State’s retail sector projected to see growth this holiday season

Washington Retail Association monitoring several key issues affecting retail sector this legislative session

It’s already starting to look a lot like Christmas as retailers rearrange their store layouts and offer new merchandise for the holiday season.

With Thanksgiving a week later than usual—this year it falls on Nov. 28; in 2018 it fell on Nov. 22—retailers are gearing up for a shorter holiday shopping season.

Conditions are looking good for the sector, said Renée Sunde, president and chief executive officer for the Washington Retail Association, a representative and advocate group for about 4,000 in-state and out-of-state members operating storefronts across Washington.

“When you look at the holiday season, what’s important to note is that the Washington economy is very strong right now. We have seen a steady increase in taxable retail sales,” she said. “The retail industry is doing well.”

Sunde noted that the state is currently the 10th largest economy in the nation, having recently knocked Massachusetts out of the top 10 and boasting an unemployment rate of 4.6 percent.

She said the state employs about 400,000 people in retail, amounting to $18.6 billion in wages earned annually.

Nationally, the Employment Security Department is projecting the number of retail jobs to be up 30 percent for holiday season employment.

Statewide, the ESD estimates 18,826 hires could be made this season, compared with 13,920 last year.

The Tri-City area is expected to offer 465 additional retail job opportunities, up from 392 last year.

Despite talk of a recession within the next year, retaliatory tariffs, several retail-related legislative items, and ongoing drama at the White House, Sunde reported that consumer confidence seems to be running high.

This is a good omen for retailers, many of which bank about 20 percent of their annual earnings during the holiday shopping season. Sunde explained that this fourth quarter push can sometimes make or break retailers.

Even the weather can be a factor, according to a Forbes article Sunde cited. “What happens week to week during the holidays does project the outcomes of the season,” she said.

Sunde said retail sales are projected to increase 3.8 percent to 4.2 percent, to an estimated $730.7 billion, with the biggest sales increases primarily among hobby, toy and game stores.

Average per capita consumer spending during the holiday shopping season is $1,050.

Though consumers often refer to Black Friday as the kickoff to holiday shopping, it really starts in October, Sunde said.

“It seems like it gets earlier and earlier every year,” she said. But the truth is in the numbers. “Forty percent of consumers begin (holiday) shopping before Halloween,” she said.

The busiest shopping days of the season steadfastly remain the five that lay between Thanksgiving and Cyber Monday.

In light of the increasing popularity of online shopping, Sunde said that “Cyber Monday is getting very close to surpassing the amount of sales of Black Friday.”

Despite the looming imperative for businesses both big and small to establish strong online presences and offer “click and pick up” and other similar curbside or courier-powered services, Sunde said online sales account for only 11 percent of all retail sales.

“A majority of retail sales are still happening in the store,” she said, adding that a lot depends on the nature of the transaction.

For example, an item ordered online and picked up in store is counted as an in-store transaction. Also, many consumers research and preview products online, but still ultimately make a trip to the store to make a final assessment and buy the item in person.

However, there’s no doubt online shopping is rapidly taking hold of the market; Sunde cited one industry projection that stated online sales will account for 24 percent, or nearly a quarter, of all retail sales by 2021.

“We’ve been noticing how fast our industry is changing,” she said. “What’s driving the industry and how the consumer is driving the industry, a lot of that’s technology, and that’s a lot of what’s driving retail specifically. It’s challenging right now for brick and mortar (retailers) … it’s why brick and mortar retail is needing to continue to evolve to be omni-channel.”

Despite a promising outlook for fourth quarter, there are several items on the upcoming legislative agenda that may result in new regulations affecting the retail sector, according to Mark Johnson, senior vice president of policy and government affairs at the WRA.

A core issue is one involving an increase in regulation to ensure consumer data privacy, Johnson said.

Senate Bill 5376 and House Bill 1854 were proposed earlier this year, and though the Legislature ultimately opted not to pass the bills, revised proposals will be up for consideration in 2020.

New regulations may translate to new measures that businesses will have to incorporate into their models to ensure the information they collect from customers is sufficiently protected to meet the new standards.

“It’s one of the chief issues that we are working on as an association,” Johnson said.

Another issue being tackled is a crackdown on retail theft.

Johnson said that Washington is one of the only states that doesn’t give store employees the power to stop theft before it happens.

It is not currently lawful for employees to apprehend or even approach a customer who has been observed slipping merchandise into their pocket, or concealing it in a coat or purse for example, until that customer has left the store without paying, thereby officially committing theft.

House Bill 1159 and Senate Bill 5248 would enable personnel and law enforcement to intercede in cases where merchandise has been concealed with intent to steal.

These bills, also introduced last session, will be back for consideration in 2020.

“A lot of people don’t realize that $45 billion (dollars’ worth of merchandise) is stolen every year across the country,” Johnson said. “$850 million is stolen out of stores in Washington … consumers have to absorb higher prices; the state loses out on tax revenues.”

Employee scheduling is another issue the association is watching.

House Bill 1491 and Senate Bill 5717 would require employers to provide employees their schedules at least 14 days in advance. If any changes to the schedule are made with less than two weeks’ notice, then employers would be required to pay affected employees penalty pay as compensation.

For example, if more workers need to be called in than originally foreseen, or if less hands are needed, those workers would be compensated for the late change to the schedule.

The measure has already been adopted in Seattle.

The WRA is opposed to the new legislation because “it takes a lot of flexibility out of the job,” Johnson said. He explained that the regulation would greatly affect the retail sector, given the variability inherent in the industry.

Other issues the WRA is monitoring are bills regarding the classification of independent contractors, as well as the outcomes of a rule already put into place by labor committees in the house and senate that sets the annual salary wage cap for the state at $79,800, below which employees must be paid an hourly wage.

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