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Winter’s Wrath Bears Down on U.S. Retailers

A broad cold front delivered a punch to retailers in the form of brutally cold temperatures and storms that kept stores closed and shoppers at home.

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The polar vortex. Even the name sounds ominous.

It’s the large pocket of very cold air — usually the coldest air in the Northern Hemisphere — that sits over the polar region during the winter. This week, it found its way to southern Canada, the northern Plains, the Midwest and northeastern U.S., delivering a punch to retailers in the form of brutally cold temperatures and storms that kept stores closed and shoppers at home. This, after a holiday season that retail analysts are calling “anemic.” Planalytics calculated $5 billion in lost business for Monday and Tuesday, noting that about 200 million people have been affected by the weather.

RELATED STORY: Winter Storm Hits Retail >>

Even places where harsh winters are a way of life, people balked at plummeting temperatures. Minnesota Gov. Mark Dayton ordered all public schools in the state closed on Monday due to extreme cold, but left Tuesday’s decision to local school districts. Some, including Bloomington, Minn., home to Mall of America, remained closed on Tuesday.

“We’ve had, over the last couple of days, 20 to 25 stores that opened late, closed early or were closed all day. Muncie, Ind., is the only store that is still closed,” said a Macy’s spokesman on Tuesday. “We started closing stores on Sunday. We closed eight in St. Louis markets and 15 stores closed early that day, primarily in Indiana. Only a small number of stores were closed all day and they were in Indiana, Ohio and Mississippi.”

The weather was also an excuse to clear winter merchandise even more aggressively. The spokesman said long coats, boots, gloves, hats and scarves were selling briskly.

“We have just a few stores in Ohio that are currently closed, mostly due to access issues. Associates and customers can’t make it to the stores due to local or state travel advisories and mandates due to poor road conditions,” said a spokeswoman for Wal-Mart Stores Inc. “We closed one store last night and two others this morning. At peak, we’ve had 50 stores closed. All but the three in Ohio have since reopened.”

High-demand apparel items include coats, boots, gloves and thermal underwear, the spokeswoman said.

Ten J.C. Penney Co. Inc. locations were closed as a result of winter weather Tuesday, with an additional seven closing early due to weather conditions, a spokesman said Tuesday afternoon. “We began seeing a surge in cold-weather items during the holiday season, and demand continues in much of the country,” he said.

Target Corp. on Sunday closed eight stores early due to the weather. All reopened the next morning.

Taubman Co. on Monday closed two centers in the late afternoon: Taubman Prestige Outlets in Chesterfield, Mo. and the Mall at Partridge Creek in Clinton Township, Mich. Both typically close at 9 p.m.

Foot traffic in New York’s SoHo neighborhood was lighter than usual for this time of year. Samantha Joseph-Pauline, manager of the Anne Fontaine store on Greene Street, said, “We’re not getting the same traffic compared with last year. The people who are out are those that have to be out. People are coming in completely bundled up and complaining.” Fontaine’s Chicago unit was closed on Monday when temperatures dropped to 30 degrees below zero following a storm on Sunday.

“There definitely is an impact” from the weather, said Evan Gold, senior vice president of client services at Planalytics. “If you think about the winners and losers for this type of event, mall-based retailers don’t do well, neither do sit-down restaurants and entertainment centers. It’s a negative. These are the coldest temperatures in 20 years. People are spending more money to heat their homes. It may have little impact now, but there might be an impact 30 to 60 days from now when the heating bills come due. That may cut into discretionary spending.”

Not all is lost for retail, however. “People have gift cards, $30 billion in gift cards according to the National Retail Federation,” Gold said. “Online business is good. For retailers that have leftover apparel from the holidays, this is great news for them to clear that stuff. There’s 30 days until the calendar starts spring.” Gold said retailers can move inventory around or do fulfillment out of a local store. “This is hitting on a Tuesday after the Christmas season, so it’s not a huge retail day, per se,” he added. “This event is for need-based purchasing. If I didn’t get that jacket or thermals or pair of boots I wanted for Christmas, I’m buying them. We saw a lot of our retail clients send e-mail blasts to customers in the [affected] markets, saying, ‘Come get your cold-weather gear here.’”

Evren Kopelman, a senior analyst at Wells Fargo Securities, also found an upside to the cold spell. “A lot of these cold-weather brands are benefiting,” she said. “You can see the stock prices of VF Corp., for example, moving. We’ve had two warm winters for the past two years, so there’s some pent-up demand. The sell-through is stronger than what people planned for. VF said it planned for an average winter. This is not an average winter.”

Minnesota’s Mall of America on Monday took advantage of the statewide school closings by offering free rides at its Nickelodeon Universe worth $30. Despite temperatures as low as negative 60 degrees, shoppers flocked to the gigantic shopping center. “It changed the course of business,” said Maureen Bausch, executive vice president of business development. “The communication method is so powerful. We posted it on Facebook and it went viral. Some lines had an hour wait. In the morning, it was really quiet and we had tenants calling and saying ‘Can we close?’ In the afternoon, those same retailers called and said, ‘You’re not closing early, are you?’” About 100,000 people visited the mall Monday. “We’re hearty Minnesotans. When they learned Monday afternoon that schools would be closed again on Tuesday, they stayed at the center,” Bausch said. “Usually, the traffic would taper off, but we stayed busy until 9:30 p.m. That’s unheard of for a Monday.”

Bausch said there were slim pickings on winter products. “There’s no clearance left,” she said. “The clearance merchandise is gone.”

It’s been a different story at Americana Manhasset in Manhasset, N.Y., where the personal shopping team said it’s been getting requests for resort items such as bathing suits, cover-ups and sandals from customers who are headed somewhere warm. “They’re also getting plenty of calls for cold-weather accessories,” a spokeswoman said. “People are set by now with their coats and [ready-to-wear], but are still looking for specific items such as over-the-knee boots, fur infinity scarves and pretty, but warm, hats.” Lori Hirshleifer, of Hirshliefers, said Moncler jackets are selling incredibly well. In addition, Lucien Pellat-Finet sweaters are being snapped up.

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