Retail Disaster Planning: Learning Lessons from the 2005 Hurricanes

Two national companies learn about contingency responses in the wake of Hurricane Katrina


The devastation that Hurricanes Katrina, Rita and Wilma have visited provides a real learning opportunity. By examining what retailers have done-or not-to prepare, others can better decide how to formulate plans for future natural or man-made disasters.

Those retailers who had a game plan have one thing in common: they were primarily concerned with the welfare of their employees. The thinking is that nothing can stop Mother Nature, and all you can do is take the precautions of boarding up stores. Beyond that, insurance will take care of lost or damaged stock. But you can't replace your employees, and you have to do what you can to protect them and help them get back on their feet in the event that they're affected by the storm.

People First

A national drug retailer (the company has requested that it remain anonymous) with stores in New Orleans did the best it could when the warnings about Katrina were announced. After safeguarding the stores as well as possible, the loss prevention staff turned their attentions to their employees. LP people from surrounding regions were summoned to nearby areas, and the company set up shelters for all employees and their families from the affected areas. After the hurricane, old stores that were no longer in use but still available to the company were outfitted with beds and showers, and the company had meals catered.

Over, at the three-hundred-store Mattress Firm chain, which is headquartered in Houston, executives had a slilghtly different approach. The company has retail outlets and a distribution center in New Orleans and Baton Rouge. The Labor Day holiday weekend is the largest sale period of the year, so company decision-makers dreaded the thought that the storm might affect them then.

But according to Director of Loss Prevention Maurice Edwards, the employees at the retail level were shaken and terrified after the storm as they faced an environment of closed businesses, widespread reports of looting and violence, flooded homes and broken infrastructure. The company responded by flying employees in the affected areas to stores in different regions and putting them to work there.

Some employees of both companies were in the worst hit areas and lost everything. The drugstore chain set up a priority assistance program to help them back on their feet.

Mattress Firm set up an assistance program that was funded by donated commissions. Employees in the non-affected areas gave $100,000 in Labor Day weekend commissions to their counterparts who suffered from the storm. They also responded with offers of housing and other assistance. Edwards says that he was surprised and touched to learn how caring the company's employees are.

Carrying on with Business

As the city flooded, looters broke into some of the New Orleans stores of the national drugstore chain. Looters didn't just take food and water, items which many thought would be understandable, but they also set fires and completely destroyed some locations.

However, the company's LP director said that the lawlessness wasn't pervasive. Some citizens even called the company's toll-free number and reported incidents of people breaking into the stores.

According to the LP director, the drugstore chain's biggest priority, once the storm passed, was to become ready to serve its customers. With some stores suffering too much damage to reopen, the company set up trailers next to the store buildings and opened for business. The company's LP director explained that the idea wasn't to open because profits were being lost, but that people needed their medications, and that it was the company's duty to be there for the customers with medical needs.

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