. Seuss book meets roller coaster.

Throughout 2018, only one thing has been consistent for business managers when it comes to trade policy and regulation — uncertainty.

"This is no way for retailers to be doing business," Hun Quach, vice president for international trade at the Retail Industry Leaders Association (RILA), told Supply Chain Dive. Tariffs on $250 billion worth of goods from China are already in place, and the 10% duties on $200 billion were set to rise to 25% on Jan. 1, 2019.

That all changed after a dinner between President Donald Trump and Chinese President Xi Jinping at the G-20 summit in Argentina on Dec. 1. The two leaders agreed to a 90-day tariff "cease-fire," in which the countries would negotiate underlying trade issues and agree not to raise tariffs at the start of the year.

"This 90-day timeline is incredibly ambitious," McCaffrey said, and it's unlikely enough time to resolve the trade concerns outlined in the White House's statement following Xi and Trump's meeting. The administration said negotiations would revolve around "structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture."

Made in China 2025, a state-led policy seeking to boost Chinese manufacturers, scale up technological advancements and decrease the country's reliance on foreign suppliers and producers, also lies at the root of the trade tensions.

"Policymakers worry that China’s state-led model and its ambition to control entire supply chains ... means that entire industries could come under control of a rival geopolitical power," an analysis from the Council on Foreign Relations stated.

The U.S. government said China's efforts to recruit foreign scientists to help boost its domestic business is an example of intellectual property theft.

Made in China 2025, released in 2015, is a relatively new policy, but tensions around technology issues have been in place for several years and administrations. A mere three months is highly unlikely to be sufficient to eradicate these trade practices.

"The issues here are very deep set," Steve Bowen, Maine Pointe CEO and author of "Total Value Optimization: Transforming Your Global Supply Chain into a Competitive Weapon," told Supply Chain Dive. "This is not about the immediate trade deficit."

Given the complexity of the issues to be resolved, several analysts expressed to Supply Chain Dive they anticipate the 10% tariffs will rise to 25% on or shortly after March 1. Following that, "We think Beijing would retaliate, and tensions would just intensify from there," McCaffrey said. In that situation, 10% tariffs on $60 billion of U.S. imports would rise to 25%.

A fourth tranche isn't off the table either, which would involve tariffs on $267 billion of goods from China, likely followed by further retaliation. "The only way for a business to operate is to assume things could get worse before they get better," Bowen said.
500 People Have Applied For These 24 State Jobs
From the Pioneer Press, Dave Orrick, December 13, 2018

There are either a lot of highly qualified candidates, or … well, let’s just say a lot of rejection letters will be going out. Some 500 people have applied for two dozen commissioner positions as members of Minnesota Gov.-elect Tim Walz’ cabinet.

That’s nearly 22 resumes for every job — although it’s known that at least some people are applying for multiple cabinet posts.

It’s hard to say if that’s a “normal” stampede or not. Walz and Lt. Gov.-elect Peggy Flanagan’s transition website invites anyone to apply for all sorts of state jobs.

That’s quite a bit different from the last time a new governor set up his cabinet.

In 2010, Mark Dayton was in the throes of a statewide recount with Republican opponent Tom Emmer. Dayton was always ahead in votes, but he wasn’t given the keys to the Capitol until it was all official. So Dayton vetted much of his cabinet from the confines of his humble campaign headquarters in St. Paul’s Dayton’s Bluff neighborhood. Walz’ transition staff is humming along on the third floor of the Capitol.

And Dayton didn’t open the e-apply floodgates like Walz has, but often recruited specific people. Times were also different. Dayton took office in the midst of the Great Recession and the state was facing a looming budget shortfall. So he was recruiting Democrats to potentially cut government spending — as opposed to now, with Walz inheriting a predicted budget surplus.
'Tis The Season For Increased Cyber Attacks
From the Retail Dive, Dan O'Shea, December 17, 2018

Thirty-one percent of retail IT professionals surveyed by Infoblox reported an increase in cyber attacks during the holiday season, often through phishing methods that employ fake promotional websites, according to an Infoblox report.

By attack type, 15% saw an increase in social media scams, while 14% saw a rise in distributed denial-of service (DDoS) attacks and 11% cited ransomware incidents. Commonly discovered weaknesses included unpatched vulnerabilities and customer/end-user errors, cited by 25% of those surveyed, as well as supply chain vulnerabilities and unprotected "internet of things" devices, cited by 23%.

Almost 65% of online retailers plan to increase levels of network monitoring and related security measures during the holiday season, acting on the forecast that 26% of holiday shoppers said they would shop exclusively online during the holidays, the report said.
Watch The Minnesota's Retail Champions Video: 10 Award Winner
The Minnesota Retailers Association (MnRA) was pleased to be recognize ten organizations leading the way in attracting consumers with the announcement of the 2018 Minnesota’s Retail Champions at Retail Rally October 9.

Watch the awards video now!