As individuals continue to recover from Superstorm Sandy, many still without power or access to essentials, business owners small and large face the additional challenge as they begin to forecast the impact of the storm on their holiday numbers.
Experts seem to be all over the spectrum on this. Optimists are slow to come off of their pre-storm holiday predictions of a 3.5% to 4% increase in year-over-year sales (AlixPartners consulting firm). Others are a bit more pessimistic estimating that the storm will cut into 4th quarter earnings by at least half a percentage point (NY Times).
While the experts debate, the issue at hand is really one of simple economics - Supply vs. Demand.
Here are some of the facts on both sides.
Supply The Good News- The timing of the storm didn't effect October sales which came in .4% above analyst predictions - NY Times
- Most retailers have already received stock shipments for the beginning of the holiday rush
- We are still weeks away from the busiest buying weekend which should provide retailers time to recover
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The flooding and damage caused by Sandy has disrupted the trade and distribution channels in the Northeast
- Several ports in the New York/New Jersey area were closed but will reopen soon.
- Many ports in the New England region, while operational are without sufficient manpower as employees attend to their own personal emergencies
- Ground transportation has been delayed due to physical obstacles and resource shortages (i.e. fuel)
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Much of the inventory that had been delivered pre-Sandy and housed in distribution centers on the Eastern Seaboard may have suffered irrepairable damage making it unusable
- Although insurance will likely cover this in most cases, it will create shortages and challenges in merchandise planning, especially for "hot" products and "re-orders"
- While many people may have some level of repairs to budget for, most were able to heed the warnings and will likely retain part of their discretionary spending budget for the holidays - NPD Group
- Outside of the Northeast, consumers remain largely unburdened by unanticipated expenditures
- Despite positive estimates, there will still be a sizable contingent of the population who diverts spending to more essential products
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October, which is notoriously a down month for spending, beat analysts estimates
- This inflated number could be an indication of early holiday spending that will cut into November/December sales
With supply of popular gift items likely diminishing this holiday season (or at least experiencing delays) and demand holding relatively stable in most parts outside of the Northeast, retailers big and small may be in for a leaner winter than they expected.
Have thoughts on the holiday sales outlook? We would love to hear them - leave us a comment below or send us an email at tellmemore@igodigital.com.
And as always in these trying times, the thoughts and prayers of our iGoDigital family go out to those who continue to recover and rebuild in the aftermath of this storm.
