|A transportation strike in NYC kept shoppers home during the height of the holiday season.|
NEW YORK (CNNMoney.com) – New York city's transit strike, which went into effect Tuesday, couldn't have come at a worse time for the city's retail industry, as shoppers and merchants make the final sales push in the last five days to Christmas.
Marshal Cohen, retail industry analyst with NPD Group, estimates that merchants with businesses in the city could lose as much as $250 million, or more, per day.
"This is a terrible scenario for New York city retailers," Cohen said. "These retailers stand to lose 5 to 6 percent of their annual revenue because of this strike."
While the Big Apple rakes in about $3 billion a week during the key November-December gift-buying months, "one-third of their entire holiday business comes in this week alone," he said
The strike shut down the city' subways and bus lines, affecting more than 7 million commuters who use public transportation on a daily basis.
Cash registers quieted
The Retail Council of New York State, a trade group based in Albany, NY that represents about 5,000 retail stores and affiliated businesses throughout the state, fears the strike will have a "devastating impact" on business, especially this close to Christmas and Hanukkah.
"We're probably going to start hearing anecdotally from our members as the day goes on about how the strike is hurting them," said council spokeswoman Rebecca Marion.
At the two Bloomingdales locations in Manhattan, about 400 company executives hit the sales floor to help out with the shortage of sales staff.
"About 50 percent of our sales associates turned up today and our executives are helping them," said Anne Keating, spokeswoman with the high-end retailer, a unit of parent Federated Department Stores (Research).
"The strike isn't what we would've wanted," she said. "The stores aren't packed but we're trying to work with our people here."
The company was providing car and taxi service to its staff as an incentive for coming into the city, as well as reimbursing them for any additional costs incurred, she said.
Merrill Lynch analyst Mark Friedman wrote in a research note Tuesday that he expects jewelry retailer Tiffany (Research) to be heavily impacted by the strike, since the company's flagship Manhattan store accounts for about 10 percent of its sales.
No free rides
Just recently, the MTA (Metropolitan Transportation Authority), which is NYC Transit's parent agency, introduced half fares on weekends until Jan 2 in a bid to entice more people living outside of Manhattan and in the city's outer boroughs to flock to the Big Apple to do their holiday shopping.
"Yes there will be lost sales for merchants in the city, because people who live outside of the five boroughs will shop closer to home or they'll go online and shop," said the New York Retail Council's Marion, but she added that the group did not have a current estimate for how much retailers' stand to lose on a daily basis because of the strike.
According to the Retail Council of New York, annual retail sales in the Empire State exceeded $139 billion last year, but no breakdown was available specifically for holiday.
Scott Krugman, spokesman for the National Retail Federation (NRF), agreed with Marion about what he calls "displaced sales" resulting from the strike.
"The last week of the holiday shopping season accounts for a decent percentage of holiday sales," Krugman said. "New York City is a high-profile area, but I don't think this strike will necessarily have any kind of national impact on holiday season."
"More than anything else, the strike will displace sales to the outer boroughs where there is a higher concentration of people who own cars," he added.
Besides benefiting online sales, NPD's Cohen thinks the strike will make many more holiday procrastinators resort to gifting gift cards.
Said Cohen, "Etailers will probably take advantage of this situation and extend their free shipping offer for an extra two days. And even if you make it into stores, if all the staff didn't make it in, you could have to wait longer than usual at the register," he said. "The frustration level will rise. So what will people pick up in a pinch? Gift cards."
Check retail stocks here.
How are New York and Wall Street coping with the strike? Click here.