How Retailers Brace For Weekends Like This

Home Depot

Photo: Tammra McCauley via Flickr

For retailers, big storms like hurricanes and blizzards present major hassles, as well as opportunities to score some solid sales.They’re different from sudden disasters like earthquakes and flash floods. We now know well in advance before a hurricane hits the shore, allowing people to prepare for the imminent storm.

But this run-up also allows for fear and anxiety to spread about, which can encourage people to buy more than they probably need.

Retailers can be credited with helping out in big ways during disasters — without Walmart during and in the aftermath of Hurricane Katrina, things would have been even worse.

But there are also always a few who use questionable tactics to make that extra buck.

Demand for survival products increases 300% once there's news about an imminent disaster

This affects products like water, nonperishable foods, flashlights, beer and drive-through fast food.

Source: TampaBay.com

In New York City, there are 19 Home Depots, 14 Targets, 3 Lowe's, and more than 250 Duane Reades

The benefit for these stores is at its greatest if they're able to re-open quickly following a disaster and meet the increased demand in sales.

Retailers optimise their stores by putting all the disaster-related products up front

A recent report from Bloomberg described a North Carolina Lowe's with 11 power generators sitting up front at $799 a piece.

After Hurricane Frances, Walmart found that the biggest pre-hurricane selling item was beer

In 2004, a week ahead of Hurricane Frances, Walmart's chief information officer Linda M. Dillman 'pressed her staff to come up with forecasts based on what had happened when Hurricane Charley struck several weeks earlier. Backed by the trillions of bytes' worth of shopper history that is stored in Wal-Mart's computer network, she felt that the company could 'start predicting what's going to happen, instead of waiting for it to happen,'' she told the Times.

'We didn't know in the past that strawberry Pop-Tarts increase in sales, like seven times their normal sales rate, ahead of a hurricane. And the pre-hurricane top-selling item was beer.'

The other biggest sellers: generators, batteries, water

'Most probably, the biggest demand right now is for generators, obviously,' Suzanne Roche, manager of a Sears store in Wilmington, North Carolina, told Reuters today. 'We have got customers calling nonstop about the generators.'

The newswire also reported that 'Newell's shares were about 3% higher on Friday, as were those battery makers Energizer Holdings Inc and Spectrum Brand Holdings.'

Surfshops also capitalise off of board sales

Lowe's stores in North Carolina have called for 200 trucks stocked with chainsaws and water in the lead-up to Hurricane Irene, and Home Depots in Manhattan are struggling to keep up with demand for flashlights

Source: Bloomberg

Retailers are also using social media to communicate with customers

Home Depot's Twitter account has been particularly active as Irene slides up the coast. Its digital media team is using Twitter to provide updates and disperse contact information, and is personally replying to a large number of individual questions.

Also, it's another opportunity to educate people on what items they need for the disaster, and suggest what products they should come in and buy. That way, Home Depot can both provide a much needed public service and get people into the store to purchase stuff.

And they're posting survival guides on their websites

Home Depot has put up a checklist for Irene, and Lowe's also has a preparation and clean-up guide.

Retailers have to worry about the safety of their own stores too, and have procedures in place to handle problems

For example:

All of Lowe's 1,750 store managers go through disaster training programs.

Home Depot has a 600,000-sq.ft rapid deployment centre.

Every Walmart Supercenter gets three truckloads of emergency supplies before hurricane season in Florida, and it has emergency vans prepped to head out and repair damaged stores.

Source: St. Petersburg Times

They even set up command centres to monitor disasters and organise the movement of supplies -- like this one in Home Depot

Price gouging presents a huge debate surrounding all natural disasters

It can happen before, during and after a disaster. Following the deadly Hurricane Charley in 2004, there were thousands of complaints accusing retailers, gas stations and hotels of raising prices on items like bottled water and lumber.

Some states have laws against this. For instance, Florida and Texas both have protective laws that prevent unnecessary price hikes on items deemed 'essential,' like water, wood and ice, and have hotlines set up to report cases.

After Katrina, even gas stations in New York were fined for price gouging

Fifteen gas stations statewide were 'fined $63,500 for marking their prices up so much after Hurricane Katrina struck the Gulf Coast that they boosted their profits by 25% or more,' said then-Attorney General Eliot Spitzer, according to the Los Angeles Times.

Remember Y2K? People were stocking up a year in advance

In December 1999, the Los Angeles Times reported that:

San Fernando Valley retailers selling survival supplies, outdoor gear and camping equipment are delivering mixed reports on how big an impact the Y2K phenomenon is having on their sales.

Some Army and Navy surplus stores, earthquake supplies specialists and others selling survival products say they enjoyed brief sales spurts earlier this year, but the approach of 2000 has had minimal impact on sales and isn't producing any year-end rush of customers.

But some stores fared better than others: 'We're doing about five times as much business in survival supplies this year as we usually do at this time of year,' store owner Peter Kalaydjian told the paper. He said it was the biggest run on such supplies since the Northridge earthquake.

It's back to school season - which means clothing retailers will suffer this weekend

Retailers that don't sell survival supplies inevitably suffer prior to any anticipated disaster.

Luxury retailers like Saks and Tiffany & Co will also lose out, especially if airports are closed and people cancel trips, Morningstar analyst Paul Swinand told Reuters.

Now read about how major chains dominate ...

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