New York, long buoyed from the issues many of us face in running our businesses every day has been hit, and hard.
The financial meltdown over the past few weeks, coupled with economic issues that have rippled across the world have caused foreign tourists, an economic lifeline for NYC as of late to drastically cut their excursions to the U.S.
The city has a pall over it. It’s more subdued, lacks the usual energy and there’s a general malaise I haven’t seen since 9/11.
In talking with people here, retail is suffering, hotels and restaurants are suffering and people have closed up their wallets, just as they have across the entire country. We had no problem getting reservations at three great restaurants that normally wouldn’t have had space available. Hotel rates are indeed coming down. And the sale signs, though not as prevalent as at national retailers were here too.
Having spent time in a number of cities over the past few months, the “tourist areas” had been insulated from the troubles because they attracted foreign and local tourists. Michigan Avenue in Chicago, the various malls in Las Vegas, Union Square in San Francisco, etc. all are slower and no longer protected by their tourist status.
THE REAL WORLD RETAILING TAKEAWAY
The city that never sleeps seems to be feeling drowsy.
Less traffic, less competition for a cab, and less crowded sidewalks make for a more enjoyable New York. But retailing is sleepy too. Stores are lacking customers and energy and here’s the biggie, they seem to be closing earlier. Maybe it’s my imagination, but there’s an idea here.
Have you considered closing earlier or opening later?
You can save a lot of money across a number of expense lines by closing earlier and opening later: utilities and payroll to name a couple. How do you figure out if it makes sense to close earlier?
- Just look at your sales over the first couple of hours that you’re open and the last hour or two before you close. A lot of times, your computer system can give you this information through a simple report. If not, do it the old fashioned way and manually track it.
- Take a look at your payroll dollars you’re spending during those hours. If you’re not taking enough in to cover your payroll dollars, then the answer is easy. Ideally, you’ll want to take in enough to cover your payroll, utilities and add some money in for profit. For payroll, it’s number of employees x hourly wage. For utilities, just take your annual utilities costs and divide them by the annual number of hours you’re open on average – you don’t have to go week by week, you’re just looking for a ballpark. For profit, add 20% on top of the expenses. Now you have a sales number per hour you should be achieving in order to stay open. If you’re hitting it, then stay open. If not, then consider closing.
- Sometimes leases have stipulations as to the number of hours you need to be open. Malls always have these stipulations so check the fine print in your lease.
It doesn’t matter where you are in the world (even New York, the city that never sleeps), the economy is slowing so keep looking at every opportunity to rein in expenses.