The titanic Sunday snowstorm that paralyzed much of the Eastern seaboard might have cost retailers $1 billion in the two days after Christmas.
This story first appeared in the December 30, 2010 issue of WWD. Subscribe Today.
That’s the preliminary estimate from ShopperTrak RCT Corp., the Chicago-based firm that provides research and analysis on retail sales and traffic, based on what it termed a “conservative” appraisal of the impact of the Dec. 26 storm on business Sunday and Monday.
“As expected, the 2010 blizzard throughout the Northeast halted nearly all retail visits and spending during a period that is fairly crucial for retailers,” said Bill Martin, ShopperTrak’s co-founder. “And at this point, the prospect of momentarily pausing a potential $1 billion in sales has the collective industry holding its breath.”
The company estimated the storm took an 11.2 percent bite out of the traffic anticipated for Dec. 26. While year-on-year traffic fell 6.1 percent in the Northeast, the average increase in traffic in the Midwest, South and West was 38.6 percent.
The impact on business on Monday was more severe, reducing total traffic 13.9 percent, with a 42.9 percent drop in the Northeast, more than offsetting increases averaging 13 percent in the other three regions.
Preliminary estimates of GAFO — general merchandise, apparel and accessories, furniture and other categories — sales for the two-day stretch were $10 billion. Although much of the lost business could be reclaimed as consumers resume their normal routines, any irretrievable volume could cut into December sales and retailers’ ability to minimize inventories, putting a damper on fourth-quarter and year-end earnings. Nonetheless, ShopperTrak reaffirmed its estimate for a 4 percent rise in sales and a 1.8 percent increase in traffic for the two-month holiday period.
Any fears the stock market had about the storm’s impact seemed to dissipate Wednesday, though. The S&P Retail Index Wednesday added 1.63 points, or 0.3 percent, to end the day at 510.72. The percentage increase beat out the 9.84 point, or 0.1 percent, increase of the Dow Jones Industrial Average, which sat at 11,585.38 at the end of the trading day after hitting a fresh 52-week high of 11,625 in the early afternoon.
ShopperTrak’s National Retail Sales Estimate put the decline in sales Christmas week at 4.1 percent, with traffic off 6.8 percent in the U.S., but the culprit in this case was the calendar rather than Mother Nature. Christmas week data for last year included Dec. 26, which in 2009 was the third strongest sales day and the second biggest traffic day of the year. Data for Christmas week this year was through Christmas Day, Dec. 25, and the following day, a Sunday, wasn’t included in the estimate.
ShopperTrak projected that, with the storm’s impact, Dec. 26 is expected to fall to 10th in rank among the 365 days of the year in both sales and traffic. Meanwhile, Dec. 23, dubbed Father’s Day by ShopperTrak because of the preponderance of men engaged in last-minute shopping, generated $7.86 billion in sales, behind only Black Friday ($10.69 billion). Last year, Dec. 23, with $7.55 billion in sales, finished behind only Black Friday in as well.
Martin told WWD he expects a strong comeback in the aftermath of the storm.
“I suspect the drop in traffic won’t be as dramatic as people might think,” he said. “Historically, when there’s a weather event, a lot of the business comes back, and we advise our clients to staff up accordingly. People come back to buy better gloves and scarves, and better snow removal equipment. We’ve seen this pattern both regionally and nationally.”