Storm likely to cost stores millions

Holiday weekend is bust for scores of retailers who are forced to close

The Snowstorm Of 2003

February 18, 2003|By Bill Atkinson | Bill Atkinson,SUN STAFF

Retailers may be facing millions of dollars in lost sales as people spent the holiday weekend digging out from the snowstorm that slammed Maryland instead of shopping for bargains in stores, some industry experts said yesterday.

But analysts' opinions were mixed as to whether retailers would fully recover the sales they lost over the Presidents Day shopping weekend.

"There will be a lot of lost revenue, unfortunately, that will not be made up," said Mark Millman, president of Millman Search Group Inc., a national retail consulting and executive placement firm in Owings Mills. "They certainly needed this holiday weekend ... to help boost their revenue."

Malls, restaurants and auto dealerships, which invested heavily in print, radio and television ads promoting the sales were shut down as driving conditions remained difficult throughout the area.

Many companies, including banks and brokerage houses, already were closed for the holiday, but retail establishments expected a flood of business that never came.

The storm's timing couldn't have been worse for retailers.

Many stores across the country have been reporting flat sales and even declines from a year earlier. Retail sales dropped by 0.9 percent in January, the worst performance in four months, the Commerce Department reported this month.

Stores are struggling because of a weak economy and sagging consumer confidence. Economists are worried that consumers may halt spending if war breaks out in the Middle East, which would hammer retailers and the economy, experts say.

Retailers "could clearly do without" the storm, said Richard P. Clinch, director of economic research at the University of Baltimore. "They are not having a good year because of consumer sentiment, which has a lot more to do with sentiment in the Middle East. Unless you are buying plastic sheet, you are not buying a lot at this point."

But Clinch and other economists said they don't expect the storm to have a lingering impact on retailers. They said people would be back in the stores soon to buy what they couldn't over the holiday.

"I don't think it is going to be a lasting influence," said James W. Paulsen, chief investment officer at Wells Capital Management in Minneapolis. "I think the consumer has shown continued resilience here. It is not like you dented the consumer's desire or ability [to spend] by having a snowstorm this weekend."

Paulsen said the impact will be felt, but it should be small.

"I think it is more like a one-month hurt rather than a persistent thing," Paulsen said. "If people can't get out now, they get out the next week or the week after. Could it mean that a monthly report is weakened? Does it mean the next three months are weaker? I don't think so."

Clinch expects consumers to make up for the shopping time they missed digging out their driveways or watching television.

"If people were banking on buying a dishwasher, they are going to buy a dishwasher next weekend," Clinch said.

"I just don't think it is a loss. If you lose $19 million today, you are going to pick most of it up when people make the purchases that were deferred."

What stores will lose, Clinch said, is money made from people who buy goods on the spur of the moment.

"There is some level of impulse buying that would be gone and lost, but that is almost impossible to calculate," Clinch said.

Anirban Basu, chairman and chief executive of Optimal Solutions Group LLC, a Baltimore economic consulting firm, said some retail establishments might have benefited from the storm.

He said people knew the storm was brewing days before it hit and there was "actually an increase in retail activity."

"I think the overall impact is not particularly devastating," Basu said.

But Millman said that the storm would hurt stores pretty much across the board, especially those that sell clothing, shoes, home furnishings and entertainment.

Millman doesn't expect consumers to hurry back to the stores and buy what they put off.

He noted that some have lost wages and others have to get back to work and might not be shopping anytime soon.

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