Stores and malls will get buried by snow from winter storm Juno, but retailers are catching a break with the timing.
While the overall economic impact is expected to be in the billions of dollars, retail industry executives said their losses would be mitigated by the storm occurring midweek instead of on a weekend, and during a slow traffic, low-volume time of year. While clearing snow, retailers are still clearing merchandise and transitioning into spring goods while gift-card redemptions and returns of holiday gifts to stores trail off. January is considered one of, if not the smallest, revenue months for most retailers. In addition, online sales could get a lift due to store closings and transportation issues.
As of midafternoon Monday, with metro New York and much of the Northeast facing one of its biggest snowstorms in some time, the industry was anxiously watching the weather and trying to decide on early closures and delayed openings in the days ahead.
The heart of the deluge was expected late in the afternoon Monday and through rush hour on Tuesday. Accumulations of two to three feet were being predicted in many areas. Mayor de Blasio announced New York City schools would be closed Tuesday and that all non-emergency vehicles would be ordered to stay off the streets after 11 p.m. The New York State Thruway was to close at 10 p.m. Monday and Connecticut issued a statewide travel ban beginning at 9 p.m.
An estimated 50 million people will be affected by the storm, which brought heavy snow and wind to Philadelphia, New York and Boston.
Nevertheless, “In the grand scheme of things, it’s really not that huge of a deal,” said Evan Gold, senior vice president of client services at Planalytics, which analyzes the impact of weather on businesses. “It’s disruptive, but from a retail perspective, I don’t believe it’s going to be hugely significant because of the time of year that it’s occurring and the days of the week it’s happening on. There’s just not as much money at play and for many people it’s an opportunity to clear some winter goods.”
Craig Johnson, president of Customer Growth Partners, noted that storms come with advance notice unlike many natural disasters. “The bottom line is that they don’t destroy demand, they displace it, moving it forward, backward and online,” he said. “There’s a warning and a chance to shop before the event.”
Based on the storm’s track, Johnson estimated that about 15 percent of U.S. households would be affected by the storm, or about 47.5 million people in about 17.3 million households. “For apparel and housewares, the effect is pretty neutral,” he said. “If you hadn’t done so already, this might be the incentive to buy a pair of boots, heavy-duty gloves or a good warm jacket, but this won’t drive much in the way of incremental demand.”
While boots appeared to be the strongest sellers in a fairly strong winter footwear season, outerwear has been softer, except at off-pricers like Burlington Stores, TJ Maxx and Marshalls. Johnson noted that stores with weak outerwear seasons might be able to “close out the fourth quarter on something of a high note. If anyone needs parkas, this is the time to get them.”
He pointed out that Lands’ End Inc. cited weakness in its cold-weather assortment as it provided downbeat guidance last week. “That’s not surprising,” he said. “Much of the country has had a mild winter.”
Do-it-yourself retailers like The Home Depot and stores with cold-weather equipment, like Sears and Costco, realized benefits before the storm, and the DIY retailers could realize benefits after it, if people resolve to prepare better for the next storm or need home repairs.
“This isn’t a busy retail period,” said Bill Martin, founder of the Chicago-based retail analytics firm ShopperTrak. “There’s generally a degree of softness about now, with a little bit of a spike in traffic around Valentine’s Day. This tends to be the quiet after the wearying holiday experience.”
Michael Niemira, chief economist and principal of The Retail Economist LLC, said, “I suppose the good news about the storm is that it’s happening during a light month, but a little goes a long way during a period like this one. It’s a low-volume time. I wouldn’t expect that lost sales will be made up, but it won’t affect year-end inventories all that much because it’s a low-volume period.”
Simon Property Group early Monday cited a few delayed openings including Woodbury Common in Woodbury, N.Y.; Liberty Village in Flemington, N.J., and Crossing premium in Tannersville, Pa.
At Macy’s Inc, decisions on early closings and reopenings “will be on a case-by-case basis depending on what the local conditions are. We’ll call it as the storm develops,” said corporate spokesman Jim Sluzewski. “There is discussion about closing the New York offices early today.” About 150 stores, including Macy’s, Bloomingdale’s and Bloomingdale’s outlets, are in the path of the storm, including 59 in New York, 13 in Connecticut, 35 in New Jersey, 31 in Massachusetts, seven in New Hampshire, one in Vermont, and two in Maine. By evening Monday, Macy’s closed 90 stores early in New York, New Jersey, Pennsylvania, Connecticut, Massachusetts, and Rhode Island.
A Wal-Mart spokesman said: “We will continue to monitor it at the corporate office [in Bentonville, Ark.] where we have an emergency operations center that’s up and running. In the specific locations, we look to see what public announcements are made and how the areas are being affected. We try to stay open as long as we can, but the safety of our customers and associates is our top priority.” As of noon Monday, Wal-Mart had not made plans to close stores. “We’re monitoring the situation and will make decisions” as the day progresses, the spokesman said.
“We are closely following the increasingly severe weather in the Northeast and are evaluating store closings,” said a Lord & Taylor spokesman. “Our decision will be based on our commitment to our customers’ and associates’ safety. At this time we have nothing to announce. We will be communicating to our customers via e-mail, our Web site and social media.”
“Our internal team is tracking it closely,” said a Gap spokeswoman. “The safety of our employees and customers is a top priority. Our local stores will do what’s best for their employees and customers and evaluate on a store- by-store basis.”
Westfield Corp. said it would close at 5 p.m. six shopping centers — including Westfield Garden State Plaza in Paramus, N.J., Westfield South Shore and Westfield Sunrise, both in New York, Westfield Connecticut Post, Westfield Meriden and Westfield Trumbull, in Connecticut. The centers normally close at 9:30 p.m. “Department stores, restaurants and cinema hours may vary,” the company said, adding that shoppers should contact individual businesses to get the most up-to-date operating hours. “For tomorrow, we will evaluate weather conditions and post further updates at 5 p.m. today.” The mall operator is using social media to get the word out to shoppers. Analysts from Cowen & Co. are expecting an impact of less than 0.5 percent of total fourth-quarter traffic. A spokeswoman for Coach said the company is still planning on releasing second-quarters results today, but on Monday morning it was too early to determine how many store closures there might be.
Bob Carbonell, chief credit officer at the Barnard Sands unit of Credit2B, said, “The only good news is that it is a midweek storm and not a weekend one. Groceries and home [improvement stores] will obviously benefit, but everyone else will lose a few days of sales.”
Howard Riefs, director of corporate communications at Sears Holdings Corp., said, “Our foremost concern is for the safety of our associates and our members.” He said the company is actively monitoring and preparing for the weather conditions in the Northeast, but noted it was too premature to determine how many stores might need to close early. Decisions will be made in conjunction with public service advisories, he added.
PVH Corp., which owns the Calvin Klein and Tommy Hilfiger brands as well as several heritage labels including Izod and Arrow, closed its offices in the New York City area in the middle of the day on Monday and was planning to remain closed all day Tuesday. “We are closing our tristate area offices early [Monday] to allow for safe travel home and will be closed [Tuesday,]” a spokeswoman said.
Jamie Gorman, president and owner of Only Nine, a New York sportswear company, said, “Today I will close by 4 p.m. We’ll see about tomorrow.
Media companies cautioned their employees to exercise their judgment on Monday and Tuesday in light of the winter storm.
Meredith Corp. staffers were advised to remain cautious and work from home if need be. A company spokesman said: “We are a very mobile company, so employees have the option on days such as these to work remotely, and take care of themselves and their families. We are a family-focused company.”
Time Inc. echoed that sentiment and said its offices would remain open on Monday and Tuesday.
Employees at Condé Nast received an e-mail from human resources early Monday with the recommendation that they leave the office by 1 p.m.
“According to reports, mass transit services are likely to experience congestion and delays this afternoon. The MTA suggests completing travel as early as possible this afternoon in order to avoid potential delays and service suspensions,” said Condé Nast senior vice president of human resources JoAnn Murray.
While Hearst intends to remain open Tuesday, it sent around an internal memo Monday morning regarding closures in its New York-based headquarters. The building’s cafe, wellness center and newsstand would be closed until Wednesday.
A New York Times spokeswoman said, “Our offices will be open tomorrow, but we’re encouraging employees, particularly on the business side, to work remotely. Obviously, it’s not possible for our entire employee base but we’re making arrangements to ensure that our employees don’t take any unnecessary risks and stay safe.” “Most apparel folks have anything from 25 to 50 percent of their stores in the path of the storm,” said Gold of Planalytics.
The storm’s economic impact will be felt well beyond the loss of retail sales.
A 2010 study that IHS Global Insight conducted for the American Highway Users Alliance found that one day of shutdown of normal business from impassable roads can cost a state $300 million to $700 million. That includes the direct and indirect impacts of the storm on businesses and government. Hourly workers are among the hardest hit by closures, although a portion of their lost income will be made up with overtime later.
While some purchases at retail will be deferred — or pushed forward — IHS said sales would be lost. The forecasting firm said department stores, general merchandise stores and gasoline stations would miss out on some sales.
The study suggested that New York state would lose $700 million for each day a snowstorm shut down business. That included the loss of $88 million in retail sales and another indirect impact equal to $64 million in sales. New Jersey’s economic losses for each day of shutdown were estimated at $289 million, with $34 million in retail sales lost and an indirect retail sales impact of $25 million.
“In addition to the direct loss of income and sales, there is an indirect component associated with the rippling effect through the economy that would have been stimulated by the wages and sales that are lost,” the study said. “We assume that all of the people who lost income as a result of the shutdown would have spent the majority of that income in the local economy. Lost sales in the local economy will amount to a potential loss of income by most retailers and their employees. The impact ripples further as retailers and employees curtail their purchasing activity.”