IN THIS ISSUE
- This should be a no-tax-increase year
- Washington State is least affected by the pandemic, report concludes
- Legislature wants to tax auto parts
- Ziggy’s prospers amid the pandemic’s uncertainty
- Deadline is tomorrow for COVID-19 grant applications
- Legislature tackles a week of virtual floor debate
- Grocery profits haven’t followed sales increases during the pandemic, study finds
- How will consumers change after the pandemic?
- Learn more about our partner, SpotOn
- Review lighting for optimum safety
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This should be a no-tax-increase year
Renée Sunde, President & CEO
Astonishingly, a year after suffering through retail shutdowns, failures and record unemployment due to the COVID-19 pandemic, state finances are in great shape.
April Fool’s Day was last week. This is for real.
Despite numerous tax proposals under consideration by the state Legislature in its last two weeks of the 2021 Session, members already have “an exceptionally firm foundation” from existing revenues to adopt a 2021-23 operating budget, a new Washington Research Council policy brief concludes. Put simply, that means that no new taxes are necessary or advisable for next year or the next three after that.
Regardless, Washington Retail has been hard at work fending off a handful of onerous tax proposals from lawmakers who are comfortable taxing personal wealth, car parts purchases, soft drink and retirement savings from the sale of assets including family businesses. The legality of the last idea isn’t even certain, which is a queasy prospect for many lawmakers.
“Billions of dollars have also been appropriated by the federal government over the past year for COVID relief in Washington,” the brief notes. “Raising their taxes to fund relief would be counterproductive.”
The council’s financial analysis concludes that existing state revenues without tax increases are expected to match the pre-pandemic February 2020 revenue forecast. Revenues for 2019-21 are expected to increase 13.6% over 2017-19 and by 8.2% in 2021-23.
The recovery that’s underway is a tribute not only to massive federal aid, but also to retailers who have kept their stores open safely and shoppers who have maintained strong spending levels. In the past year, unemployment has plummeted from nearly 16% at the height of the pandemic to 5.6% this past February.
The latest state revenue forecast means that the current operating budget not only projects to balance over the next four years. It results in a substantial ending fund balance of nearly $3 billion. The brief concludes that the state’s budget stabilization account, or rainy-day savings fund, is projected to be nearly $2.4 billion at the end of 2021-23.
Though billions of dollars of federal aid have poured into the state, they’re temporary. Like any other state, Washington State is expected to support itself without long-standing bailouts. An estimated $11 billion in additional federal aid to Washington is contemplated from President Biden’s latest recovery package proposal for governments and schools. Still, as of February, the state remained 232,000 short of the number of available jobs compared to last year.
Though the recovery is incomplete, an end to emergency federal funding would not leave state finances vulnerable as long as legislators refrained from using federal relief money to begin new, ongoing programs, the brief concludes.
The pending legislative mandate for this Session should be focused and clear: fostering continued economic recovery and job creation, not imposing further tax burdens or creating unsustainable new programs heaped atop a flush state budget.
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Washington State is least affected by the pandemic, report concludes
Washington State’s economy has weathered the coronavirus pandemic better than any other state in the nation, according to an analysis by the personal finance website WalletHub.
Though the pandemic has forced hundreds of businesses around the state to close and generated record unemployment, Washington State has survived better than any other state, according to the report. The analysis compared 13 key metrics including the share of employment from small businesses to the share of workers with access to paid sick leave and the increase in unemployment insurance claims.
Key components for Washington State’s performance included:
- One of the highest shares of workers able to work from home
- A gross domestic product that is one of the least dependent on industries highly affected by the pandemic.
- A higher-than-average number of employees returning to work after being unemployed.
- A higher-than-average share of workers with access to paid sick leave.
Other states that did well in the study were Arizona, second least affected, and Oregon, which finished third. Some of the hardest hit states were Louisiana, Oklahoma, Hawaii, Ohio and Nevada.
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Legislature wants to tax auto parts
Mark Johnson, Senior Vice President of Policy and Government Affairs
As one of 35 parts of a massive transportation tax proposal totaling $15.4 billion over the next 16 years, there is a provision to add a 1% sales tax on auto parts to generate an estimated $405 million.
WR feels this is the wrong direction to go and asks the Transportation Committees and Legislature to not include an additional tax on auto parts.
Washingtonians who purchase auto parts are usually fixing their cars and trucks on their own. Some owners enjoy this but many, if not most, are doing it out of necessity. They can’t afford to take their vehicle to the dealer or a repair shop. This is a brutal choice between buying groceries, paying rent, or fixing their car. These lower wage hard working citizens often are driving older, high mileage cars that are prone to break down and need repairs – simply because they can’t afford to buy a new or newer vehicle. This regressive tax hits those least able to pay.
This tax will also hurt the many auto parts stores that are small businesses in our state. Their customers may put off making that parts purchase because of the increased costs. These small business owners are struggling through the pandemic as many Americans are unemployed or living paycheck to paycheck.
This new tax on auto parts is the wrong approach at the wrong time and will cause more harm than good. WR encourages the Legislature to reject it.
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Ziggy’s prospers amid the pandemic’s uncertainty
Unlike many retailers struggling through the COVID-19 pandemic, Spokane-based Ziggy’s Home Improvement has prospered. It’s a tribute to the customer service culture that Vern Ziegler, himself a contractor, insisted upon when he established the company in 1965.
But despite record 2020 sales, navigating the pandemic has not been without anxiety.
When the pandemic took hold last March, “we didn’t know what to expect,” said Kathy Campbell, the company’s Human Resources Manager. “There were all these unknowns.”
Ziggy’s six stores in Eastern Washington and Idaho were deemed essential and remained open. But, Campbell said, for about two weeks, customers shied away from shopping as regularly as normal. The pandemic also required new expenses for sanitation, barriers and signage to keep shopping safe and socially distanced.
Like other home improvement chains, Ziggy’s soon found that customers returned. Many of them were sheltering at home with extra time on their hands. They put off spending money at restaurants or planning vacations. So, in Ziggy’s case, they bought wood to build decks and fences or do home repairs or improvements.
“Our sales were strong,” Campbell said. “We broke every record we had in terms of sales.”
Despite increased safety-related expenses, Ziggy’s sales more than covered those costs, Campbell said. It continued to buy from as many local suppliers as possible and remained active on its three social media platforms to remind customers that it was open and ready to serve.
Ziggy’s has marched through the pandemic without needing emergency government loans. It also paid its employees bonuses for risking their health to generate a record sales year.
Though Ziggy’s hasn’t struggled like so many other retailers, it nonetheless learned a valuable lesson from its success. Its long history of customer service withstood the threats of infections and resulted in a successful sales year. Ziegler was a pioneer in using his residential construction experience to advise customers on how to do their home improvement projects and they’ve been rewarding the company with loyalty ever since.
“The biggest thing we learned in just the appreciation we have for our customers,” Campbell said. “They didn’t forget us.”
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Deadline is tomorrow for COVID-19 grant applications
Businesses hurt by the COVID-19 pandemic are eligible to apply by 5 p.m., April 9, for a fourth round of emergency financial aid grants.
State legislators have approved $240 million in the current round of financial assistance. Recipients must apply grant awards toward expenses incurred between March 1 through June 30 of last year. Applicants are potentially eligible for a grant of up to $25,000.
The Working Washington grant relief is for small for-profit businesses, especially those that were required to close due to public health and safety measures.
Priorities for the funding include:
- Businesses required to close
- Businesses with lost revenue as a result of closure
- Businesses with added expenses to maintain safe operations
- Equitable distribution of funds across the state and to businesses owned and operated by historically disadvantaged applicants.
Source: Department of Commerce
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Legislature tackles a week of virtual floor debate
On Day 88 of the 2021 Legislative session today, floor sessions in the Senate and House are being conducted remotely toward another deadline on Sunday. Adjournment is scheduled on April 25
After 5 p.m. on Sunday, discussion is limited to specific topics: budget and revenue-related matters, matters of differences on bills between the two houses, and matters related to ongoing discussions after adjournment and to closing the session including the adoption of a state budget. Smaller conference committees may be assigned to work out differences between the houses in an attempt to reach agreement on bills before a final vote.
WR has narrowed its focus on remaining bills that have not been put off to the 2022 session. Please note that Legislature updates can be spontaneous. Therefore, this report was accurate at the time of writing.
WR’s focus for this year includes:
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SB 5062, the Washington Privacy Act. A conference committee is likely to try to work out differences between the Senate and House on how to protect and enforce the privacy of online consumer data. WR opposes a bill that would expand enforcement beyond the state Attorney General.
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SB 5096, capital gains tax. WR expects both houses to narrowly approve a 7% tax on the sale of long-term assets including businesses. WR opposes new taxes when state revenues have exceeded projections and returned to levels from before the COVID-19 pandemic. If Governor Inslee signs a bill into law, WR expects a lawsuit challenging the charge as an illegal income tax.
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WR is opposing HB 1539. It would overturn a state Supreme Court ruling that upheld a sales tax credit for retailers whose credit customers default on paying.
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SB 5191 would allow the Attorney General to investigate and levy fines against retailers for alleged exorbitant price hikes during emergencies such as the COVID-19 pandemic. WR has expressed concerns and has been working to improve terms. The bill passed in the Senate and is now in the House Rules Committee.
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SB 5355 would attach wage liens on property during claims for unpaid wages. WR opposes the bill that narrowly passed the Senate and the House and now the bill goes to the Governor where he is expected to sign it.
Washington Retail will continue reporting weekly updates on bills then follow with a comprehensive report for members on all monitored bills in the weeks following adjournment.
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Grocery profits haven’t followed sales increases during the pandemic, study finds
Grocery sales increases during the COVID-19 pandemic are misleading, a new study released by the Food Marketing Institute has found.
Though sales for groceries have increased by double digits in percentage terms, most grocers continue to grapple with tight profit margins and face the added pressure of restaurants and the food service industries gradually reopening.
In Seattle, for example, a City Council-approved “hazard pay” ordinance prompted QFC to announce it was closing two stores because the company could not absorb the higher payroll expenses.
Not only have food shortages increased prices for grocers. Grocery companies have encountered new expenses for personal protective equipment, cleaning and sanitation, benefit expenses and new online delivery expenses.
The U.S. food sector has spent nearly $24 billion on COVID-19 pandemic-related costs. Most companies expect lower sales and profits this year, Supermarket News reports.
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How will consumers change after the pandemic?
A company known as WGSN studies consumer behavior and how it changes over time. As such, it is an invaluable resource for retailers who want to keep pace with the changing appetites and the preferences of consumers.
The company currently has a thought-provoking white paper out called Future Consumer 2023. One of its goals is to offer insight into how to prepare for customers once the COVID-19 pandemic has been contained and defeated.
Here’s a sample of some of the broader findings:
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Consumers are actively seeking out companies that offer pre-orders. Here’s a quote from the paper: “One of the greatest drivers of customer stickiness is stock availability. This cohort dreads the ‘item currently unavailable’ message, and is taking to inventory apps such as zooLert and NowInStock.”
- Fortnite, Apple and Nestlé all segued into the subscription sector in 2020, with new monthly products and services. Market research suggests there is a chemical payoff, where opening a box releases dopamine, creating an instant spike of satisfaction.
- Thirty-eight percent of Americans, and more than half of Gen Z and Millennials, are currently boycotting at least one company for lack of diversity.
- Financially stretched consumers are on a value hunt. Brands have to work harder to deliver value and stop “price jumping” consumers from switching their loyalty.
- A phenomenon known as “shoppertainment” is going mainstream. New platforms, livestreaming capabilities and acceptance from mass-market consumers will mean that shoppertainment can’t be ignored as a sales channel any longer.
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Learn more about our partner, SpotOn
Washington Retail has partnered with SpotOn, a software company with a broad array of electronic tools to help small businesses operate more successfully and efficiently.
Over the past several weeks, we’ve highlighted some of the key services that SpotOn provides, from building you a website, to building loyalty with your customers and offering in-person service and support.
If you’re unsure about SpotOn, we understand. You can learn a lot about SpotOn at your own pace by visiting the website where you can arrange demonstrations, book a meeting with a consultant, and read about the success stories of customers and the testimonials they’ve provided for public review.
Or, just call or email our contact, Patrick Wiltsey, Director of Business Development, at 303-835-3217 or pwiltsey@spoton.com.
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Review lighting for optimum safety
You may not think that lighting and safety are that closely related but often accidents happen when lighting is poor. You should periodically review lighting in your shop or office so that workers can work in adequate light.
Here are some examples of using task-specific lighting:
- Screen glare is a common problem when working with computers. Glare can be reduced in a variety of ways; adjusting the monitor or with desk lamps, using soft white lights. Reducing glare contributes to workstation productivity.
- Storage and stairwells. Take a closer look in your storage areas where inventory is stacked on shelves that may be blocking light and bring light into those shadows.
- In servicing vehicles where there are tight places, portable LEDs are compact and offer brightness. Better lighting helps you see the working area better and reduces the potential for injury such as striking your hands on other objects.
- Pools of overhead light can distort perception of height and depth on walking surfaces that could lead to stumbling or tripping. Uneven brightness patterns can produce shadows or create the illusion of steps or edges where the light and shadow meet. In those areas, introduce additional light to make sure that the walking surface is more clearly defined.
Adding light often is simple and affordable. Such changes can help seasoned employees and even those who are younger. Additional safety tips can be found at RS SafetyTV and in the Safety Library, Aging in the Workplace section.
WR employs Rick Means as Director of Safety and Education, who is available to members to help draw up safety plans and suggest topics for safety meetings. Contact him at 360-943-9198, Ext. 118 or rmeans@waretailservices.com.
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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.
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Renée Sunde
President/CEO
360.200.6450
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Rose Gundersen
VP of Operations & Retail Services
360.200.6452
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Mark Johnson
Senior VP of Policy,
Government Affairs
360.943.0667
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Jim Szymanski
Director of Communications
360.753.8742
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