Retailers are beating the heat, at least so far this summer.
This story first appeared in the July 26, 2011 issue of WWD. Subscribe Today.
They’re keeping their cool, with sandals, swimsuits, sarongs, tops, dresses and shorts selling well, and July clearances clicking in. Bottled water, sports drinks, ice cream, fans and air conditioners are also moving, while malls are reporting decent traffic in their food courts and movie theaters.
But August, when retailers bank on greater full price and fall goods selling, could be a far different story and not a good one, particularly when consumers see their utility bills rise from cranking up the air conditioning.
“Hundreds of dollars will be ripped out of their wallets and consumers are not expecting that,” warned Scott Bernhardt, chief operating officer of Planalytics. “The effect is similar to gas prices. People won’t have the same disposable income. That hurts retailers.”
As one senior official from a department store said, “I don’t see this heat wave as an issue. We are selling wear-now but if it’s burning hot at the end of August, you could have a problem with fall goods going into September.”
According to the Farmer’s Almanac, the weather generally doesn’t look bad for August, though there will be periods of severe heat and “monsoon” like thunderstorms in certain parts of the country. For example, in the East, the first week in August could be “hot and sultry” and the last week could see temperatures eclipsing 100 degrees. The Midwest could be “very warm and muggy” in the last week of August, though the rest of the month should be cooler and showery. The Southwest won’t be hotter than normal but will be affected by “monsoonal” thunderstorms.
The Weather Channel says the next 10 days in New York City and Chicago will reach the high 80s and low 90s, while Los Angeles will be in the high 70s mostly.
Bernhardt believes there’s already been some “cocooning” from the hot weather, though he thinks consumers’ utility bills are the more serious issue going forward. The weather in certain parts of the country has been so hot that it’s been actually dangerous for some people to venture out, Bernhardt noted.
Still, several retailers contacted Monday reported little discernible impact from last week’s severe heat, when the East Coast saw temperatures top 100 degrees and record highs in New York, Newark and Washington, D.C., and in July, long stretches of post 100 degrees in Dallas, and other cities in Texas and other states.
At Taubman Centers generally across the country, traffic last week was heavier than normal for this time of year, said a spokeswoman. At the Mall at Short Hills, in Short Hills, N.J., last week, restaurants saw sales spike. Some eateries had high single-digit increases because patrons said it was too hot to stay home and cook.
Last weekend at the Mall at Wellington Green in Wellington, Fla., it was 96 to 98 degrees with the heat index registering over 110, but food court merchants reported increases of 15 to 20 percent compared with the same weekend the previous year. “It was like Thanksgiving weekend here all weekend,” an official from the Florida mall said, adding that the heavy traffic was “most likely attributed to the hot temperatures outside. The mall continues to be busy today [Monday] as well. We’ve also seen an influx of summer camps visiting the mall since the kids can’t be outside in the extreme heat.”
“We’ve seen customers making a bee-line for home air-conditioner units and generators in the wake of the recent heat wave and power outages,” said a spokeswoman for Sears.
Target stores in the Midwest “did bring in all the air-conditioning units that we could last week to help ensure that we were in-stock for guests,” a Target spokeswoman said. While she couldn’t provide specifics on how the weather impacted overall sales or sales of certain categories, swimsuits were marked down and Calypso St. Barths for Target, a limited time collection, was prominently on sale.
AMC Theaters declined to disclose specific numbers, but a spokesman said, “We do tend to get bigger crowds when the heat hits. People look to do things indoors.”
One luxury retailer said the weather so far has been a non-factor. “Business has remained pretty steady. We have been selling pre-fall [and] transition goods since June. It’s been very positive. I don’t see any negative impact,” from the soaring temperatures. “Early deliveries are more designed to wear-now. Pre-fall has been very positive.”
“Historically, our business is not materially impacted by weather,” unless the weather is so severe it forces store closings, said Saks Inc. senior vice president of investor relations and communications Julia Bentley.
“Come on — we had only one day over 100, which probably was not great for retail. But people are buying wear-now goods and we are air conditioned,” said one retail chief executive officer.
“I don’t think there is anything to comment on,” said one ceo of a fashion Web site. “We didn’t see any correlation,” between business and the weather.
“It’s a lot different from a snowstorm when people literally can not get to your store,” said another department store executive. “In the summer, there’s less sensitivity to the weather.”
Planalytics, which forecasts the weather and advises companies on how to plan for it, believes that while there was some cooling the past two days, the heat wave will resume in August and possibly last well into the month. “It will be hot — hotter than last year,” Bernhardt said.
Agreeing with retailers, Bernhardt said July’s torrid temperatures spurred traffic to the malls where people sought refuge from the heat. However, July is “a transition month,” Bernhardt added, when retailers clear spring-summer goods and start bringing in fall merchandise. “It’s not one of the bigger trading months.”