Retailers Struggle to Recoup Sales Lost to Storm, and It Will Cost Them

Northeastern retailers looking to make up some ground after the winter storm this past weekend, which smothered so-called Super Saturday, may have to pay to gain.

The results could have been worse. A swath of the East Coast was getting buried by Saturday morning, curtailing travel and even causing mall closings. In some markets, the entire weekend was badly hurt. Certainly those with the deepest snow accumulations, such as Philadelphia, which was hit with about two feet of snow, took it on the chin.

Timing certainly had an influence on impact. While Washington, Baltimore and Philadelphia got hit early, the snow didn't begin falling in the New York metropolitan area until late morning Saturday, and it fell lightly for several hours before intensifying to the point of making driving treacherous. As a result, stores focusing on food and hardware experienced a Saturday morning rush. And other retailers saw some action as well. A Target store operating in New York's outer boroughs was busy early Saturday afternoon, for example, even as the snowstorm began to strengthen. It wasn't packed, but most of the check stands were at least two or three people deep. Had the storm hit a few hours earlier, that business might have remained safe at home. The storm's timing was even better for New England retailers, as they saw a longer snow-free period on Saturday.

Outside of the Northeast, retailers saw more customers this Super Saturday than was the case last year, according to Planalytics, the business weather forecasting service. Still, the firm noted, the Northeast typically generates about a third of all super Saturday sales.

As a result, Planalytics estimates that retailers lost at least $2 billion to the Super Saturday storm and expects they only will make back a portion of that revenue. Super Saturday usually generates about $15 billion in sales, the company notes

In researching storm effects, Planalytics determined that mall visits were down 10 percent nationally on Super Saturday, although some of that traffic moved to the Friday evening, which enjoyed a 65 percent sales gain versus 2008, and Sunday. Additionally, reports had online sales up 14 percent on Super Saturday. Yet, the alternative shopping gains should be kept in perspective, as they're certainly not enough to make up all that was lost on Saturday. Online sales, for instance, only represent five percent of retail revenues, according to the National Retail Federation.

Not that retailers haven't made an effort to win back their losses. Target, for example, announced a store-hours extension for locations where the storm tossed Super Satuday sales.

Chains concentrated on the East Coast, such as BJ's Warehouse Club (BJ), experienced a proportionately greater storm impact than those elsewhere, of course. The impact also varied by industry sector. Toys and electronics do a larger proportion of their annual sales around the holidays, and retailers dependent on them had more to lose in the storm than others.

Yet, Planalytics pointed out, retailers most likely to make up sales are those that carry must-have seasonal items including Toys"R"Us and Best Buy (BBY). Also, destination retailers that carry a range of what's needed for the holidays, such as BJ's, should win back more sales lost Saturday.

The electronics sector was in a particularly strong position to withstand the storm, said Stephen Baker, NPD Group vice president, industry analysis. Baker covers electronics for the research firm, and he asserted that, although the storm-wracked New England and the Mid-Atlantic regions together accounted for 18 percent of electronics sales for the first 10 months of 2009, a one- or two-day pause in holiday store visits shouldn't cause a measurable impact on final holiday sales results in the sector.

For one thing, online shopping is stronger in technology retailing than on average. Retailers boosted email marketing to consumers around the storm, offering shipping deals and fast delivery to ensure that gift purchases would arrive in time for Christmas. Amazon (AMZN), for example, blasted an email to consumers on Dec, 20, the day after the snow fell, announcing that it had extended the deadline on standard shipping delivery for Dec. 24 to Monday the 21st. Calendar as well as clock helped mitigate the storm's effect. As Christmas falls on a Friday this year, consumers have had an entire week to catch up on their shopping. Baker pointed out that in Northern Virginia, where 20 inches of snow fell, reports had gridlock surrounding area malls in the storm's aftermath, with waits of 60 minutes to exit mall parking lots

So, in the balance, many retailers hurt by the store will make up some ground and some that could have been hurt worst will regain most. Still, storm-delayed sales will shift into a period of the year when retailers discount more deeply to move lingering inventory and in response to their most desperate competitors. Put another way, the retailers who have done poor in the holidays will be leading the industry for awhile in terms of discounting. So, sales dollars made up in the storm's aftermath may not be as profitable as those that would have been transacted on Super Saturday.