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NY strike may boost online sales
Barnesandnoble.com promises free Manhattan delivery by Christmas; Amazon touts last-minute shipping.
December 21, 2005: 4:06 PM EST
By Parija Bhatnagar, CNNMoney.com staff writer
Thanks to the strike, potential shoppers can't get very far.
Thanks to the strike, potential shoppers can't get very far.

NEW YORK (CNNMoney.com) - With the New York transit strike in its second day, retail industry watchers feel surprisingly unsympathetic towards the New York shops suffering from lost foot traffic. Their advice: Local retailers must direct customers to their alternative outlets, especially online.

Craig Johnson, president of retail consulting group Customer Growth Partners, was rather blunt with his assessment. "If you're [a] smart [retailer], you will simply redirect your customers to a channel or location that's more convenient than schlepping into Manhattan, instead of losing the sale outright," Johnson said.

No excuses

"As we said immediately after Katrina [when] CEO's blamed the weather instead of themselves for poor results, 'Meteorology is always the last refuge of retail management scoundrels,'" Johnson added. "Now you can add 'public sector strikes' as the latest refuge of retail management scoundrels."

Being nimble is especially critical during the all-important holiday shopping season, which typically accounts for as much as half of some retailers annual profits and sales.

For example, Barnesandnoble.com, the No. 2 online bookseller behind Amazon, late Tuesday added a pop-up on its Web site assuring customers that they will still get free same-day delivery to addresses in Manhattan in spite of the strike.

Meanwhile, Amazon.com (Research) sent out emails to its clients Wednesday morning alerting them to extended "last-minute" express shipping options. The etailer said that last-minute shoppers could take advantage of its two-day express shipping and delivery as late as Dec. 21, instead of its original Dec. 20 deadline.

"I can't say for sure that the emails we sent out today were done specifically with the New York transit strike in mind," said Amazon spokesman Craig Berman. "But we certainly take every opportunity to let our customers know that we are reliable and we cater aggressively to holiday procrastinators."

Burt Flickinger, retail consultant with Strategic Resources Group, called Amazon's last-minute shipping incentive "brilliant," noting that the site has one of the best supply chains in the industry.

"I think Amazon will be successful in stealing some of the displaced sales in New York because it will shift shoppers away from hard-to-reach stores in Manhattan to its online store instead," he said. "Frankly, I'm surprised [that] some of the luxury retailers in the city aren't actively promoting their online stores."

Getting the word out

Ernst & Young retail analyst Dan Valerio agreed that the growth of multi-channel retailing means brick-and-mortar merchants have little excuse not to try to mitigate the negative impact of events such New York City's transit strike and should leverage their online channels.

"Certainly the department store chains and luxury sellers like Macy's and Tiffany can get the word out to their customers and redirect them to shop online by offering additional benefits and discounts as incentives," he said.

Macy's, a unit of Federated Department Stores (Research) and high-end retailer Tiffany, both of whom have their flagship stores in Manhattan, also operate online stores Macys.com and Tiffany.com. In a note Tuesday, Merrill Lynch analyst Mark Friedman said he expected jewelry retailer Tiffany (Research) to be heavily impacted by the strike, since the company's New York city store accounts for about 10 percent of its sales.

Tiffany spokesman Mark Aaron said the retailer was not offering any special incentives such as free shipping or discounts to lure shoppers online. "We have seven suburban New York stores that people can go to if they can't get to the Manhattan location," Aaron said. Macy's could not be reached for comment.

"This is going to be a very strong season for online sales anyway. There's a growing confidence among consumers to use the Internet for shopping and its more convenient," Valerio said. To his point, market research firm ComScore Networks expects total 2005 holiday online spending, excluding travel, to jump 24 percent over last year to $19 billion.

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For more on the strike's impact on retail, click here.  Top of page

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