Demand for summer seasonal merchandise was down significantly in June 2009 across the three largest population centers in the US — the northeast, midwest and west coast markets.
Hardest hit was the northeast where persistent rain (>20 days during the month) and abnormally cold temperatures (coldest in 10 years) led to a dramatic year-over-year decrease in demand for summer seasonal items. For perspective as to how dramatic the impact was on summer-time businesses, the Long Island Press described the sales environment this way:
“For seasonal business owners on Long Island, it is the weather that affects the balance sheet, and June 2009 was the collapse of Enron, the housing market and Bernie Madoff all rolled into one.”
The Bottom Line: Long Island’s Economy Needs Sunny Skies, June 25, 2009
From a sector perspective, the biggest negative impact will be on specialty apparel, department stores and, to a lesser extent Mass merchants. The big box home center retailers (HD and LOW) will benefit from the generally great growing conditions in the northeast which are compelling purchases of relatively inelastic lawn and garden care merchandise.
The extreme heat in the southeast was, on a macro scale, a neutral to slightly negative impact on the month as the correlations to heat and sales in June in those areas are negligible and there may some negative traffic impacts.
For July, the persistent pattern of seasonally cool and wet conditions will continue in the northeast and Midwest and abnormal heat will continue in the south and southwest. These conditions will continue to put price and margin pressure on apparel retailers -- as they struggle to overcome the weak demand environment with price incentives -- and will continue to fuel demand for home center/lawn and garden retailers.
