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Retailers have no illusions about miracles in the final stretch of a mostly muted holiday season.

This story first appeared in the December 22, 2009 issue of WWD. Subscribe Today.

Markdowns likely will accelerate, more ads will be placed, but generally strategies are set, and there’s little to do to make up for the estimated $2 billion in losses from the weekend snowstorm that blanketed the Northeast and Mid-Atlantic states.

Despite the pressures, retailers don’t seem to be panicking, citing greatly reduced inventories, rising online sales and an extra day of shopping compared with last year’s disastrous season. Projections are holding steady for flat to slightly positive or negative comparable-store sales for holiday. A clearer read will emerge Jan. 7, when December comps are reported.

“Most of the sectors are showing improvements in their growth rates since Black Friday,” said Michael McNamara, vice president of research and analysis at SpendingPulse, an information service of MasterCard Advisors. “In terms of the latest performance figures, the electronics, men’s apparel, footwear and furniture and furnishings sectors are all showing positive or flat year-over-year growth rates since the Black Friday weekend. E-commerce continues to be one of the stars of the season with a season-to-date growth rate of 13 percent.

“There is improvement in the year-over-year comparisons virtually across the board as we move through December,” McNamara said. “This improvement is in spite of a significant winter storm event that impacted virtually all the northern regions of the country in the first half of the month. There is still a good deal of shopping to occur between now and Christmas.”

In fact, investors pushed up retail stocks 1.7 percent Monday, the second-strongest showing in December. The S&P Retail Index advanced 6.88 points to 413.96. (See related story, page 14.)

The Bon-Ton Stores Inc., based in York, Pa., acknowledged there’s not much that can be done in the days ahead to make up lost ground.

“We are already opened optimum hours. We have terrific promotions already lined up,” said Mary Kerr, vice president of public and investor relations. While Bon-Ton has higher online sales, “we believe our customer will still want to shop in our stores.”

Stephen I. Sadove, chairman and chief executive officer of Saks Fifth Avenue, said stores in Washington, D.C.; Philadelphia; Long Island, N.Y., and New Jersey were “clearly affected” by the storm — a total of about half a dozen full-price units and a couple of outlets.

The season “is not over yet,” said Ed Bucciarelli, president and ceo of Henri Bendel, which he said is stocked with more gift items this season, including a collection of accessories in partnership with Crystallized-Swarovski Elements. “We’ve got a very critical couple of [days] to go. We’re doing it without really promoting. There is very little promotional activity right now, and that’s how we believe our brand should be behaving.”

Although the storm hurt, retail executives said many customers, with advance warning from forecasters, shopped Friday and early Saturday.

People were not moving on Saturday, and Sunday started off slow,” said a spokesman from the Reading, Pa.-based Boscov’s department store chain. “Eighty percent of the company had some kind of impact. The extra day can help make it up, but there’s not enough time to really change strategies, though you can do some fine-tuning. We did move some ROP around to put more focus on Monday, Tuesday and Wednesday. There is a silver lining to the weather. We are selling boots, cold-weather items, shovels and heaters.”

At least $2 billion of the $15 billion in sales typically generated on Super Saturday were lost, said Scott A. Bernhardt, chief operating officer of Planalytics, a weather service for retailers and Spending Pulse.

“That is a significant portion of Super Saturday sales that will not be recovered,” Bernhardt said. “Recovery will be seen most at retailers with must-have items [e.g., Toys ‘R’ Us, Best Buy] and destinations [e.g., Wal-Mart], but the industry as a whole will not be able to completely make up for the lost shopping hours in many heavily populated centers. Pre- and post-storm, consumers were shopping to lists and focused on getting in and out of stores as quickly as possible.”

The Saturday before Christmas is considered the biggest or second-biggest day of the year for most retailers.


As far as the weather ahead, “we are not out of the woods yet,” Bernhardt said. “I am mostly worried about the day after Christmas. There could be more ice than snow, but it’s too early to know. There is the potential for some icing in the suburbs of New Jersey, Connecticut, Long Island and Westchester [N.Y.]. There is a conveyor belt of storms coming between now and the fourth of January.”

According to Planalytics, the biggest snowfalls Saturday occurred in Philadelphia and Bethesda, Md., both with about 23 inches. Dulles Airport in Virginia got 18 inches, while Washington got 16 inches.

“Saturday was a wipeout,” said the ceo of a specialty retailer, who spoke on condition of anonymity. “It cost retailers big time in Virginia, Washington, Maryland, the Carolinas — the whole Mid-Atlantic. Sunday was better. No one is making their numbers in the East. Everyone is getting more desperate on markdowns. But it’s been happening anyway. If you look at the newspapers, they’re loaded with sale. Retailers have got to move the goods, but nothing will compare to last year’s tsunami. It’s a 30-foot wave instead of 100 feet.”

The storm forced six Macy’s stores to close early Friday, between 8 and 11 p.m., instead of midnight. On Saturday, 73 Macy’s units and five Bloomingdale’s either opened late or closed early. On Sunday, 27 Macy’s opened late. The company declined comment on sales, but a key disruption resulted from a small fire in the mechanical system of an escalator at the Herald Square flagship on Sunday. The store was evacuated and shut down around 4:15 p.m., reopening about 90 minutes later. Damage was minimal to the store and merchandise, affecting some women’s apparel on the second floor, handbags on the first floor and parts of The Cellar.

Neiman Marcus never opened its Tysons Corner, Va., store on Saturday and closed its Washington unit early. On Sunday, all stores were open.

Wal-Mart shut a dozen stores Saturday. Most were Supercenters, which normally operate 24-7. Units in some cases have expanded hours and for those shopping down to the wire; Wal-Mart on Christmas Eve will remain open two hours later, until 8 p.m. Sam’s Club is staying open half an hour later to 9 p.m.

“Consumers continue to wait till the last minute to complete their shopping for the holiday meal and gifts,” said Susan Koehler, a spokeswoman at Sam’s Club. “I’m not sure if the delay is because they’re looking for deals or if it’s also due to time pressures and scheduling. Perhaps it’s both.

“ reported positive activity in searches and purchases this month and our jewelry team saw positive signs of member interest both online and in the club,” she said. “Electronics have been popular, including HDTVs as people buy gifts for the entire family or a second set for another room.”

Target has “temperature stations” at the front of stores affected by the storm selling umbrellas, shovels and boots.

We had to close several stores in affected areas early on Saturday evening,” a spokesman said. “We were able to reopen on time on Sunday. In general, in those affected markets, we experienced strong sales in winter clean-up categories, all the essentials consumers need to get out from under the snow.

“To give these guests more opportunity to make all their holiday purchases, the majority of our stores in hard-hit areas opened one hour earlier than originally planned [on Sunday] and remained open until midnight,” said the spokesman. All stores nationwide will be open from 7 a.m. to 11 p.m. on Dec. 26 for post-holiday bargain hunters.

Stacey Pecor, founder of Olive & Bette’s, said, “The snow killed us.” The week was up 1 percent over last year, but she’s still estimating double-digit gains in 2010.

“We’ve definitely lowered our inventory,” she said. “It means you’re not going to do the sales you did before.”

Bestsellers at Olive & Bette’s include Le Tarte and Shoshanna bathing suits, resort blouses from Joie and skinny jeans from Citizen. Novelty winter items are moving: for example, Nirvana’s knit hats with skulls, a jeweled hat from Autumn Cashmere and Carolina Amato gloves. “We’ll sell 120 pairs of Citizen jeans,” Pecor said. “We’re selling of out Ugg boots, and we sold two pairs of leather pants priced at over $1,000. Price doesn’t matter. It’s all about the item.”

The specialty chain’s Columbus Avenue store in Manhattan had its best-ever November, up 26 percent over last year, while the Madison Avenue unit was ahead 25 percent over last year. However, “The downtown stores are getting killed,” Pecor said, citing a lack of tourists in SoHo and the West Village, though other retailers have seen tourism surge.

“I don’t see the Europeans in SoHo spending $1,000 to $2,000 a pop,” she said. “People are looking for that item under $25.” Demand for resort is strong. “I’ve never sold so many bathing suits in the month of December.”

Ken Giddon, president of Rothmans men’s wear in Manhattan’s Union Square, said he was disappointed by Saturday’s tally. “We beat last year, but not by as much as expected.”

Overall, Giddon said fall has been better than last year. “But we’re not blowing it away. Consumers are in a different mode from 2007, when business was so good. That may have been an aberration.” Lowered inventories “makes us less desperate. That’s why I’m not freaking out for missing the Saturday before Christmas,” he said. “It’s not affecting our cash flow.”

He does have some strong-selling items, including sweaters from Raffi, suits from Calvin Klein and DKNY and Thomas Dean shirts. “Across the board, the hipper, cooler stuff has been outselling the traditional.”

Craig Johnson, president of the Customer Growth Partners research and analysis firm, said, “For mall retailers, apparel, department and other stores, the effect of the storm is neutral, not negative. Although the last Saturday before Christmas is normally the busiest shopping day of the year — and a few malls, including Tysons Corner [the largest mall in Virginia] and Montgomery Mall and Annapolis Mall in Maryland did shut down partway through Saturday — the primary effect of the storm is displacement, rather than diminution, of holiday demand. Shoppers simply shifted their shopping trip either forward to Friday, or backward to Sunday, or to the Internet, rather than not making their planned purchases.”

Doug Wood, president and ceo of Tommy Bahama, said, “The storm shut down Tysons.…That meant zero sales, and it is a big store for us. We had about eight to 10 stores that were impacted by the storm.” Wood said there were no plans to open for extended hours because “we are open for the maximum number of hours already.”

He also said the Natick Mall near Boston had a “terrific” Saturday morning during the first four hours it was opened, as shoppers made purchases early.

Over the weekend, sales at Tommy Bahama stores were better than a year ago, with particular strength in heavier knits and sweaters.

“We had about a dozen states affected by the storm, but all stores except for a handful opened Saturday and Sunday, a little late in some markets,” said Bob Aronson, vice president of investor relations at Stage Stores Inc. “This is the week before Christmas and people still have to fulfill gift-giving needs, so we’re going to extend our hours Tuesday, Wednesday and Christmas Eve.”

Business so far this month is up 1 percent at Dallas luxury retailer Stanley Korshak on 30 percent less inventory, said owner Crawford Brock. Bestsellers at the luxury store include gold jewelry, women’s designer and contemporary fashions, shoes, handbags, bridal and cosmetics. Soft accessories such as scarves and gloves and men’s are both down.

“I think we’ll end the month down, but the margins are slightly better,” Brock said. “We’ve got holes [in inventory] all over the place — women’s shoes, handbags and all over men’s because we pushed a lot of receipts into spring to force sell-through on what we own in fall.”

Paco Underhill, founder, ceo and president of Envirosell consulting, had some suggestions on how retailers can tweak their businesses in the final days of holiday selling.

“Be more conscious of the windows,” he said. “There’s a tendency to put a sale in the window, but people are looking for gifting solutions. Maybe say you have great gift wrapping. And make sure your window shows the range of prices, that you can get something for $30 or $300. You don’t want to scare anyone out.”

Once the customer enters the store, “don’t look them in the eye and say, ‘Can I help you?’ That is almost universally scary,” Underwood added. “Let them in, acknowledge them with a smile or a wave, but in general, if someone wants service immediately, they will say it. Let them wander for 60 seconds or a little longer before you greet them. That has a positive impact on the conversion ratio. Also, if you are a New York retailer, recognize most people with money in their pockets are tourists. Showcase your language skills.”