Although Washington state is collecting record revenue despite the ongoing economic lockdown in response to the COVID-19 pandemic, it’s been a different story for retailers, and industry advocates say many physical retailers are struggling to keep their doors open.
One of the effects of the restrictions on store occupancy is a shift toward online purchases. According to Retail Dive, national online purchases during Black Friday were the highest ever, while in-store traffic fell by 50 percent – circumstances which likely contributed to Amazon’s revenue growth in the past year.
Washington Retail Association (WRA) President Renee Sundee wrote in a Dec. 31 statement that “2020 has been a challenging year for the retail industry marked by historical events, business closures, changing consumer demands, endless guidelines and restrictions and unforeseen changes to work and family life.”
Nevertheless, National Retail Federation President and CEO Matthew Shay said during a Dec. 22 podcast interview that he thinks the industry will recover – particularly as the vaccine is distributed.
“It will take some time, but I think we should be optimistic. We went into this recession not because there were fundamentals broken about the economy, but because we had a medical issue. Once we resolve the medical issue…people will resume many of their normal activities.”
At the same time, WRA Vice President Mark Johnson says the organization’s biggest priority for this session is that legislators “do not harm. Leave us alone.”
Johnson added that while possible grants and financial aid may help, the best thing the state legislature could do is prevent the unemployment insurance tax rates from skyrocketing, warning that for some retailers it could increase by 200-600 percent.
“I think the legislature recognizes there’s a problem,” he said. “They’re going to do something to try and fix it.”
Another policy he said could help retailers is extending Governor Jay Inslee’s delay of a plastic bag ban law enacted last year. HB 1053 sponsored by Rep. Strom Peterson (D-21) would delay the law until July. Johnson said that without the bill’s passage this month, many retailers will be out of compliance and face penalties from the state Department of Ecology.
“There’s just not enough post-consumer content paper and plastic bags out there for retailers to get because of the pandemic,” he said. “A lot of these manufacturers are making PPE and facial coverings.”
Meanwhile, he said that tax proposals from many state policymakers are the last thing retailers need at the moment. Inslee’s 2021-23 operating budget includes a capital gains income tax, while there are plans to introduce a digital advertising tax. There are also plans to introduce another payroll tax bill.
“Of all the times to introduce a disincentive to hire and pay employees more money, this would probably be the worst time,” Johnson said. “My small business owners are mortgaging their home a second time to pay their rent (and) trying to keep employees on the payroll. Don’t forget the brick-and-mortar little guys – they’re dangling by a thread.”
At a time when the state is experiencing record revenue, Johnson says that there’s no need to tax even more when retailers are trying to remain open.
“We’re not going to borrow our way out of this pandemic,” he said. “We have to sell our way out of this pandemic.”
The best way to do that is by allowing greater occupancy, he said. Inslee’s latest proclamation maintains a 25 percent operating capacity limit, while states like Pennsylvania allow for 75 percent capacity.
“Nobody is forced to go to the store,” Johnson said. “If the store is operating safely…then let them open up.”
The legislative session begins Jan. 11.