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As Transit Threat Intensifies, N.Y. Retail Sees Mixed Results

NEW YORK — The threat of a transit strike gave a minor kick to New York stores over the weekend — but the crucial remaining 10 shopping days could be ruined if a walkout takes place.<br><br>Stores and sidewalks were jammed with people...

NEW YORK — The threat of a transit strike gave a minor kick to New York stores over the weekend — but the crucial remaining 10 shopping days could be ruined if a walkout takes place.

This story first appeared in the December 16, 2002 issue of WWD.  Subscribe Today.

Stores and sidewalks were jammed with people loading up on Christmas gifts and other essentials, like walking shoes and outerwear. Despite the inclement weather, retailers said Saturday generally was busier than the sunnier Sunday. There were different views, though, as to whether shoppers were out in force simply to beat the Christmas deadline or because of the potential strike.

As of press time, negotiations were continuing between the Metropolitan Transit Authority and the Transportation Workers Union and it wasn’t clear whether a strike would indeed occur.

“We had a terrific weekend. I can only imagine that it was spurred on by fear of the transit strike and that everyone was trying to get some last-minute shopping in,” said Ed Burstell, vice president and general manager at Henri Bendel.

Shoppers were buying primarily holiday gifts at Bendel’s as opposed to strike-related items like shoes and coats, according to Burstell. “It was all gifts — the typical items that are sold here this time of year like accessories, which are a big part of our gift-giving business. Jewelry and handbags were outstanding areas, followed by novelty knits in scarves and sweaters and then into basic sweaters,” said Burstell.

“Traffic was on the heavy side, but it is hard to determine whether it’s pre-strike shopping or just normal holiday traffic,” said a Saks Fifth Avenue spokesman. “But given the inclement weather and the crowds, I would venture to say it was more driven by the potential strike.”

Barneys New York also was busy, but a spokeswoman said there were factors in play other than just the possible transit strike. “This is the time of year when people usually do the bulk of their holiday shopping and it is also high tourist season,” she said.

On 34th Street on Sunday, traffic at Macy’s and chain stores including the Gap, Victoria’s Secret, H&M and Banana Republic was healthy, but not hopping. According to several store workers at Macy’s and the Gap, it was busier Saturday, though not much.

However, one Victoria’s Secret employee said the lack of traffic Sunday surprised her. “[Management] told us in a meeting this morning that it would probably be really busy because people would try to get things done in case of the strike,” said the employee, who spoke on condition of anonymity. “But it’s not, so I’m confused. It should be packed because it was at this time [Saturday].”

It was also busier on Saturday, according to Anne Rose, a shopper on 34th Street who had been in the neighborhood both days. Rose said she was going to New Jersey to pick up her car, but stopped by Macy’s to do some extra Christmas shopping since it was along her way.

Meanwhile Macy’s shopper Julie Barriga said the looming transit strike would affect her professional life, but not her shopping plans. “It might affect how I get to work,” she said. “But today I’m only shopping because I need to get it done.” Marcia Marcano, who was also at Macy’s, said she remained optimistic that the strike wouldn’t happen. Shopping Sunday had nothing to do with a potential transit strike, she added.

While retailers were generally pleased with the crowds and business this weekend, the impact of a strike would be severe. Industry analysts say it would be a death knell for holiday sales in the city — the severity of which would depend on how long a strike would last. Mayor Michael Bloomberg estimates the cost of a strike at $350 million a day.

“A strike will cause retailers to face a sharp downturn in the NYC stores,” said retail consultant Walter Loeb of Loeb Associates. “It could be as much as 40 percent. Some of the business will transfer to the suburban branches, but some will be lost as people will give money instead of buying merchandise. I think it is regrettable because of the loss of momentum that usually happens during this critical time of the year. People always shop at the last minute and the usual crush generally starts around the 16th.”

“A strike in the New York metro area would be a first-class disaster during the most intense period of the holiday shopping season,” said Emanuel Weintraub, of the apparel consulting firm that bears his name. “Manhattan is a key area for shopping because people want to see the Rockefeller Center Christmas tree, shop at the stores and see the window displays from 34th Street to 59th Street. Areas such as the Village will be less impacted because it is mostly residential. Further up, store such as Macy’s, Bloomingdale’s and Bergdorf’s will feel the pressure of lost sales.”

Richard Jaffe, equity analyst at UBS Warburg, said, “As I understand it, the city is pretty well rented up. You have maximum tourist capacity and those guys aren’t going to go away. However, a strike can’t be good for business. The trend now is that people are shopping closer to need. A strike now couldn’t be more poorly timed, particularly this year because of the compressed holiday shopping period.”

In a conference call hosted by Salomon Smith Barney, Brad Martin, chairman and chief executive officer of Saks Inc., said that the Saks Fifth Avenue flagship on Fifth Avenue “represents in the aggregate 7 percent of the revenue” of the corporation. He noted that the company expects to do a lot of business in the next few weeks, and that a strike would be a “negative for our margins on the business.” Martin said that Christmas will be late, as everyone is predicting, but also noted that most businesses went into the fourth quarter with conservative inventories and sales plans. He said there probably won’t be enormous price reductions or wholesale discounting. While there will be promotions, they will be geared toward stimulating traffic and not about clearing excess inventory.

Late last week, the Fashion Center Business Improvement District began passing around a one-page handout explaining the commuting options open to people working in the district.

“Frankly, we don’t really know what to expect, other than if it goes through it won’t be business as usual,” said Jerry Scupp, deputy director of the FCBID. “It’s going to be a big mess. We’re just trying to figure out how to get our people in here.”

Many designer firms, vendors and retailers were preparing elaborate contingency plans to get their employees to work, with the aid of buses, livery cars, car pools, Web sites, hotlines and even bike racks at their buildings. Other companies have put the burden of finding transportation on employees.

Several designer companies had not made available any alternate means of transportation to employees by late Friday, but were expecting to remain open for business this week. In some cases, such as at Donna Karan and Michael Kors, the companies were advising their employees to look into carpooling with their neighbors. But at other companies, executives met with individual employees to determine that each worker would be able to make it to the office in the event of a strike.

“In the event of a strike, we will increase the number of vans that run between our New York and New Jersey headquarters during rush hour,” said Larry McClure, senior vice president of human resources at Liz Claiborne Inc. “We have also identified additional work stations in both New York and New Jersey for employees who cannot get to their primary work location, and provided our employees with a list of mass transit companies that should be in operation in the event of a strike. Finally, we are keeping our employees up-to-date with all of the City’s plans as well,” said McClure.

A Kellwood Co. spokeswoman said a transit strike will not affect its associates, because most of them live in New Jersey, Pennsylvania, Connecticut and Long Island. Terri Eagle, executive vice president at David Yurman, said that the company is providing private transportation to pick up employees from each of the five boroughs, and Coach has organized buses in Manhattan for its employees along with car pools. Junior sportswear makers based in Manhattan also organized carpools and car services.