Retail — and almost everything else but the snowplows — ground to a halt Saturday as a massive blizzard laid down what could ultimately be as much as two feet of snow from Washington to New York.
With the snow still falling and high winds – and, in some cases, authorities’ bans on travel – keeping most indoors, economic forecasters predicted Saturday that the storm would ultimately cost the region $750 million to $850 million on the high end.
Even retailers who planned to take their chances with the whiteout conditions changed course and closed up shop. And while there were some indications that the snow prompted a long-awaited surge in sales of cold-weather gear, experts were split as to whether or not shoppers who have put off buying a coat thus far would now open their wallets for one.
Chris G. Christopher, director of consumer economics at IHS Global Insight, said many areas of the economy, including apparel and accessories store sales and building materials stores, could see a boost from the storm, despite two to possibly three days of lost sales due to closures.
“We think clothing and accessories stores [specialty stores] will benefit from this storm,” Christopher said. “We had an unseasonably warm December and clothing tanked. There was excess inventory of clothing and the whole season so far was not in favor of winter weather fashion and clothing. Now you have a reason where people will get out and buy sweaters and boots so this kind of storm does have a benefit for certain segments of consumption after the fact and it could help reduce inventory buildup on clothing that had been noticeable in the third and fourth quarters last year.”
The IHS forecast for nominal retail sales at apparel and accessories stores in the first quarter before the storm was pegged at a 1.1 percent annualized growth rate, compared with the first quarter of 2015. The revised forecast with the storm impact included is now 4.3 percent annualized growth in the first quarter, Christopher said.
While specialty stores are expected to get a significant bump in sales after the storm, department stores are not likely to, Christopher said.
“We don’t think the storm will have a great impact on department stores,” he noted. “Given that they are a downward trajectory overall, we don’t think this is enough to spur department store sales.”
Retail apparel prices could also see a bit of a rebound associated with the expected surge in demand for clothing after the storm.
“This could also reverse clothing [Consumer Price Index] prices,” he added. “They have been discounting and prices have been falling. But with the rush to demand, retailers might feel a little resistant to discounting.”
Craig Johnson, president of Customer Growth Partners, said he did not expect the storm to “destroy demand” on a macroeconomic basis.
“It displaces it, either forward or backwards or online,” Johnson said. “In terms of creating demand, when you have a tornado or earthquake, there is no ahead-of-time to prepare. For hurricanes and snowstorms, they are often predicted in advance and people buy things ahead of time, including stuff they might not otherwise have bought. It won’t change things much for the overall quarter on a macroeconomic basis.”
However, Johnson said while Home Depot and Lowe’s might see a big boost in weather-related sales such as shovels and snow blowers, apparel stores will not see as much of an impact.
“When we get to apparel, we see modest buying,” Johnson said. “There are some people that might go out and buy an extra pair of gloves but we aren’t seeing a lot of that. If you made it through to Jan. 22 without buying a new parka because it was so warm this year, there is a good chance you may wait.”
Johnson said he expects this storm to have only a short-term impact.
“For the full quarter this won’t even be a blip,” he added, pointing to underperforming retailers who might cite lost sales due to store closures.
“Any major national chain will not get a negative hit from this, other than restaurants,” Johnson said. “People are still ordering online,” he said, adding that they will also pick up shopping where they left off when the storm is over.
But the storm could prove to be very costly overall.
Planalytics — a Pennsylvania-based business consultancy company that advises firms on weather-related profits and losses — said in a statement Friday that, “Based on GDP assumptions for January, and the estimated portion of the population in the storm’s path (75 million people), we expect the loss of economic activity to range between $585 million — $850 million.”
Planalytics client services director Kelly Carroll said Saturday morning that the storm’s snow totals were nearing the higher end of their predicted amounts, and as a result: “If cleanup extends into the week I would expect those [economic impact] numbers to increase.”
The firm originally estimated that, “the New York City metro area will see losses around $70 million, and the cost to the Baltimore/DC metro area will be approximately $275 million.”
“The fact that the bulk of the impact of this storm will be Saturday, the sectors that will be most significantly impacted will be retail, restaurant, and entertainment,” it specified.
Though the East Coast has experienced an unusually warm winter thus far, Carroll said that “year-over-year it’s actually pretty similar — a lot of our [snowstorms last year] didn’t start until post-holiday as well. Actually [2015 and 2016] are pretty even.”
IHS pegged the cost of the massive storm between $350 million to $750 million, taking into account expenses to repair damage, insurance costs, lost sales and wages.
Those predictions are tied, in part, to the sheer scale of the storm.
By Saturday morning, 11 states had declared states of emergency, including Georgia, Tennessee, Pennsylvania, Maryland, Kentucky, North Carolina, New Jersey, New York, Delaware, Virginia and West Virginia. Washington, D.C. declared a snow emergency.
Gov. Andrew Cuomo issued a travel ban for New York City and Long Island, including all travel from New Jersey bridges and tunnels into and out of Manhattan. In Pennsylvania, Virginia and West Virginia, 30 inches of snow were predicted by Saturday, with New York City expected to get 18 to 24 inches of snow by Sunday, according to the National Weather Service.
On Friday, many New York retailers told WWD that they intended to stay open through the storm. But by Saturday afternoon, they had changed course as the snow began to pummel city streets and officials urged New Yorkers to stay indoors.
A representative for Saks Fifth Avenue released a statement Friday evening, saying: “Saks Fifth Avenue’s priority is the safety of its customers and associates. At this point, Saks will open as scheduled; however, Saks will continue to monitor the storm’s progress throughout the weekend, making decisions as appropriate.”
By Saturday afternoon a call to the retailer’s Fifth Avenue flagship revealed that the store had closed at 1 p.m. due to inclement weather.
On Saturday morning Bergdorf Goodman posted on social media, telling shoppers: “Stay warm with a little shopping, the store is open!”
But just two hours later the retailer revised its plans, tweeting: “Due to the snowstorm the store is closing for the rest of the day. We will be open tomorrow morning. Stay warm!”
Independent retailers shut their doors as well. What Goes Around Comes Around in SoHo had originally planned to remain open but on Saturday morning its cofounder Gerard Maione said: “We have decided to close our SoHo flagship today due to the blizzard. We want to service our clients this weekend for our special Winter clothing sale — hopefully Sunday will be calmer so that we can open our doors.”
Ditto for Carson Street Clothiers. The menswear store’s cofounder Brian Trunzo said, “Seeing that we just had our ‘soft opening’ a few days ago at [our new location], we are not even technically open yet, so it was quite easy to just…stay closed. Financially speaking, since we are not fully delivered on spring 2016 goods yet, the effect should be minimal. And there’s always our online shop to bolster sales on a snow day anyways.”
Washington, D.C. on Friday closed its Metro subway system, which was expected to reopen on Monday. Bloomingdale’s locations at Tysons Corner Center in Tysons, Va., and Chevy Chase, Md., closed Friday at 1 pm, while Bloomingdale’s Potomac Mills outlet in Woodbridge, Va., closed at 2 pm. Increasingly deteriorating weather conditions on Saturday prevented Bloomingdale’s from opening locations in King of Prussia, and Willow Grove, Pa.; White Plains, N.Y.; Hackensack and Short Hills, N.J. Outlet stores in Paramus, N.J., Philadelphia and Potomac Mills in Woodbridge, Va., did not open. Those stores are scheduled to reopen on Sunday at their normal times, a Bloomingdale’s spokeswoman said.
Bloomingdale’s units at the Roosevelt Field Mall in Garden City and Huntington, N.Y., as well as SoHo and the Upper West Side outlets also were closed on Saturday.
“We have been busy with people buying coats, boots and cold weather accessories at our 59th Street flagship,” the Bloomingdale’s spokeswoman said. “Hotel guests coming into the 59th Street store were saying, ‘What I brought in my suitcase didn’t prepare me for this.’”
But it didn’t last. The 59th Street flagship was closed at 2 p.m. due to the travel ban. A spokeswoman noted, “The safety and well-being of our employees is a priority.”
Mayor Bill de Blasio urged Broadway theaters and restaurants to close; as a result, all Broadway matinees and evening shows were cancelled Saturday.
On Friday, 56 Macy’s stores closed early and 16 stores were shuttered the entire day. On Saturday, the count of closed stores had risen to 111 full-price and five Macy’s Backstage units, a spokesman for the retailer said, adding that 22 additional Macy’s stores will be operating with modified hours.
Macy’s Herald Square hung in the longest of all of Manhattan’s major retailers, closing at 4 pm. “It’s not unprecedented,” a spokesman said. “During Hurricane Sandy, Herald Square closed early on the day the storm arrived and was closed the next day as well.”
Taubman Centers said its Green Hills Mall in Nashville was closed Friday, while the Fair Oaks Mall in Fairfax, Va., was set to remain shuttered until Sunday. “There has been no damage to the Fair Oaks center,” a spokeswoman said. “The intensity of the storm and the fact that local transportation has been shut down until Monday morning is what prompted our decision to close until Sunday.”
Simon Property Group early closings on Friday included South Park Mall in Charlotte, Apple Blossom Mall in Winchester, and the Fashion Centre at Pentagon City in Arlington, Va.; St. Charles Towne Center in Waldorf, Md., and Haywood Mall in Greenville, S.C. Twelve Simon Mills and Premium Outlet centers, primarily in Maryland and Virginia, had early closings on Friday.
Westfield Garden State Plaza in Paramus, N.J., and shopping centers in Annapolis, Montgomery and Wheaton, Md., were closed on Saturday.
In the Washington, D.C., area, many businesses, including four major shopping destinations in the region, were closed on Saturday and still questionable for Sunday.
Tysons Corner Center and Tysons Galleria, both in McLean, Va. remained closed Saturday, as did The Fashion Centre at Pentagon City in Arlington, Va. In Chevy Chase, Md., another big shopping corridor, Mazza Gallerie, anchored by Neirman Marcus and The Shops at Wisconsin Place, anchored by Bloomingdale’s, also remained closed Saturday.
The Pentagon City shopping center in Arlington, posted a notice on its Web site, stating it planned to open by 11:00 a.m. on Sunday.
Charles Crerand, associate director of CBRE, which owns and operates Mazza Gallerie and The Shops at Wisconsin Place, said no determination had been made about reopening the properties on Sunday.
“This storm was what we expected,” he said. The two properties both closed early on Friday as the storm moved into the region.
Kevin Berry, vice president of investor relations at General Growth Properties, said three of the 11 properties that closed early Friday had reopened with a truncated schedule on Saturday. They included Carolina Place in Pineville, NC.; Four Seasons Town Center in Greensboro, N.C., and Streets at Southpoint in Durham, N.C., all of which opened at noon on Saturday.
However, 15 of GGP’s properties (including seven added to Friday’s totals) were closed on Saturday.
By early Saturday afternoon, the storm had dumped 13 to 15 inches on the nation’s capital, and more than 20 inches north and west of the city. Another foot of snow was seen as possible for the Washington, D.C. and Baltimore metropolitan area before the storm leaves the region late Saturday night or Sunday morning, according to the National Weather Service.
Winds gusted up to 50 mph, creating whiteout conditions with drifting and blowing snow throughout the day Saturday, although there were lulls that allowed some to venture outside.
For many who did go out on foot, the only option was to walk in the middle of deserted streets. The Metro subway and bus system was shut down late Friday night and will remain closed through Sunday. Washington transit authorities said a decision on whether to reopen the system Monday would be made on Sunday.
D.C. Mayor Muriel Bowser the winds from the storm were expected to be the “most significant” on Saturday. She implored people to stay off the streets, nothing that “too many people” were on the street both driving and walking.
“We need to you stay home,” Bowser said Saturday morning. “This is an emergency event and we are very much still in our emergency response phase.”