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NEW YORK — They walked, cycled or used Rollerblades to get across bridges and traverse streets at dawn in subfreezing temperatures, hopped into taxis with strangers, carpooled and packed into private buses.
Millions of New Yorkers and tourists struggled to cope with the first subway and transit strike in 25 years — and some even went shopping in the final countdown to Christmas.
The stakes were high for the city’s retailing industry, particularly major department stores such as Macy’s and Saks, in a holiday season that has been marked by ups and downs as retailers aim for same-store sales increases of 4 to 6 percent.
“The retail sector is the hardest hit, though that’s due to the loss of customers, as opposed to loss of workers,” said Kathryn Wylde, president and chief executive officer of The Partnership for New York City, a consortium of 200 top companies.
An analysis of the strike’s impact on the city by Comptroller William C. Thompson Jr. determined that New York could lose about $1.6 billion during the first week. That figure factors in decreased output from reduced workforces and productivity, tax losses, overtime charges and retail losses. For December, the city had projected collecting $466 million in retail sales tax — without the strike.
“If [the strike] goes the full week,” said Burt P. Flickinger 3rd, a retail industry analyst, “sales could be off 50 percent or more this week,” which would translate to the loss of 5 to 10 percent of the entire year’s profits. “In terms of lost operating income for New York-based retailers, it could be a quarter to half a billion dollars if they lose the entire week.”
The nation’s largest mass transit system, which serves seven million riders a day, shut down at 3 a.m. Tuesday for the first time since April 1980. Roger Toussaint, president of Local 100 of the Transport Workers Union, which represents 33,700 workers, called the walkout after a breakdown in negotiations with the Metropolitan Transportation Authority.
Hours later, a State Supreme Court justice found the union in contempt and imposed a fine of $1 million a day for violating the state’s Taylor Law, which bars walkouts by public employees. The union said it would appeal.
This story first appeared in the December 21, 2005 issue of WWD. Subscribe Today.
The sticking point in negotiations was the MTA’s proposal that all future transit workers pay 6 percent of their wages toward their pensions for the first 10 years of employment, up from the 2 percent that workers now pay. But the agency backed off its demand to boost the retirement age for a full pension to 62, up from 55 for current workers. It offered a total of 10.5 percent in raises over three years. The union sought 6 percent annually.
Mayor Michael Bloomberg, who walked across the Brooklyn Bridge to City Hall from the Emergency Management Office, denounced the strikers at a news conference, saying they “walked out on the people of New York.”
The Partnership estimated that 20 percent of the workforce at major corporations did not come into work, and that seemed to mirror the estimates of major retailers, who said they were 70 to 80 percent staffed on the selling floors.
“Overwhelmingly, it seems provisions had been made for hotels and buses and private cars for senior-level employees,” Wylde said. “It was more support staff that was not able to get into work, people on the lower end of the economic spectrum and those dependent on public transportation. The small business sector in general suffered more. Some just stayed closed. If you have a handful of employees and lose 20 percent, you are not able to function.”
Lauren Hoffman, the day manager of 8th Street Lab, a fashion boutique at 69 East 8th Street, said several businesses in the neighborhood were closed. “A number of small independent clothing stores were closed,” she said, adding, “We’re not doing very well.”
Fashion executives and merchants soldiered on, many finding themselves in the unusual position of being on the selling floor.
At Bloomingdale’s, spokeswoman Anne Keating said 40 percent of the sales force got to the 59th flagship, but the store was fully staffed because it had about 300 executives on the selling floor, including buyers, divisional vice presidents and operating vice presidents. In the shoe department, it was all about, “Boots, boots and more boots” being sold, said Debbie King, vice president of women’s shoes, among those filling in.
Francine Klein, executive vice president of cosmetics, added, “We’ve got a nice balance today between tourists and locals and most of them are wearing their comfy shoes — we’re seeing lots of sneakers today.”
Among the tourists was Karen Davies, of Montreal, who was shopping with her two daughters. “We’re on a birthday trip this week,” she explained. “We came a little early on purpose, just in case of the strike. We got a cab, but the cabbie charged us $30 for 10 blocks and there was someone in the car already.”
When Saks Fifth Avenue opened, the top brass including chief executive officer Fred Wilson and president Andrew Jennings were there to encourage workers and greet shoppers. “I was personally on the main floor at 9 a.m. in cosmetics greeting customers when the store opened, doing our shopkeeping duty,” Jennings said. “In the face of adversity, our team was just brilliant. We played ‘New York, New York,'” over the loudspeakers. Jennings remained on the floor until 10:30 a.m. and acknowledged traffic was thin.
Saks’ Deborah Walters, senior vice president and general merchandise manager for cosmetics, fragrance and intimate apparel for Saks, braved the commute in her stilettos. Her colleague, Kate Oldham, vice president and divisional merchandise manager of cosmetics, accessories and fragrances, opted for hiking boots. Oldham brought her son along with her in a taxi because his nanny could not get into Manhattan.
At Brooks Bros., which operates three stores in Manhattan and none elsewhere in the city, “We could be 30, 40, 50 percent down each day. It’s very hard to quantify,” said Claudio Del Vecchio, chairman and ceo of the 190-unit chain. “Worst case scenario is $120,000 to $200,000 a day” in lost revenues. “It’s not going to make or kill the season, but this is like a big snowstorm. You never make it all up.”
Brooks Bros. in the Americana Manhasset shopping center on Long Island could catch some local residents that would otherwise shop Manhattan. On a Tuesday or Wednesday before Christmas, the three Manhattan stores would typically generate $500,000 to $600,000 a day in sales, Del Vecchio said.
The impact grows each day the strike lasts. “December 26 is usually our biggest day,” following the launch of the chain’s semiannual sale Dec. 24.
“We have over 80 percent of our people in the stores,” Del Vecchio said. “We organized buses and car pools. We planned this pretty well.”
Typically, Macy’s Herald Square does $4 million to $5 million daily this time of year, and could lose a million or a million and a half each day because of the walkout, said a person familiar with the operation. “Macy’s will lose some volume, but a lot of what they drop at Herald Square shifts to the branches. They can’t make it all up, but it’s not catastrophic.”
Macy’s has two units in Brooklyn, two in Queens and a furniture gallery in Queens. The parent, Federated Department Stores, also operates Bloomingdale’s, which has two Manhattan stores, but none elsewhere in the city. “The stores are well-staffed,” said Jim Sluzewski, spokesman for Federated. He had no comment on the strike’s business impact, but noted December sales will be reported on Jan. 5.
About 4.2 percent of New York City holiday purchasing is at stake from Tuesday through Saturday, business that will take a big hit if the strike extends through Christmas Eve, said Marshal Cohen, chief industry analyst at market researcher NPD Group.
Almost one-fifth of annual retail business in the country, or 18 percent, is transacted by consumers during December, and 33 percent of that slice comes in the last week, Cohen said. In New York City, that translates to an estimated $250 million-worth of business daily — as much as $1.25 billion that stands to be seriously diminished if the strike continues through Saturday.
Apparel marketers will likely take a bigger hit than “just about any one else, because it’s such an impulse purchase,” Cohen said. “Now, gift cards will take the place of a number of gifts that would have been apparel.”
Jim Gold, president and ceo of Bergdorf Goodman, said selling floors were “very adequately covered, with 75 percent of the total staff on hand. “We had an all-store meeting to talk about the importance of delivering tremendous customer service today. We are going to be very focused about conducting business over the phone. We’re offering free delivery. Since our clients have been so inconvenienced, we need to step up and make their lives as easy as possible.”
Gap Inc., which operates 20 Gaps, 15 Banana Republics and four Old Navys in Manhattan, dispatched buses to pick up employees around the boroughs and is providing $15 a day for travel reimbursement.
To avoid the mayhem, Jack Wiswall, president of designer fragrances at L’Oréal USA’s luxury products division, took a cab from the West Side to L’Oréal’s offices at Fifth Avenue and 47th Street about 5 a.m. “We’re at just about 100 percent,” he said of attendance at the office. “One of our executives — so she could get through the tunnel from New Jersey — got out of bed at 3 a.m., and got here at 4:30,” said Wiswall. “What concerns me is my assistant comes from New Jersey and she said there were only five people on a [typically] standing-room-only bus. A lot of people decided to take today off.”
Deliveries are not a major issue this time of year for stores, except for replenishing hot-selling gifts, such as toys, or accessories, and cold-weather fashion products, such as scarves, said Arnold Aronson, marketing director of retail strategies, Kurt Salmon Associates. Many stores utilize local warehouses out of such places as Long Island City and Secaucus, N.J., for fast holiday replenishments, but with roads clogged that could slow deliveries.
Traffic at area malls was heavy Tuesday, but it was unclear how much was because of the strike or time ticking away before the holidays. Lisa Herman, marketing director of Westfield Shoppingtown Garden State Plaza in Paramus, N.J., said, “We have seen more men and women in business attire shopping today.”
Nancy Ploeger, president of the Manhattan Chamber of Commerce, said one member, Our Name is Mud, a store selling ceramics in Grand Central Terminal, reported 10 percent of employees did not make it to work and 95 percent arrived late. Business was off by 30 percent last weekend due to the threat of strike. “The effects of the low business last weekend coupled with [Tuesday] and whatever happens is really killing us,” she said.
Corrine Beauvoir Manderbach, spokeswoman for Calypso, who walked across the Manhattan Bridge to get to work, said some Calypso stores were opening late because employees living in Harlem and New Jersey were having trouble getting to work. “Downtown, here, it’s really deserted,” Manderbach said, referring to SoHo, where the company has its offices and some stores. “If you are not working today you are going to be discouraged to Christmas shop. How do you make that up? That’s a good question.”
Jeffrey Kalinsky of Jeffrey was pragmatic about the strike. “I guess you don’t make up the loss,” he said. “Thank God we’ve had a great December and hopefully the strike will be short.”
The sartorial buzzword was comfort as Uggs returned in a major way. Also prevalent were big jackets to battle the cold wind. To be sure, it was a day of extremes. A commuter walked through Central Park with a “Not on Strike” cardboard sign. Tourists posed for pictures in the middle of a carless Fifth Avenue and a 76-year-old self-described “capitalist” ran along Fifth Avenue from his Upper West Side apartment — fully dressed for work.
Susan Sokol, president of Vera Wang, apparel division, said, “December is a very important shipping month. Many people who work in our production and sewing commute from Queens and Brooklyn. That could impact our deliveries, and the strike affects our store on Madison Avenue.”
Sokol said she is concerned about getting work done by local contractors to a New Jersey facility in a timely manner. “We have brides we can’t disappoint. Clearly, we’re facing challenges.”
Nicole Miller is prepared to ride her Razor electric scooter to the garment district if necessary, even though she carpooled it Tuesday. The designer praised her staff for their near perfect attendance. “A lot of people rode their bikes in from Brooklyn or Queens, which is admirable on such a freezing day.”
But Miller is worried. “It’s a mess. I’m concerned about everything. First of all, there’s gridlock everywhere. It’s going to affect our retail and shipping out of Queens.”
James Mischka and Mark Badgley seem to be in better shape, having already received all their fabrics for their spring collection and with “a few things due in January,” Mischka said.
With the exception of one employee, Badgley Mischka’s 50-person staff was at work on Tuesday. The designers planned to walk from their Washington Square apartment but after a few blocks, they ducked indoors for a coffee and decided to cab it. “One of the people in our cab didn’t know there was a strike. She couldn’t figure out why the driver was stopping to pick up people. She was oblivious.” Mischka said.
As someone who rides a tricycle from her TriBeCa home to her West 37th Street offices, Lela Rose took the strike in stride. “I am so pleased with myself. The strike doesn’t affect me at all.” Rose, who affectionately refers to her $1 eBay find (excluding its $189 in shipping) as “Blue Bell,” customized the vehicle’s two oversized baskets with reversible Lela Rose fabric. The trike is large enough to take her son to school and ferry her Norwich terrier “Stitch” with her to work.
“I think every single person should have a bike. I saw all these people walking and I thought, ‘You people have got to get a bike.’ It’s the best way to get around. It takes 20 minutes everywhere I go.”
Rose also spurred on her sewers to get to work any way they could. “I called the sewers immediately and said, ‘Fai ti la.’ That’s ‘Hurry up.” in Mandarin.”
Accessories vendors surveyed said most of their employees made it into work, but they’re worried about the impact of the transit strike on their business in New York stores. Jewelry designer Robert Lee Morris, who has a store in SoHo, was livid. “This is a time of year when the city needs its greatest mobility and flexibility,” said Morris. “It makes me so angry with the strikers even though I believe in their getting the upgrades. The way they are going about it is criminal.…immobility hitting part of our world tends to create collapse across the board.”
Michele Ateyeh, president of Lamberston Truex, canceled the company holiday dinner scheduled for tonight, but otherwise the strike didn’t hurt her mostly wholesale business. “Our specialist at Bergdorf’s [where the brand has a shop-in-shop on the main floor] is up there and working. It’s really a mental pause. [The strike] took a lot of energy, effort and joy out of the week. We are concerned about the retail traffic. If our partners hurt, we get hurt.”
Richie Rich of Heatherette said the transit strike wasn’t affecting business — or his mood. “Everyone here at Heatherette is coping amazingly,” he said. “The Christmas cookies are out with the hot chocolate and we are grooving to Madonna’s new album.”