New York City retailers welcome back shoppers but challenges loom
Upscale retailers including Nordstrom Inc (JWN.N), privately owned Saks Fifth Avenue and jeweler Tiffany & Co (TIF.N) reopened their large New York City flagship locations on Wednesday with reassuring signage and sanitizer stands to calm shoppers worried about the coronavirus pandemic.
Cheery store associates, all donning masks, were at the ready as upbeat music played in the background.
“Welcome back! Good to see you again!” a Saks associate said. “Thanks!” the shopper replied. “It’s been a while.”
But curbing the spread of the coronavirus is not the only challenge facing retailers in coming weeks as the hardest hit and biggest U.S. city reopens, experts said.
As retailers reopen after months of shutdowns, deep discounts on designer clothing and accessories are a way to clear mountains of unsold inventory and lure back customers like Nika Imamberdieva.
“After staying home for several months doing absolutely nothing, I felt the urge to come and shop,” said Imamberdieva, a 16-year-old student living in Brooklyn. Imamberdieva said she was pleased to purchase a discounted pair of Christian Louboutin metallic silver pumps for $520, originally $745.
A silk purple Valentino blouse originally $1,690 is now $845 and a Sies Marjan navy dress originally marked at $1,095 is now $438 at Nordstrom.
“On every floor there are racks of sales,” one Nordstrom associate said.
To be sure, the discounts are happening country-wide. Mohamed Albadry, 29, an engineer from Los Angeles, said he bought workout clothes from Nike Inc (NKE.N) and Lululemon (LULU.O) at 25-50% off.
However, with Louis Vuitton and Chanel bags slung on their forearms, sisters Skye and Sheri Bryan of Queens purchased their bracelets and perfume at full price.
Luxury brands including Chanel, Louis Vuitton and Gucci have substantially increased prices on some products to protect margins.
Many retailers deemed nonessential have pulled annual forecasts amid the virus outbreak, unsure of how much people will spend on items like toys, apparel and accessories, and home improvement.
“It’s no longer good enough to look at how sales are versus a year ago. We need to look now week by week” by keeping tabs on how stores are performing, foot traffic and unemployment figures, said NPD Group’s chief industry analyst, Marshal Cohen.
Wall Street is also watching out for contactless services offered, like curbside pickup, virtual shopping and “appointment only” consultations.
But such services “are not a substitute for the volume retailers need,” said Cohen.
The S&P 500 Retailing Index .SPXRT has risen 10.3% since Feb. 19, when the benchmark S&P 500 hit a record high, but the sharp rise in Amazon.com Inc (AMZN.O), up 26.2% since Feb. 19, accounts for much of those gains. The S&P 500 .SPX itself is still 9.95% lower over that period.
With record-low tourism, and many New Yorkers out of town, the retailers’ pool of potential shoppers is much smaller now, even in the generally slower summer months.
Craig Johnson of Customer Growth Partners said a lack of spending by tourists could bring a hit of 9% to 12% on average to upscale department stores’ revenue compared with a year earlier. Foreign tourists are traditionally major spenders at department stores and luxury boutiques in New York City, as well as in Los Angeles and Miami.
Representatives of Nordstrom, Saks and Tiffany were not immediately available for comment.
Many New Yorkers have fled the city for the Hamptons and Montauk on Long Island, which is farther along in the reopening process.
Saks in May started offering same-day delivery to anywhere in the Hamptons. Customers can work with a style adviser to place orders via email or phone. Orders placed by 10 a.m. will arrive by that evening for a fee of $25, a company spokeswoman said.