Weather Updates

Blizzard cost area businesses millions

Chicago February 2 2011 A lone pedestrian crosses quiet Michigan Avenue Wednesday morning during Chicago's blizzard.   |Suzanne Tennant~Sun-Times

Chicago February 2, 2011 A lone pedestrian crosses a quiet Michigan Avenue on Wednesday morning during Chicago's blizzard. |Suzanne Tennant~Sun-Times Media

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Updated: May 21, 2011 5:14AM

The blizzard that ate Chicago hurt more than the pride of motorists caught in snowdrifts on Lake Shore Drive; it cost millions in lost retail revenues and pummeled already reeling hourly workers and city and suburban municipalities, experts say.

A single day of crippled businesses in February likely cost the city of Chicago $55 million to $60 million, and the six-county metro area as much as $300 million, said John C. Melaniphy, head of Chicago retail consulting firm Melaniphy & Associates Inc.

Melaniphy based his calculations on his company’s yearly spending reports.

Because many businesses were nearly as incapacitated for portions of Tuesday and Thursday as they were Wednesday, Melaniphy said the worst-case scenario is that the blizzard’s toll spanned two days — doubling his single-day estimates to $120 million for Chicago and $600 million for the region.

The figures reflect lost revenues at restaurants, drugstores, grocery stores, gas stations, department and discount stores, and furniture, electronics and home-improvement stores.

Restaurants likely incurred $13 million in losses in a single day in Chicago, and $33 million to $36 million in the metro area, according to Melaniphy’s estimates. He calculates that 2010 retail sales for the region totaled $96.2 billion, the first increase in three years but behind the heady days before the recession, when sales popped up to $107 billion.

Though revenues ebb and flow with the seasons, Melaniphy said lost retail sales are difficult to recover.

“We had a burst of sales the day before the blizzard in drug and supermarket sales, but if someone had planned to buy a dress on the day of the blizzard, we don’t know when the shopper will take the time to make that purchase,” he said.

Hotels reported mixed results. Some gained unexpected guests stuck here by canceled flights or commuting nightmares, while others suffered as guests fled early to get home before the storm. Hotel occupancy rates in the Chicago area stood at 61.8 percent in 2010, a 9.9 percent increase from 2009, according to research firm STR.

Other economists said they couldn’t forecast hard numbers so quickly after the blizzard, but the storm’s pain was unquestionably widespread.

Diane Swonk, chief economist at Mesirow Financial, said the blizzard’s biggest victims were hourly workers and others forced to give up pay when their workplaces shut down. That’s a big group, including retail and restaurant workers and people who staff the airlines and Midway and O’Hare airports, Swonk said.

Companies lost productivity from all employees who missed work, but many salaried and executive staff kept working remotely via the Internet.

Swonk said the blizzard added insult to injury to city and suburban municipalities, already crunched by the recession, the housing crisis and financial crises.

“This could result in even more staff and service cuts down the road,” Swonk said.

Every storm has its winners, too, and they included workers and emergency-service providers who got overtime pay to manage and clean up after the blizzard, Swonk said.

The head of the Magnificent Mile merchants’ association said the impact could have been worse.

“The good news is that this is a slow time for retail, and it’s cleared up for the weekend,” said John Chikow, president and CEO of the Greater North Michigan Avenue Association.

“Hotels are slow this time of year, so even the discounted rates offered to folks [stuck in the blizzard] will help overall February numbers,” Chikow said.

Museum representatives said this is their slow time, too. The Field Museum had slated a free admission day on Wednesday anyway, and the Museum of Science and Industry reports that this is typically a slow time of year for visitors. Navy Pier, which was closed Wednesday and Thursday, estimated it lost a total of $115,000 from sales and parking revenues, based on 2010 figures.

“Our summer numbers are much greater when fireworks, beer gardens and cruise ships are going strong,” said Navy Pier spokeswoman Delores Robinson.

Contributing: Francine Knowles

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