B-T-S LIFTS N.Y.’S NO-TAX WEEK
NEW YORK — Buoyed by back-to-school crowds, the sixth installment of the state’s no-sales-tax week lifted store figures across the board, with department stores and mass chains capitalizing on the tax break more than upscale and luxury retailers.
From Sept. 1 through Tuesday, the state suspended its 4 percent sales tax and the .25 percent Metropolitan Transportation Authority tax on apparel priced under $500, while individual counties had the option of suspending their local sales taxes on the apparel. Most counties did, in fact, temporarily drop their sales tax, but some key counties did not. In Nassau and Suffolk Counties, for example, shoppers still paid the 4 percent local sales tax, and that hurt stores there.
“Business was very good in New York City, but on Long Island, with the counties not participating, there was a major negative impact on business,” said Michael Gould, chairman and chief executive officer of Bloomingdale’s, which has two Long Island stores, in the Walt Whitman Mall in Huntington and the Roosevelt Field shopping center in Garden City.
Stores in those counties will end up doing substantially less for the week’s volume compared to the no-tax week of a year ago, Gould said.
Ed Goldberg, vice president of government and consumer affairs for Macy’s East, said the week was “terrific,” adding, “With back-to-school, we planned a very good promotional week, but the consumer response was much, much greater than expected.” Business ran over 10 percent ahead, he said.
However, in Nassau and Suffolk, “the business was nowhere near as brisk as the rest of the city and state,” Goldberg noted. On Long Island, Macy’s has stores in Bay Shore, Garden City, Huntington Station, Smith Haven, Manhasset, Massapequa and Valley Stream.
There will be another tax-free week Jan. 15-21 with the same ground rules, and in March, a permanent revocation of the state sales tax on apparel and footwear under $110 will be launched.
“We would like to see the [permanent] tax break for up-to-$500 items,” Goldberg said. “At Macy’s, that would encompass almost everything we sell, with some exceptions, and would put us at an even keel with New Jersey. No matter how you slice it, $110 is just not as good.”
New York’s sales-tax weeks are geared to help retailers in the state capture sales lost to stores in New Jersey and Connecticut, where there is no sales tax on apparel. The new policy is geared to help lower- and middle-income shoppers in particular.
Stephen Elkin, chairman and ceo of Bergdorf Goodman, said the week saw “a little bit of an uptick,” and that the store was fairly busy in many areas due to the tax abatement.
“Remember, the $500 did not apply to some of the merchandise,” such as jewelry, he noted.
However, elsewhere around town, the reaction was stronger. Dan Pisark, vice president of retail services for the 34th Street Partnership, said, “The 34th Street shopping district probably did record numbers,” based on reports and early returns from retailers.
“Our take is that foot traffic was quite vigorous, and a wide range of stores, from Old Navy and Macy’s, to Foot Locker and Kmart, as well as smaller independent stores, had very strong customer turnout,” Pisark said. “All the stores did a great job with signage and planning and promoting no-sales-tax week for apparel. It was a strong back-to-school business, and the economy is strong and tourism is booming, but the no-sales-tax vehicle really topped it off.”
Pisark said he was in Macy’s Monday morning and observed “real New Yorkers with full shopping bags doing some serious buying, taking advantage of the no sales tax on clothing.”
“Old Navy, which is a great addition to the street because of its popularity, affordability and wide demographics, was mobbed around noontime,” he added.
Meanwhile, radio reports on Monday said parking lots at New Jersey malls were jammed. A spokeswoman for Westfield Associates, which manages the Garden State Plaza in Paramus, said lots were at near capacity Monday and stores reported strong sales. While some counties have argued that dropping their local sales taxes would adversely impact their local budgets, stores in those regions have complained that maintaining their levies when there is no tax in neighboring counties will encourage shoppers to cross borders to save an extra 4 to 4.5 percent.
“The consensus was that while it was a good week, it was not as good as it was a year ago, when the tax was zero,” said Ethel Sloan, area marketing director for the Simon Properties-managed Roosevelt Field and The Mall at the Source in Westbury, N.Y., which is in Nassau County.
“The only thing customers saved was the state [and Metropolitan Transportation Authority] tax, which is about 4.25 percent,” she said. “It wasn’t a no-tax week here, but a reduced-tax week, and the difference was evident.”
Back-to-school shoppers and those who sought indoor activities due to inclement weather over the Labor Day weekend, particularly on Sunday, helped keep shops in the malls packed, she said.
But most stores base their performance on year-ago comparisons, and the boost they received in 1998 during the no-tax week left some disappointed when reviewing this week’s figures.
“When the sales tax comes down, it encourages people to shop,” Sloan said. “When it comes down to zero, it encourages people to shop more.”
In midtown Manhattan, shoppers were lined up 10-deep at certain registers at Macy’s and Gap stores on 34th Street. At the Woodbury Common outlet center parking lot in Central Valley, N.Y., where some stores were combining a 70-percent-off sale with the no-tax promotion, shoppers had to stand in line on Saturday to get into Space, a popular destination that carries Prada and Miu Miu, where a doorman controlled traffic into the store and told some customers he would let them in “when I feel like it,” according to one shopper.
A store manager at Space did not return calls on Tuesday.