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Issue Date: Vol. 54, No. 3, March 2014, Posted On: 2/28/2014


Harsh Weather Impacts Consumer Spending And Route Operations


Hank Schlesinger
swag@earthlink.net
TAGS: TAGS: Vending, Coin-Op Route, Bulk Vending Winter's impact on business, Scott Dougherty, D&D Amusement Games, jukebox operator, coin-op, jukebox, pinball, dart league, National Retail Federation, Matthew Shay, Baby, its cold outside, Steve Schechner, Capital Vending & Distribution, Leonard Daitch, Sweet City

Scott Dougherty, jukebox operator, coin-op.
PHOTO: Scott & Pam Dougherty of D&D Amusement Games use snow machines to reach locations along D&D's central Wisconsin jukebox and amusement route.


To misquote the old Frank Loesser song, "Baby, its cold outside." Really cold. Unusually low temperatures and frequent winter storms have sent shoppers and coin-op patrons scurrying for cover and hibernation. Regions of the nation not accustomed to snow, ice and plunging temperatures became news for multi-car highway accidents, closed schools and a scramble by municipalities to deal with harsh weather conditions. At least 11 governors declared states of emergency because of the weather, while consumers stayed at home learning new words like "polar vortex."

According to the U.S. Department of Commerce, retail sales fell 0.4% in January. The analysts explained that the decline was led by categories such as auto sales, but also affected things like clothing retailers, furniture stores and restaurants. Notably, all of these depend on foot traffic -- and many represent the best locations for coin-op equipment.

"Following a solid holiday sales season, it seems that many consumers decided to take a break from the stores and shopping malls this January in an attempt to avoid winter weather," said National Retail Federation president and chief executive Matthew Shay. "While the dip in retail sales was somewhat anticipated, it is concerning that both jobless claims came in above projections and that consumer spending was flat in January -- it's not the way to kick off a new year."

Most hard hit in the coin machine industry were operators in states where consumers are unaccustomed to frigid weather conditions. Not only did the weather keep shoppers out of the malls and off the streets of downtown areas, but it made day-to-day business for operators that much more difficult.

"It was atrocious. I had more cancellations because you can't send drivers out in the kind of weather we had," said National Bulk Vendors Association president Steve Schechner, Capital Vending & Distribution (Florence, AL). "I would say that we lost five days so far. That means we couldn't collect, couldn't service. We fell behind because of the problems we experienced."

According to Schechner, whose market area extends across Alabama, Mississippi and Tennessee, even locations where sales maintained or, in a few cases, improved, suffered because route personnel had trouble servicing them. "It was very tough. Some of our high-volume places, such as movie theaters, were doing double and triple what they normally do," he explained. "But we couldn't get out to service them. We only need a little bit of ice and snow to shut a city down because we're in the South."

Leonard Daitch of Sweet City (Walled Lake, MI), with affiliated routes that extend from Oklahoma to the East Coast, saw weather-related problems, as well. "It's been extremely problematic," he said. "The Midwest all the way to the East Coast were hit badly. Whatever it takes, we service. But it certainly is a hardship for everyone who has to be out in the inclement weather. It takes more time, it's less cost effective." Michigan has had the third-worst winter on record, in terms of snowfall; but added to that is a string of days that have been consistently below 10°F. -- without factoring in wind chill. Operating under those conditions, even in Michigan, is an unusual challenge. Routes that would normally take two days to service could take three. Something that might have been finished in three hours might take six.

"It's expensive, too," Daitch added. "Sitting in a snowstorm going 10 miles an hour is expensive. We tell everyone to be careful, and to stop and stay over if it gets difficult. In case it gets hazardous, we'd rather be safe than sorry."

Added to that are the days when office and warehouse staff can't make it in to work.

SCARY COLD

Interestingly, the bad weather hasn't been all bad news. Scott Dougherty, D&D Amusement Games (Waupaca, WI), has reported an uptick. "We've had almost record-breaking snowfall, but for me, that's somewhat of a good thing," he said. "We're in a big snowmobile area. So when the snowmobile trails are open, my locations do better."

Taverns and bars along the snowmobile trails are traditional stopovers for enthusiasts touring the countryside on the extensive network of trails throughout central Wisconsin. Indeed, snowmobilers can make up anywhere from a third to half of a tavern's business. It's not unusual for patrons to pull up on their "sled" and warm up with a cold beer and a game of pool before hitting the trails again. And yes, there was plenty of snow for those snowmobilers -- up to 60" in some areas.

"Now the cold weather, of course, I don't know if that helps," Dougherty continued. "I drove to work a couple of mornings when it was minus 29 and minus 30 -- not wind chill, but temperature. With the wind chill, it was down to minus 35 or minus 50. We were colder than Alaska this year."

Those double-digit sub-zero temperatures definitely are chilly, Dougherty admitted, even for people in Wisconsin. "We had some days that were scary cold," he said. "We've had some cold days where we wouldn't go way far out; we would keep it closer. And I'd tell my route people to stay on the main highways, so they'd have cell service in case something happened."

NOTHING BUT BLUE SKIES?

The uncommonly severe, and in some areas historically bad, weather was not the way anyone wanted to start 2014. For both retailers and vending operators, predictions for an improving economy in the new year fell flat as consumers stayed home. And the added financial burden of increased heating costs put a damper on consumer spending. Still, many economists remain optimistic about the coming year, while others see a more lasting impact from the unfortunate weather.

The economists, as usual, remain divided in their predictions that have proven less reliable than, well, weather forecasts. "Harsh winter weather is masking the performance of the broader economy," said NRF chief economist Jack Kleinhenz. "Extreme temperatures and severe ice and snow are making it increasingly difficult to assess whether the retail sales slowdown is temporary or a telling sign of a longer-lasting weakness in the consumer-fueled economy. No one can jump to any solid conclusion until we shovel out of the snow."


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