A retail issue right now is how to handle inventory By Jan Teague, President/CEO
Recent news reports indicate that many retailers are buying less inventory to make sure that they don't have to put a lot of things on sale at the end of a season. But the problem they face is the risk that goes along with buying the wrong inventory and the risk of consumers getting bored with their sparse selection.
If all of the stores are buying less and what is for sale all looks the same from store to store, why would the consumer spend much time shopping? Where is the shopping excitement and the experience of looking at various fashions or products that drive many consumers to the store on a regular basis?
Consumers may go from store to store just to find the right color, the right fit, and the right style of clothing, for instance. I read a report this week that recommended that retailers focus on a core style that is selling well and order the basic colors for the season. Yet another article warned of this type of inventory control.
For the past two weeks I have gone out to the malls to see how many people are in the stores and to see what the traffic looks like. As you would expect, the school traffic is bringing people to the malls. But as I went into the stores, I saw it. Less merchandise, wider space between racks, clothes not so neatly hung on the racks, and fewer clerks to help.
With the recession in full swing, retailers have done all they can to tighten their belts. You might not think that seasonal changes in style, color and fabric matter, but they do. If style and fashion take a back seat for the next few years out of the sheer need to simply sell for basic needs, could it backfire? Some speculate that without product innovation, consumers who have money to spend will stay home. While unemployment may be hovering at 10 percent, there is still another 90 percent with money to spend who are simply holding on to it.
Small retailers may not have much choice when deciding about their inventory. If they can't get loans to purchase much inventory, they have to make every purchase count. Bigger stores can afford to have loss leaders, things to get people into the store but that do not make much money. Smaller stores can't do that.
This gets back to one point I made last week; retailers have to think strategically about how they market and service their customers. A week ago I found a nice jacket and a matching shirt in a store. When I asked for the shirt in my size, the clerk said OK and, let me see if we have it in our inventory. "Oh yes, it's there," she said. I gave her my credit card and she began to run the jacket without getting me the shirt. I asked where the shirt was. She said it would ship to my house free of charge. I decided I could wait since I was buying for fall season. That may be where consumers find themselves - waiting for items or looking online for more choice.
These experiences lead to even less shopping in the stores. Why shop in the store if there isn't much selection? It takes time to travel to the store, and parking or day care may add another cost. Would the consumer find it more satisfying to shop online where they can look at hundreds of items in less than an hour, order, and wait the same amount of time as they did when they went to the store and the item had to be shipped? When time, gas, and day care or parking are too much money for the consumer compared to online services, consumers, particularly the next generation of shoppers, will likely increase their shopping online.
I have increasingly been thinking that the future of consumption will be a lot like the past when mail order and delivery service was how people got special products into the small towns that dotted this country. Some of my specialty members already do quite a bit of mail order business and delivery business.
Right now consumers are shopping on price for school, which starts in a few weeks. They are not as interested in online shopping. It's seasonal events like this that help local retailers do better. But predictions are that sales will be lackluster for the back-to-school season even with all of the low cost offers from retailers.
Traditionally, the school clothes season sets the tone for the Christmas holiday season. Let's hope that the recent reports this week in the media are correct. Consumers are starting to buy again and the worst is over.
WRA Board of Directors annual elections
Board of Directors positions are now open at the Washington Retail Association. Please consider participating on the Board.
WRA's Board of Directors has the responsibility of directing the affairs of the Association, determining its policies, overseeing finances, and adopting the legislative agenda. The Board also participates in the planning and evaluation process for both long-range government affairs goals and association operating objectives.
The Board meets three times each year and has opportunities to chair or participate on committees such as the Small Business Committee, the Human Resource Committee and the Government Affairs Committee.
Each legislative session the Board meets in Olympia and spends time talking with leaders of the House and Senate. The Board also meets with the Governor or Chief of staff to discuss WRA priorities.
If you would like to consider serving on the Washington Retail Association Board of Directors, please contact Jan Teague at 360-943-9198 ext. 19 or email her at jteague@retailassociation.org
WRA participates in health care conference
Mark Johnson, WRA Vice President of Government Affairs, attended a health care conference last week to discuss state and federal health care policy. The conference was attended by providers, regulators, purchasers, insurers, lobbyists, elected and appointed officials, legislative and executive staff, and other stakeholders.
"I am concerned that our policymakers are heading down the wrong path by forcing employers to provide health care coverage whether they can afford it or not," Johnson said.
Several influential speakers shared their views on what needs to take place in Washington State and on a national level. Among the presenters were Secretary of Health Mary Selecky, House Health Care Committee Chair Eileen Cody, Chief Health Care Research Analyst David Knutson, and Insurance Commissioner Deputy for Policy and Legislative Affairs, Mary Clogston.
Comments were made regarding the very successful Association Health Plans or AHP's that many associations offer to their members. There may be a study on how AHP's operate in the near future. In these times of dwindling budgets it is imperative we support and expand programs that are increasing in enrollment and providing their customers with a quality, affordable product.
Federal health care reform was a hot topic of debate. Several of the speakers outlined their priorities for a final compromise. Areas of agreement include: the plan must be portable between jobs, administration needs to be streamlined to save money, health care technology such as electronic medical records needs to be expanded, and overutilization of existing procedures and services needs to be addressed.
Expectations are that a plan may be approved this fall. It was also noted that anything the federal government does will take several years for the states to implement.
"Interestingly absent from the debate on a federal level is talk of liability reform such as addressing the skyrocketing costs of med malpractice settlements, lawsuits and insurance," said Johnson. "If we are going to reform our entire system, we should look at one of the major cost drivers."
Unfortunately, it was made clear by most of the speakers that added revenues and additional cuts will be needed both at the state and federal level in order to keep existing health care safety nets from failing and if we hope to finance a new system.
"I just hope that in their haste, Congress and our State Legislature don't throw a wet blanket on our anemic economy and further delay the possibility of a strong recovery." Johnson said.
WRA board votes to oppose Envision Spokane campaign
The Washington Retail Association board of directors has unanimously voted to oppose a November ballot measure that proposes to significantly amend the City of Spokane charter.
Most troubling with the proposed amendment are sections 7 and 8. Section 7 requires that all private construction projects exceeding $2 million would be required to pay the prevailing wage. Section 8 imposes an employer neutrality or "gag rule" on unionization efforts. Specifically, it says workers do not have to attend mandatory company meetings.
"This union-backed effort to force employers to pay unrealistic wages on construction projects and to deny employers their First Amendment rights to directly communicate with their employees needs to be rejected," said Mark Johnson, WRA's Vice President of Government Affairs. "Furthermore, the unintended consequences of lost jobs and fewer construction projects need to be fully considered."
Spokane City Council members also have warned that the measure will increase city legal bills by allowing people to sue to enforce the rights.
High taxes contribute to Seattle's job losses, report says
Even as Seattle has grown in population, it has lost job creation to the suburbs, a new Washington Research Council report shows.
The report suggests that Seattle's higher businesses taxes are coaxing companies to move to the suburbs. And that trend could lead to dwindling Seattle revenues even as demand for services grows with the population.
"Seattle is becoming a place to live rather than work," reads a headline in the report: Seattle's Lost Decade. The flight of jobs to the suburbs left Seattle with 7,900 few jobs in the spring of 2008 than it offered in the spring of 2000. During that same stretch of time, Bellevue added 19,200 jobs; Redmond, 16,000; and Issaquah, 4,000 new jobs.
In the case of these cities, unlike Seattle, Redmond charges no business and occupation tax. And Bellevue's B&O and property taxes are lower than Seattle's.
The report makes a clear point that tax levels matter when businesses decide where to locate. To read the entire report, click here.
Monthly taxpayers must file electronically beginning this month
Businesses that pay taxes monthly are required beginning this month to switch to electronic filing. Electronic payment options include Electronic Funds Transfer (EFT) debit, EFT credit, E-check, and credit card.
The change is as a result of substitute Senate Bill 5571, enacted during the 2009 Legislative session. Both filing and paying electronically will eliminate the need to reconcile payments with tax returns, allowing the Department to process tax returns more efficiently and reduce staffing in this area, the Department of Revenue said.
The switch in payment methods begins with July tax returns that will be due on Aug. 25.
Nearly 80 percent of the state's 85,200 monthly filers already file electronically, but many still mail in their payments, said Mike Gowrylow, spokesman for the Department of Revenue.
A business is required to file tax returns monthly when its annual tax liability exceeds $4,800. Monthlies comprise about 18 percent of taxpayers and pay 93.5 percent of excise taxes due.
The law allows the Department to grant exceptions when electronic filing or payment is not feasible. The Department offers help with questions about e-filing by calling the Telephone Information Center, 1-800-647-7706. More information is available at http://dor.wa.gov/mandatorye-file.
Ralston resigns as research council President
Al Ralston has resigned after two years as President of the Washington Research Council.
Dick Davis, the Research Council's former president, has succeeded Ralston and will oversee the organization's work for the next 12 to 18 months. Davis will continue to head the Washington Alliance For A Competitive Economy (WashACE).
"I want to thank Al for his long-standing commitment to the Council and the many contributions he has made to the Research Council as our president over the past two years," said Tom Smith, the council's chairman. "Under his leadership and guidance, the Research Council has continued to be a respected source for credible, independent research on taxes, public policy and local and statewide initiatives."
Ralston, a former Boeing executive, had served on the Research Council's board of directors prior to becoming president of the organization.
Kriss Sjoblom will continue as the council's primary researcher while DeDe McConnell will provide administrative support and office management.
Smith said the council has research projects scheduled through the balance of the year. They include a state revenue forecast to be released in September, a study of the biopharmaceutical industry's impact in the state and an analysis of Tim Eyman's property tax limiting Initiative 1033, which is on the Nov. 3 election ballot.
More on workers' comp insurance rate increases coming in September
Labor & Industries has responded to the Puget Sound Business Journal's story by posting a Q&A on its Website this week to address speculation that workers' comp insurance rates to companies could rise up to 20 percent next year.
The L&I posting termed the 20 percent figure "very preliminary" and continued that it would not propose a change in rates until late in September, after more state revenue figures are available for the year.
Word of a possible 20 percent rate hike surfaced after L&I conducted a series of meetings with a group called the Workers' Compensation Advisory Committee, which is attended by Tammie Hetrick, WRA's Vice President of Retail Services.
A rate hike this year might be larger than normal due to rising medical costs and workers' compensation claims that are lasting longer in recent years, the posting reports. The Department of Labor and Industries does not identify the need for reform in the workers' compensation system.
Labor and Industries has justified the potential hike by indicating that rates have been kept artificially low due to investments. "Now that investments are not performing," Hetrick reported, "it is time for Labor and industries to acknowledge the system needs some reform."
The Kaiser Family Foundation Website includes a helpful report for clarifying the complexities of health care reform and how the various states compare in providing health care coverage.
Kaiser is a non-profit, private foundation focusing on major health care issues in the United State.
A link on its Website, http://www.kff.org/, offers health care analysis from several perspectives. The report includes interactive tables and maps and presents a variety of state-level economic and health care data that help illustrate the different impacts of potential health reform on the 50 states and the District of Columbia.
The 13th Washington Small Business Fair is scheduled on September 12 at Renton Technical College.
The free event aims to assist new and existing small businesses to grow and survive the recession.
The fair requires no pre-registration. Speakers will be unpaid and no private vendors or selling will be allowed during the event.
Seminars range from understanding taxes to business planning and from marketing to starting a Website. A list of exhibitors is expected to be posted at the fair's Website, www.bizfair.org, early in July. You can also visit the site for directions to the college and updates about the fair.
The Washington Retail Association participates on a planning committee and will exhibit at the fair. There is no single fair sponsor but organizations such as the Internal Revenue Service, Small Business Administration and various state government departments participate in the planning.
About 50 exhibitors participate annually at the fair, attended by up to 1,000 visitors. Business networking is encouraged during the event.
E-Cycle Washington exceeding expectations
The E-Cycle Washington free recycling program continued to exceed expectations in July as consumers donated 22.1 million pounds of televisions, computers and monitors at statewide collection spots.
When the program began in January, officials projected they would collect about 26 million pounds by year's end. But the more-rapid-than expected pace of donations now has officials expecting to collect 36 million pounds, or nearly 39 percent more than expected.
So far this year, televisions have accounted for 12.7 million pounds of donations, or 57 percent of all electronic items brought in, said Miles Kuntz of the Department of Ecology.
Kuntz said the pace of collecting could speed up further as more people learn about the new program.
While favoring a national program for collecting electronic waste, the Washington Retail Association worked to ensure that manufacturers, not retailers, were responsible for carrying out the state collection program.
To learn about collection sites where you live or operate a business, visit EcycleWashington.org.
Safety Tips: (one in a series) Defensive driving can save employees during work-related trips
Employees who use a company vehicle to do their jobs should be trained and reminded about defensive driving skills, says Patti Vernie, WRA's safety advisor.
A study by the National Institute of Occupational Safety and Health of 3,000 work-related driving fatalities found:
*More than two-thirds of the accidents occurred among employees ages25 to 54.
*62 percent of the victims were not wearing seatbelts.
Hit-from-behind accidents or mishaps caused by losing concentration behind the wheel are some of the most common reasons for accidents, Vernie said.
She shared some tips for employees who must drive to do their jobs:
*Don't follow too closely and be alert for brake lights and turn signals.
*Match your speed to road conditions.
*Avoid sudden stops and signal your intention to turn.
*By remaining alert and not allowing your mind to wander, you'll be better prepared to react to hazards such as disabled cars, cars crossing lanes to get to an exit and potholes or debris on the road.
Vernie is available to do on-site safety assessments for WRA members. Contact here at 360-943-9198, Ext. 21 or at patti@retailassociationservices.com.
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.
