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British online fashion giant doubling down on the U.S.

BY Marianne Wilson

As if American apparel retailers didn't have enough homegrown competition, ASOS, the largest online fashion retailer in the U.K., is making a major push into the American market.

The company has signed an agreement to establish its second North American fulfilment center, in Union City, Georgia, outside of Atlanta. The center, which has an initial investment of $40 million, will be able to handle 10 million items, with the opportunity to expand further. Construction is expected to begin shortly, with operations starting in fall 2018.

"This agreement is a major step forward for ASOS in the US and demonstrates the opportunity we believe lies ahead in this key market," said Nick Beighton, CEO, ASOS. "Our US business delivered 39% constant currency growth in the first six months of the current financial year. Our U.S. fulfilment centre will enable us to significantly develop our proposition for our 20-something US customers supporting our continued growth and future ambitions."

Founded in 2000, ASOS (which stands for "As Seen on Screen") targets young millennial men and women with affordable fast-fashion items and accessories. It features 85,000 different products (including 4,000 new styles every week) to 12.4 million active customers. About 40% of the mix comes from its own brand, and another 20% from exclusive items created for it by other brands. The rest is made up of items from both well-known labels and smaller ones.

According to Business Insider, U.S. sales make up 12% of ASOS's total sales globally, and are growing twice as fast as U.K. sales. The retailer is looking to capitalize on that growth with its new distribution center.

"This fulfilment centre will significantly enhance ASOS' US customer proposition providing more cost effective, faster and more flexible delivery options," the company stated.

The company currently has a market cap of about five billion British pounds, or around $6.5 billion. Sales totaled about $1.8 billion in 2016. With eight local language websites, ASOS sells to customers in the U.S., U.K., Australia, France, Germany, Spain, Italy and Russia.

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Regulatory Wrap-Up: Minimum wage and paid-leave ballot initiatives popping up

BY CSA STAFF

Wages

Massachusetts: SEIU-backed Raise Up Massachusetts has begun its long-promised effort to put a wage increase and paid leave proposal on the Nov. 2018 ballot following inaction during the 2017 legislative session. If passed, the rate would increase $1/yr to $15/hr by 2022 with future increases tied to an annual cost of living adjustment. The coalition must collect 64,750 signatures for the initiative by early Dec. 2017 and an additional 10,000 by June 2018. The attorney general’s office still has to approve the ballot language and the legislature could still take action in early 2018 on minimum wage, which could circumvent the ballot initiative process.

Michigan: The Restaurant Opportunities Center-backed Michigan One Fair Wage Committee filed a 2018 ballot initiative to increase the minimum wage to $12/hr by 2022 and also incrementally increase the minimum wage for tipped workers until they reach the full minimum wage by 2024. Pending approval by the Board of State Canvassers, the group will begin collecting signatures.

Cook County, IL: Municipalities continue opting out electing of the county-wide wage increase and paid leave laws that passed in Oct. 2016. To date, 107 (roughly 80%) of the 132 localities within the county have decided not to implement the ordinances.

Kansas City, MO: An initiative seeking to raise the city’s minimum wage to $15/hr by 2022 will appear on the Aug. 8 ballot. Should the measure pass, it will be in direct conflict with a state law barring municipalities from raising wages above the state’s $7.70/hr minimum. The city has not yet announced if it would challenge the state’s preemption law in court.

Montgomery County, MD: Following Councilmember Elrich’s introduction of another legislative effort to raise the minimum wage to $15/hr, a study commissioned by the county was released. It details the economic impacts of the proposed increase and found that the county would lose 47,000 jobs by 2022. County Executive Leggett commissioned the study when he vetoed a similar measure earlier this year. The council will hold a hearing Sept. 19 to review the findings.


Paid Leave

Massachusetts: As stated above, SEIU-backed Raise Up Massachusetts has begun its long-promised effort to put a wage increase and paid leave proposal on the Nov. 2018 ballot following inaction during the 2017 legislative session. The paid leave proposal would mandate 16 weeks of paid leave to care for a new child or ill family member and also includes up to 26 weeks for personal illness or injury. The leave program would be funded by employer contributions and businesses could require employees to pay up to half of the total cost of the program. The benefit would be capped at $1,000/wk. The coalition must collect 64,750 signatures for the initiative by early Dec. 2017 and an additional 10,000 by June 2018. The attorney general’s office still has to approve the ballot language and the legislature could still take action in early 2018 on the issue which could circumvent the ballot initiative process.

Michigan: The Michigan Time for Care coalition filed a 2018 ballot initiative that would mandate employers with more than 10 workers to provide one hour of paid leave for every 30 hours worked with a maximum of 72 hours of leave per year. Pending approval by the Board of State Canvassers, the organization will begin collecting signatures.

Albuquerque, NM: A state circuit judge ordered the removal of a paid leave ballot initiative that was supported by the business community from the Oct. 3 ballot. Supporters of the original paid leave initiative argued successfully that the competing language would confuse voters. The case is expected to be reviewed by higher courts prior to a final decision on what appears on the ballot.


Wage Theft

U.S. Congress: House and Senate Democratic leaders introduced the Wage Theft Prevention and Wage Recovery Act. The bill would create a $2,000 penalty for violations and a $10,000 for each subsequent violation. Penalties currently are capped at $1,100 per violation. The legislation will not pass in the Republican-controlled Congress but its introduction demonstrates growing momentum for the issue.

St. Petersburg, FL: The city council recently amended its wage theft ordinance which contains two new employer mandates. At the point of hire, an employer must provide written notice to the employee regarding rate of pay, overtime rate and other employee rights under the ordinance. Any changes during the employee’s tenure must also be delivered in writing and records must be kept for three years. Employers must also post a notice that summarizes those rights under the ordinance. Employers who violate this new poster requirement may be fined up to $500 per violation.


Pay Equity

Maine: The legislature failed to override the Governor’s veto of legislation that included provisions preventing employers from requesting salary history information during their hiring process.

New Jersey: Governor Christie vetoed legislation that would have prevented employers from requesting salary history from potential employees.

San Francisco, CA: Mayor Lee signed the Parity in Pay Ordinance into law following passage by the city council earlier this year. The law aims to close the wage gap between women and men, and applies to both private employers and city agencies. Effective July 1, 2018, employers are prohibited from asking job applicants about their salary history or from considering past salaries in determining what salary to offer and whether to hire the applicant.


Taxes

MTC: The Multistate Tax Commission (MTC) announced a special voluntary disclosure program for online sellers, who could have sales tax collection liabilities as a result of storing inventory in fulfillment centers across the country. Participating retailers that sell into states joining the program would be forgiven for any historical sales tax compliance liability but would be required to collect taxes on future sales. The states that have agreed to participate in the program so far are: Alabama, Arkansas, Colorado, Connecticut, Kansas, Kentucky, Louisiana, Nebraska, New Jersey, Oklahoma, Texas, Utah and Vermont. The program will run from Aug. 17 through Oct. 17.

South Dakota: The state Supreme Court announced it will hear oral arguments Aug. 29 in South Dakota v. Wayfair Inc., one of two lawsuits challenging the state law that mandates sales tax collection from merchants with over $100,000 in sales (or 200 transactions) per year into the state. The first-in-the-nation law was signed by Gov. Dennis Daugaard (R) in March 2016 and went into effect on May 1, 2016. Should the Court find for the plaintiffs, the case may be reviewed by the U.S. Supreme Court during the 2018 session.

Rhode Island: Legislative leaders finally agreed to a state budget that was signed into law by the governor. The package included negotiated language establishing a physical nexus for sales tax collection purposes for out-of-state retailers. Previous iterations called for reporting requirements similar to Colorado’s 2010 law. The final language establishes physical presence for collection purposes as the usage of “in-state software” on the devices of “in-state consumers.”


Sugar Tax

Cook County, IL: Following the local judge’s dismissal of the lawsuit opposing implementation of the soda tax, the tax went into effect on Aug. 2. Merchants must begin collecting the penny-per-ounce tax on sugary drinks.


Labor Policy

Seattle, WA: A federal judge dismissed a lawsuit brought by the Chamber of Commerce seeking to block the landmark Seattle law which allows Uber and Lyft drivers to unionize. The law remains on hold as a similar case brought by individual drivers makes its way through the legal system.

NLRB: The full U.S. Senate confirmed Marvin Kaplan to one of the two open board seats at the National Labor Relations Board, bringing the organization one step closer to a Republican majority.

EEOC: President Trump nominated Daniel Gade to the last vacant slot on the Equal Employment Opportunity Commission. The President has also nominated Janet Dhillon as EEOC Chair and should both be confirmed, there will be a Republican majority on the EEOC.


Product Safety

CPSC: President Trump nominated Ann Marie Buerkle to be the next Commissioner of the Consumer Products Safety Commission. Buerkle has been serving as acting director of the organization for the last six months and is a former member of Congress from New York.


Immigration

U.S. Senate: Senators Tom Cotton (R-AR) and David Purdue (R-GA) introduced a modified immigration reform bill that focuses on a merit-based system. The Reforming American Immigration for Strong Employment (RAISE) Act would cut the annual number of green cards granted for legal residence in half and would emphasize job skills over family ties for applicants. The White House has indicated strong support for the bill.


Trade

NAFTA: Countries participating in potential NAFTA renegotiations announced a second meeting in Mexico City in early Sept., following one already scheduled in Washington, DC in mid-Aug.

Steel: President Trump announced the delay of a decision that would potentially restrict imports of foreign steel as a matter of national security. Several of the president’s advisors have highlighted the risks of starting a trade war with China over the steel issue. The president also announced the delay of another issue that would impact the U.S.-China relationship; a potential investigation into the violation of U.S. intellectual property rights and forced technology transfer.


Transportation

FedEx: The company announced this week that it would not charge extra delivery fees to most homes during the peak holiday season, countering rival UPS’s plans to add a surcharge to deliveries. The two carriers, collectively transport a significant percentage of consumer goods from various ecommerce platforms.

Key Takeaways

• The South Dakota economic nexus law is in direct contradiction with standing Supreme Court precedent regarding how retailers without a physical presence in a state trigger a sales tax collection obligation. Should the state’s Supreme Court rule in favor of the online retailers, the case could go to the U.S. Supreme Court as early as next year and has the potential to overturn the physical presence standard that has been in place for decades.

• 2018 minimum wage and paid leave ballot initiatives are beginning to pop up around the country. Leading up to the 2016 elections, the SEIU announced it would put measures on the ballot in every state that allowed it (over half); however, the SEIU fell far short of that goal, running initiatives in only a handful of states. At this juncture, there is no reason to suspect there will be a wave of initiatives in 2018. Hopefully that’s the case because these measures almost always pass and entry-level employers are portrayed negatively throughout the process.

• The immigration reform bill that was introduced this week nearly mirrors the message of union leaders in years past. They argue that immigrants are competing against Americans for jobs and driving down wages in the process. In this conversation, entry-level employers (“job magnets”) are at the center of the problem. Not only are the policy outcomes potentially bad for employers, but this conversation also has negative reputation implications.

Legislature Status for Week of 8/7/17

• The United States Senate is in recess until September 5, 2017

• The United States House of Representatives is in recess until September 5, 2017

• Ten state legislatures are currently in regular session

o CA, IL, MA, MI, NC, NJ, NY, OH, PA, WI

• One state legislature is in special session

o TX

Podcast

We’ve recently launched a podcast that focuses on politics and policy for the restaurant industry. You can listen to the “Working Lunch” podcast by clicking here or subscribe on iTunes here.


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The Regulatory Wrap-Up is presented by Align Public Strategies. Click here to learn how Align can provide your brand with the counsel and insight you need to navigate the policy and political issues impacting retail.

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Retail jobs dip slightly in July

BY Marianne Wilson

The retail industry lost jobs in July.

Retail industry employment declined slightly in July, decreasing 1,700 jobs from June, according to the National Retail Federation. On a three-month average, retail jobs have decreased by 4,200 jobs as calculated by NRF. (The numbers exclude automobile dealers, gasoline stations and restaurants.) On a positive note, the economy overall saw gains of 209,000 jobs in July, exceeding growth expectations for the month.

“Overall job and wage growth are positive indicators for the retail industry since it means consumers have more money to spend when they come into stores or shop online,” said NRF chief economist Jack Kleinhenz. “With back-to-school shopping ramping up and the holiday season just around the corner, retailers will only be busier in the weeks and months ahead.”

While the sporting goods sector saw decreased employment in July, department stores, building materials and supply stores, and health and personal care stores all saw job gains. Department store employment has increased for the past two months, with June and July gaining a combined total of 6,000 jobs.

Kleinhenz noted that retail job numbers reported by the Labor Department don’t paint an entirely accurate picture of the industry because they count only employees who work in stores while excluding retail workers in other parts of the business like corporate headquarters, distribution centers, call centers and innovation labs.

Economy-wide, average hourly earnings in July grew 2.5% year-over-year, keeping pace with the increase in June.

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