Retail trends report released By Jan Teague, President/CEO
When net worth and personal income go down, savings rates go up and retailers see lower sales. A recently commissioned report from the Washington Research Council tells the story of the bubble that led people to literally not save a dime since 2005.
Everyone had strong disposable incomes and high household net worth. So they spent. Historically, people will save four times to five times their disposable income. Now the savings rate is estimated to be 6.9 percent and might go as high as seven to nine percent.
According to the report, retail sales are unlikely to lead the economy out of the current recession. The story for retailers is one that will be driven by the change in people's willingness to spend again. The key indicators will be car sales and home sales, both of which have slightly ticked up recently. Another key indicator will be the stock market settling down into less dramatic swings.
Right now the only retailers that are showing any increases in sales are food & beverage (+3 percent) and health & personal care (+5.8 percent).
The news is not so good for most retailers. Five categories exceeded 10 percent declines in sales: furniture & home furnishing stores (-20.1 percent); motor vehicle and parts dealers (-19.4 percent); Gasoline stations (-17.4 percent); building materials and garden supplies dealers (-11.5 percent); and electronics and appliance stores (-10.5 percent). The rest of the story is no less alarming, though. Clothing & clothing accessories stores were -7 percent; sporting goods, hobby, book & music stores were -4.8 percent; and miscellaneous store retailers are at -8.1 percent.
As I looked at the report I noticed that the employment losses were strong in specific categories of retail. We have lost 19,300 jobs this past year. That is alarming and represents a 5.85 percent drop in one year. But just a few short years ago, in 2002, employment was less than it is now. It is 313,300 now and in 2002 it was 304,600. The economic bubble is what drove our employment to an all time high of 332,600 in early 2008. And, it was a few retail segments that drove the employment up and now back down.
As you would expect, many of these lost jobs for retail follow the lack of home sales, new construction and the auto industry. Motor vehicle and parts dealers lost 9,000 jobs (-20.9 percent); building materials and garden supplies dealers lost 3,800 jobs (-13.1 percent) ; and furniture and home furnishings stores lost 2,200 jobs (-17.6 percent); clothing and accessories lost 1,200 jobs (-4 percent); other trade lost 4,400 jobs (5.7 percent); and food & beverage stores lost 300 jobs (-.5 percent). The only gains were 200 jobs in health personal care and 1,400 jobs in general merchandise stores.
As we enter into one of our strongest retail sales seasons, the back-to-school sales, I think we will see some improvements for our clothing and accessories and electronics retailers. I am hearing that these retailers have seen slightly stronger sales in both May and June. They have just begun their marketing campaigns for school. Last weekend when we were out car shopping, the lots were packed with shoppers. Let's hope that is another good sign for all retail categories that people are willing to spend again.
Edmonds votes to ban plastic shopping bags
Edmonds this week became the first Washington city to vote to ban the use of plastic shopping bags.
The City Council Tuesday approved the ban in a 5 to 1 vote. It amended its ordinance to exempt restaurants from the ban, said City Council member Ron Wambolt, who voted against the ban.
The ordinance directs Edmonds retailers to provide either reusable bags or recyclable paper bags. It allows retailers one year, until Aug. 27 of next year, to comply with the ban to give them time to adapt. The ban won't affect plastic bags for produce and bulk food, which shoppers still will be able to obtain.
The Washington Retail Association favors recycling, promoting the use of reusable bags and offering consumers the most possible shopping choices. Mark Johnson, WRA's Vice President of Government Affairs, testified in opposition to the ban before the Edmonds City Council earlier this year.
In adopting the ban, the council was acting on a plan for sustainability that included a ban on plastic grocery bags. Wambolt said residents already were recycling and didn't want government dictating their actions.
The Edmonds council considered but later rejected imposing a 20-cent per bag tax on plastic shopping bags, an issue Seattle voters are scheduled to decide in an Aug. 18 election. The Seattle tax, if approved, would also apply to paper bags.
"WRA is disappointed that Edmonds passed such an ordinance," Johnson said. "Bag bans in other cities have been shown to have unintended negative effects such as huge increases in the use of paper bags that actually have a greater negative impact on our environment."
Johnson continued: "WRA would have preferred if Edmonds had implemented an aggressive recycling program and promoted reusable bag use in partnership with retailers and other interested stakeholders."
Sources: Seattle Times, Edmonds Clerk Sandy Chase
Legislators, insurers, lobbyists issue warnings about health care reform bills
Jobs could be lost and employers could lose choices for providing health care coverage as a result of health care reform bills under consideration in Congress, according to testimony at a meeting of the Senate Health & Long Term Care Committee held last week.
Those concerned about the Congressional bills predicted that businesses would have to lay off employees if they were required to provide health care. Others predicted that if a government-run health care program were established, it would cause private insurers to go out of business and reduce the number of choices employers currently have to provide health insurance.
An estimated 1.6 million jobs could be lost in five years if health care reform requires small businesses to provide health insurance, said Troy Nichols, state director of the National Federation of Independent Business.
Nichols discounted the merits of a government-run health care option.
"In reality, it's a false choice that will undercut the private market," he testified.
The two-hour hearing was held to review and allow comment regarding the Congressional health care reform debate this summer, which is expected to continue in the fall.
The Washington Retail Association opposes a government-mandated health care program that it believes would be costly and damaging to the economy. Instead, WRA favors cost-reduction steps including greater use of electronic medical records and discourages steps that would drive private health insurers out of the state.
Sen. Linda Evans Parlette of Wenatchee said the government-run Medicare program has proven wasteful and discouraged away competition by private insurers. Parlette said she feared a similar outcome if the federal government mandates universal health care.
Sen. Karen Keiser of Des Moines, the committee chair, said she felt rising premiums made health care reform necessary.
Jan Teague, President/CEO of the Washington Retail Association, said WRA is concerned about deteriorating health care insurance availability and its impact on employers being able to access coverage for employees. While costs are increasing, the ability to purchase insurance is decreasing for employers, she said.
"WRA supports legislation that would reform the private health care insurance market in the nation and bring insurers back to the state," Teague said. "We support solutions that will encourage people to buy health care coverage for prevention and longer term health care needs."
But, WRA opposes any additional government-imposed mandates on what health care coverage consumers must purchase, Teague said.
Workers' comp rates could rise 20 percent, paper reports
Employers could face increases of up to 20 percent next year in workers' compensation insurance rates, the Puget Sound Business Journal reports.
Should the prediction hold true, the rate increases would be the largest faced in the state in the past seven years, the paper reported.
Preliminary estimates by the Department of Labor and Industries indicate the need for rate increases ranging from 15 percent to 20 percent, the paper reported.
A month earlier, Tammie Hetrick, WRA's Vice President of Retail Services, predicted rates probably will rise due to dwindling premium payments brought on by the recession, and rising lost-time insurance claims.
L&I will make a formal announcement about insurance rates for next year in September.
The department contingency fund, used in the past to hedge against rate increases, lost more than $1 billion between June of last year and March of this year, the paper reported. The department has lost investment incomes because its investment funds have been battered in the stock market, the Business Journal reported.
Resellers' permits to start arriving in September mail
New state reseller's permits are expected to be mailed directly to qualified businesses starting in September, Department of Revenue officials say.
The new permits allow qualified businesses to forgo paying sales tax on merchandise they expect to re-sell as part of their business. A contractor, for example, would buy wood to build a deck but the homeowner would pay the tax on the wood.
The state estimates about 226,000 businesses will qualify for the new permits. The permit holders will be expected to supply copies of the permit to all of the suppliers from which they purchase equipment and other merchandise.
In separate September mailing, Revenue expects to mail applications to an estimated 41,000 contractors likely to be approved for permits. A third mailing will go to businesses not expected to qualify for the permit, but they will be allowed to apply.
The state instituted the new system due to abuses of a system by which users downloaded a permit from the Internet. State tax officials have found permit holders who avoided taxes with no intention on re-selling the merchandise. The Washington Retail Association has been monitoring the steps Revenue officials have taken this summer to launch the program.
Eligible businesses must obtain a permit by January to comply with the new law. Violators will lose their permit and be subject to paying the tax plus an additional 50 percent of the tax due.
To read about updates regarding the new permit and law, go to dor.wa.gov/sellerspermit. If you have further questions, call the automated 800-647-7706 and ask for a tax specialist or e-mail reseller@dor.wa.gov.
Source: Department of Revenue
EMD lists hot weather precautions online
This week's record heat wave makes it important for residents to practice sound hot weather precautions.
The Washington Military Department's Emergency Management Division lists several heat management resources on its Website, www.emd.wa.gov. The site includes specific directions for children and pets, as well as adults including the elderly.
Generally speaking, the Department of Health advises drinking plenty of cool fluids but avoid beverages that include alcohol, caffeine or a lot of sugar. If you must remain indoors without air conditioning, cover windows that receive sunlight.
If air conditioning goes out, stay on the lowest floor out of the sunshine. If you go outside, take frequent breaks if you're working and plan strenuous activity for early or late in the day, when temperatures are cooler.
Source: Emergency Management Division
Retail restroom law takes effect
A new state law requires retailers to make employee restrooms available to customers under certain circumstances.
The law, introduced as Engrossed Substitute Bill 1138, took effect on July 26.
The Washington Retail Association worked closely with legislators and stakeholders to make sure the law would have the intended effects and be workable for retailers.
Under the law, retailers do not have to make physical changes to an employee restroom, may accompany a visitor to the restroom entrance and can deny restroom access if allowing non-employees access could jeopardize safety or security. Also, three or more employees of the retail establishment must be working at the same time before allowing a visitor access to an employee restroom.
New law spares some employers from military-related unemployment costs
A new law that took effect on Sunday spares many employers of unemployment charges for employees hired to fill temporary vacancies created by National Guard and reserve members.
To avoid being charged for such benefits, employers must contact Employment Security and specify which layoffs are due to military members returning to work, said Karen Lee, Employment Security Commissioner.
"Employers who welcome reservists back into the work place shouldn't be penalized through higher unemployment taxes," Lee said. "This law allows our unemployment system to treat both the temporary workers and their employers with compassion."
The new law does not apply to certain employers, including state, local and federal governments; public schools; some tribal entities; and some non-profit organizations with 501(c)(3) status. These reimbursable employers are still required to pay dollar for dollar for all unemployment benefits paid to former employees.
Source: Employment Security
Some employers must provide protective equipment
State safety and health rules require employers to provide a safe workplace for employees.
Where appropriate, protective equipment can include goggles, head covers, safety shoes and gloves. State law further requires employer to perform hazard assessments of their work environments and to pay for personal protection equipment that would not normally be worn off the job.
The Occupational Safety and Health Administration currently is clarifying its rules, particularly pertaining to providing respirators for employees who might need one. The rule rewriting also is clarifying the requirement that employers train workers on the proper use of protective equipment.
The Washington Retail Association's Safety Advisor, Patti Vernie, can not only point you to the latest in workplace requirements, but can also visit your workplace to do a safety assessment.
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.
