Brutal winter takes its toll on service industries

  • Article by: LIBOR JANY , Star Tribune
  • Updated: April 19, 2014 - 10:27 PM

A report put the economic impact of one big snowstorm at $167.5 million. Months of extreme cold took their toll on local businesses.

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Mom-and-pop operations like the Scandia Market & Mercantile, run by Holly and Gary Kaufhold, are less likely to recoup lost winter sales in the coming months.

Photo: Photos by Richard Sennott • richard.sennott@startribune.com,

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Opening a new grocery store is tough enough, without having to deal with the kind of unforgiving winter we just had — one that saw some customers resort to food shopping by snowmobile.

Just ask Holly Kaufhold.

“Those bigger snow days were tougher,” said Kaufhold, who, along with her husband, runs the Scandia Market & Mercantile and neighboring Scandia Café.

With the brutal winter weather that gripped the state for nearly four months, business has been slow for the Kaufholds. And theirs isn’t the only small business in the east and south suburbs to take a hit.

Other service industries, such as restaurants, health care and retail, also have been affected.

“I will not get the sales that I lost back, but I didn’t lose my customers,” said Mary Jo Stevens, who operates Jo Jo’s Rise & Wine, a coffee shop and wine bar in Burnsville.

“Our commuters were not stopping in in the morning because they didn’t want to get our of their cars,” said Stevens, adding that January sales slipped 25 percent. “Our lunch group wasn’t coming in because they weren’t going out.”

While most major retailers, with their marketing muscle and deep pockets, took this winter’s best punches without a whimper, smaller mom-and-pop operations like the Scandia Market bore the brunt of the low temperatures and unrelenting snow, economic analysts say.

Toby Madden, regional economist for the Federal Reserve Bank of Minneapolis, said that bigger businesses made out better financially than smaller businesses because many of them will likely recoup lost sales in coming months. The bigger they are, the more economic breathing room they have, Madden said.

“The overall picture’s probably not affecting Minnesota’s economy much, at the macro level,” he said. “However, on a micro level, it definitely has big disruptions. So if you’re a coffee shop next to a school, and the school had extra days of closures, you might get less business. If you’re a coffee shop next to a business that had closed for a few days because of the cold, then you’d have less business.

“Meanwhile, if you’re a snowplow driver you probably had more business.”

A recent report, titled “The Economic Costs of Disruption from a Snowstorm,” put the cost of a “one-day shutdown” on Minnesota “businesses and government” at $167.5 million, a figure that includes $112.7 million in lost earnings. Among the conclusions drawn by the study is that, “Among all economic classes, snow-related shutdowns harm hourly workers the worst, accounting for almost two-thirds of direct economic losses.”

According to the National Weather Service, the past winter delivered 53 days of low temperatures at or below zero. It also produced a near-record-low Winter Misery Index, a measure devised by the state Department of Natural Resources to “weigh the relative severity of winters.”

Kaufhold said her business — the latest iteration of Scandia’s only grocery store that has occupied the corner of Olinda Trail and Oakhill Road for more than 130 years — has become a lifeline of sorts for residents of the town of 4,000, who would rather not make the 18-mile round-trip in snowy conditions to nearby Forest Lake for groceries.

On “bad days,” she saw only a fraction of the store’s 130 average daily customers, she said. And on mornings after heavy snowfall that left many roads in the rural town impassable, some people arrived by snowmobile, she said.

Fortunately for her, she says, people need groceries and while a snowstorm may keep customers from her store for a day or two, they will eventually come back.

The same cannot be said for all small businesses.

At Great Lakes Window & Siding, a home remodeling company in Apple Valley, revenue was down about 30 percent in January and February, Julie York said.

“We were not visiting with as many folks and not giving as many estimates because people weren’t inviting us into their homes,” said York, whose mother and stepfather run the company. “I think what was going on outside really impacted people inside, because they weren’t even thinking about improving [their homes].”

But, sales rebounded in March, she said, thanks to “pent-up demand.”

 

Libor Jany • 651-925-5033

Twitter:@StribJany

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  • Holly Kaufhold of Scandia Market & Mercantile talked with Adam Bruening of Stillwater when he came to see the renovated grocery store. She won’t easily forget this winter. “Those bigger snow days were tougher,” she said.

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