Retailers race to the bottom on price By Jan Teague, President/CEO
A new trend in retail is to appeal to consumers with free samples, free gifts, or free products. In times when price matters, more retailers are looking at marketing strategies that include something "free".
Known as "freeconomics", this recessionary business model is helping some retailers find new revenue by enticing shoppers with free products and selling others that complement the item. Some retailers give away a basic item if the consumer buys that regular-priced item. Cosmetics have been doing this for a long time. They rarely lower their price, but always offer a free gift with a certain dollar purchase.
Cross-subsidies pay for this marketing approach, so nothing is really free. What makes this approach new is that it is easier to get cheap products online now and with prices dropping, free offers are exploding. This is a very serious situation for the many small local retailers in our communities.
The Internet is pushing prices lower and lower. Internet sites have little overhead or the high fixed costs of the local brick and mortar stores. As consumers get used to lower and lower prices, many local retailers are finding their profits drying up. For example, the camera shops used to print pictures, but not any more. Now people keep their pictures in their computers, on their phone, or print their own. Music and movies can be easily copied online making local retailers who sell these items almost obsolete.
Amazon has introduced the Kindle that offers an inexpensive way to read books, magazines and newspapers, making it harder to sell these items in the local stores. Free news has already had catastrophic effects on newspapers unable to compete with "free" online information.
People are becoming very savvy on how to find things for "free". The younger shopper has already learned to text friends while in the store to ask about a product, or use software that compares prices of items. Emerging technologies are no friend to local retailers who struggle to pay fixed costs and may not be able to lower prices to compete.
But experts believe that retailers who survive this race to the bottom on price will become less and less static as they develop new strategies to compete. It will be good for consumers, but it may be a very long time before sales are what they were in the first half of the decade.
Edmonds moves closer to banning plastic shopping bags
The City of Edmonds has moved a step closer to becoming the first community in the state to ban the use of plastic shopping bags.
The City Council has asked staff to perform an environmental review of an ordinance to ban use of plastic shopping bags in all retail establishments. Such an ordinance would go into effect 30 days after a council vote to adopt it, said City Clerk Sandy Chase. She estimated the environmental review could take two weeks.
Mark Johnson, the Washington Retail Association's Vice President Government Affairs, testified against a ban during a public hearing this week. Johnson said he was disappointed that the ordinance in Edmonds sets a bad precedent for other communities to consider.
WRA favors promoting recycling of plastic bags and has been promoting the use of reusable shopping bags, but opposes bans or taxes charged for the use of disposable shopping bags.
Edmonds council member Strom Peterson said he expects the council will approve the ban and may again take up the issue for a vote by the end of this month.
According to the Edmonds ordinance, retailers would provide customers either with reusable bags or recyclable paper bags if the plastic bag ban goes into effect.
In a related matter, Seattle has scheduled a vote later this year on whether to impose a 20-cent per bag tax on the use of disposable shopping bags. WRA instead favors recycling and the use of reusable shopping bags.
Small businesses meet about economic recovery
The American Recovery and Reinvestment Act of 2009 can help retailers survive the recession, if they know where to look for information.
To that end, the Internal Revenue Service and Small Business Administration teamed up to conduct a small business forum last week in Bellevue.
The act was enacted to jumpstart the economy toward recovery from recession. It has expanded loan programs and eliminated loan fees for borrowers and lenders, among other incentives.
Kari Gilje, stakeholder liaison for the Internal Revenue Service and Julie McFarlane, a business development specialist with the Small Business Administration, shared information on where small businesses can learn more about how they might benefit financially from ARRA.
For IRS information on aspects of the Recovery Act, click here.
Visit the SBA Website, www.sba.gov for more information about programs offered under the Recovery Act. For a broader view of the act, visit www.recovery.gov.
Another consideration for small businesses is learning more about the burgeoning trend of social media. Internet offerings such as Facebook and Twitter offer small businesses potential marketing opportunities, said Tom Dorr, Director of Western Washington University's Center for Economic Vitality. He spoke to those who attended the forum.
Facebook and Twitter are two examples of emerging social networking sites where people meet and discuss issues on the Internet. Dorr suggested they are a good way for business to grow their customer lists and promote sales. Social networking site are a good way to reach young customers because they are the most frequent users of the Internet as a social tool, Dorr said.
"If you don't understand the new (communications) rules, you're not going to be able to communicate with certain generations," he said.
Businesses uncomfortable or unfamiliar with social media should at least sign up and read the discussions, Dorr said. It's a good way to learn about what's on people's minds and a business owner might even read about his or her own business.
"If you're not actively playing, at least go in and listen," Dorr said.
Employers urged to guard against outdoor heat exposure
With summer approaching, it's a good time to remember that Washington State adopted a directive last summer on exposing employees to outdoor heat.
Heat-related illness can affect anyone exposed to heat on the job, regardless of whether they're outside or inside. Employers are responsible for providing a safe workplace and can be subject to inspection, citation or penalty if a heat-related illness occurs on their property.
To avoid HRI, consider taking the following steps:
*Increase your fluid intake. It is recommended that you drink 1 cup (8 ounces) of water for every 15 minutes when working in a hot environment. *Advise employees to avoid alcohol, caffeinated drinks, or heavy meals before or during times they are exposed to working in the heat. *Make sure that you allow employees to take extra breaks out of the heat to cool off and if possible provide shade in the work area. *Getting to know your employees and coworkers will help to identify if they are acting differently, watching for mood changes or if they are irritated or confused. You may save their life by just being aware of the warning signs, and by comparing the way they normally act to any new actions. *When exposed to heat while working, work with a "buddy" if possible; monitor each other looking for signs of an HRI. *Remember if exertion in the heat makes your heart pound and leaves you gasping for breath, STOP all activity.
The warning signs of heat exhaustion include heavy sweating, paleness, muscle cramps, headache, nausea or vomiting and fainting.
Cool the person quickly, move to a cool shaded area and give sips of water if they are not sick to their stomach. Try to cool the person by removing heavy clothing, fanning and misting with water. Watch for symptoms to lesson. If symptoms do not go away within a few minutes or worsen get medical attention.
To review the state's heat-related illness announcement from last year, click here.
Obama signs credit card reform law
President Obama has signed into law the Credit Card Accountability Responsibility and Disclosure Act, which reforms credit card practices.
The new law incorporates several recommendations made by the Retail Industry Leaders Association (RILA), including a prohibition on arbitrary interest rate increases.
The state Health Department has switched to monitoring hospitalized swine flu patients as opposed to monitoring the general spread of the disease as it did when the outbreak occurred in Washington earlier this year.
With the change to a tighter monitoring focus, only the state total of swine flu hospitalizations or deaths will be posted online. Those updates will be available about 3 p.m. on Fridays.
To visit the state's swine flu Website, click here. It contains lots of helpful background including facts sheets, symptoms and videos on flu prevention. A bi-lingual telephone line can be reached at 1-888-703-4364.
As of earlier this week, Washington State had 517 confirmed cases of swine flu.
Now that the strain is common in Washington, the state lab no longer is collecting samples from all patients with influenza. Instead, the state is focusing its resources on examining fatalities and hospitalizations from the swine flu strain. One swine flu death from swine flu has been reported in the state this year.
Though the swine flu strain has been milder than officials once feared, they still advise frequent hand washing, covering coughs and staying home from work or school if you experience flu symptoms.
Source: Department of Health, The Capitol Record blog
State posts tax law changes online
The Department of Revenue has posted online a summary of tax-related legislation approved during the 2009 Legislative session.
The summaries are meant to help businesses become aware of changes to the state tax system. The 2009 summary covers 43 bills.
The Washington Retail Association, WRA, is a 501 C 6 trade association formed to advocate for Washington State’s retailers at the local, state and national level. Since 1987, the WRA has protected Washington's retailers from unreasonable taxes, fees, regulations and legislation. The efforts of the WRA benefit all Washington state retailers and help fuel statewide economic growth.
