Sandy cuts into small LI retailers' holiday sales
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Sandy has thrown Long Island's small retailers another curve as they head into the most important time of the year: The storm has shortened the holiday shopping season and strained consumers' wallets.
Long Islanders have been spending a good deal of their budgets just surviving: purchasing generators, repair services and supplies, appliances to replace those destroyed during the storm, hotel rooms and meals outside the home. Many missed days of work and pay, and some will be focused on rebuilding homes, continuing a small boom for retailers selling products related to the recovery.
But retail analysts say those selling traditional holiday gift items such as clothing, accessories and jewelry will feel the effects of smaller holiday shopping budgets. That comes on top of two weeks or more of lost sales, storm-damaged products and equipment, as well as outright destruction in some cases.
Shrinking selling season
"My selling season has shrunk so much," said Pat Turner, owner of Roomors Gift Shoppe in Babylon, who lost about two weeks of crucial business because of a Sandy-related power outage and the nor'easter. "My biggest base of customers, some of them are without homes. Some of them are without power. Some are living with relatives. They are in major crisis mode."
The storm's effects are much tougher on small businesses than they are on big retailers, which have the resources of their corporations behind them, said Marshal Cohen, retail analyst with the NPD Group, a Port Washington market research firm. Depending on the retailer, sales during the holiday season can make up 20 percent to 40 percent of annual sales.
Although the national chains are hyping Thanksgiving night sales as the holiday kickoff, retailers typically count all of November sales in holiday spending tallies. Usually, about 10 percent of the season's sales are made before Thanksgiving, Cohen said. "Take away 10 percent of business in our region and that's not so easy to catch up with."
Cohen had forecast a 3.8 percent increase in holiday sales for Long Island. But post-Sandy, the island's merchants will be lucky to see a 2.8 percent increase, he said.
How deeply the potential cuts in discretionary holiday spending will hit the Island's economy is hard to measure.
"Just what they didn't need"
"It will be a blow to retailers at holiday time and this is just what they didn't need," said Pearl Kamer, chief economist of the Long Island Association, the Island's largest business group.
If shoppers cut back on nonessential items, small retailers that suffered from storm damage and have little access to credit "could go out of business," Kamer said. "That's going to be a big problem here."
Toy sales should remain steady, as parents likely won't skimp on their children's gifts, doing their best to provide a normal holiday, she said.
Rebuilding efforts will stimulate the economy, Kamer said. "We don't know what the net [effect] will be."
Retail experts don't expect the storm to affect overall retail sales during the holiday season because the surge in emergency and recovery spending at places such as home improvement stores will offset drops in other shopping categories such as apparel and accessories.
The National Retail Federation is projecting U.S. holiday sales will rise 4.1 percent to $586.1 billion. But "seriously eroded" holiday budgets will make bargains and online shopping even more of a focus for consumers in the storm-affected regions, said Robin Lewis, chief executive of the Robin Report, a retail strategy report.
The disaster has created three groups of holiday shoppers -- those displaced from their homes, those whose homes are habitable but in need of repairs and those who were largely untouched by the storm, Lewis said
. The first two groups "will be no-shows for major holiday spending and splurging on gifts," he said. The third group is likely to spend but will be discreet and "sensitive to the spirit of recovery and those not well off."
"A lot of luxury people can hide behind the Internet and do their shopping, not running around the aisles of Saks throwing money around," Lewis said.
Personal as well as business losses
In hard-hit areas such as Long Beach, retailers are facing personal as well as business losses. Jenny Montiglio, owner of Ooh La La, a local boutique chain with a Long Beach location, is dealing with the destruction of her Long Beach apartment and her parents' Babylon home as well as employees who have lost homes and cars.
Her seasonal Fire Island store was severely damaged. At the same time, she and her staff are trying to figure out how to move forward into the holiday selling season with so many of their customers living without the basic necessities.
For two weekends, she has pitched tents in front of her Long Beach store and offered residents free clothing -- half of it new and donated by vendors and herself, the other half donated by customers in other locations.
When she holds her annual Pink Friday holiday promotion in her stores next month, she will donate a portion of proceeds to the Red Cross for disaster relief on Long Island. And she intends to hold fundraisers to aid in Long Beach's recovery.
"So close to such devastation"
"Many residents are still without power or shelter," Montiglio said. "Never in my lifetime have I felt so close to such devastation."
She had hoped for a 5 percent to 7 percent increase in holiday revenues before the storm, but now realizes there won't be any. Montiglio said she will have to put all her merchandise on "permanent sale." "It's the only way it's going to happen. There is no other choice."
At the same time that storm costs have eaten into holiday shopping budgets, the season has become even more crucial for local independent retailers who lost business and thousands of dollars of products because of the lack of power or storm damage. And these shops continue to face the challenges posed by growing online competition.
"It's more urgent for people to shop downtown," said Julie Marchesella, president of the Nassau Council of Chambers of Commerce. "Whether our houses may be underwater or whatever our circumstances are at home, we opened up our stores because we have to earn a living."
Catering losses, spoiled food
Giovanni Guttilla, owner of Giovanni's of Massapequa, a restaurant and catering business, makes a large portion of his annual sales in November and December. The two weeks of business lost, canceled catering events and food he had to throw out because he had no power, has put Guttilla in a tough spot.
"It's going to take months to get this business back," said Guttilla, whose business was without power for 12 days.
Debi Triola, co-owner of Northport's Fashions in Flowers and second vice president of the Northport Chamber of Commerce, said she is going to be very careful purchasing products for the holiday season. She is well aware that storm-related spending has left less for luxuries such as the floral centerpieces she sells for holiday events. But recovery spending may have a silver lining for some small retailers, she said.
"It is going to put a lot of middle-class people to work in construction, support services and supplies and bring business to people who may not have had it," Triola said. "This can be its own little economic stimulus."