New "hurricane culture" poses retailing challenge

[LaPlaceFF]

NEW YORK, June 15 (Reuters) - News that Alberto could be the first hurricane of the season prompted media outlets to race to the coast to cover the storm, shoppers to bulk up on supplies, and Gov. Jeb Bush to put Florida under a state of emergency.

While Alberto never became a hurricane, the rapid reaction to news of an impending storm reflects a "hurricane culture" emerging after two years of brutal storms and predictions that the Atlantic has entered a period of heightened hurricane activity, said experts at a conference to discuss the impact of this year's weather on retailers.

That new culture -- in which even the inkling of a storm sparks prolonged, intense media coverage and government action even before it reaches land -- poses challenges to retailers in a storm's path, with some positioned to benefit but others at a disadvantage, attendees of the Planalytics Consumer Conference in New York said on Thursday.


Paul Walsh, senior business meteorologist at weather forecasting firm Planalytics, said non-stop media coverage in days leading up to a hurricane acts like an infomercial for stores selling items essential for power cuts or an emergency.

These include home centers such as Home Depot Inc. (HD.N: Quote, Profile, Research); super centers and clubs like BJ's Wholesale Club Inc. (BJ.N: Quote, Profile, Research); grocery and convenience stores; and some mass merchants, including Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research).

While this pre-storm media coverage prompts a surge in buying of items such as water and batteries, it puts specialty apparel retailers, department stores, hobby and book stores, auto dealers and malls at a disadvantage.

"Consumers are just no longer interested in khakis when a hurricane is coming," Walsh said.

Jan Davis, president and CEO of ShopperTrak, agreed with Walsh's finding.

ShopperTrak tracks foot traffic at malls, shopping centers and casinos -- typically locations that carry non-essential items. Davis studied foot traffic following some of last year's most powerful hurricanes, including Wilma, Katrina and Rita.

She found that areas receiving a "direct hit" from a hurricane lost virtually all shopping activity for a minimum of one day and up to 10 days. She also found that specialized retailers followed by ShopperTrak tended not to be able to make up the retail sales they lost due to a hurricane.

But retailers that Walsh identified as ones with an advantage were often able to recoup the sales they had lost on the day of the hurricane.

For instance, David Whatley, who recently retired as Home Depot's vice president of risk management, said that before a storm, Home Depot stores in the potential area would carry an extra supply of storm preparation materials, like plywood, but after the storm, the stores would quickly switch to selling "post-strike" items including rubber gloves, buckets and mops.


But speakers at the conference agreed there was much room for improvement in how retailers prepare and react to hurricanes, from developing better disaster relief plans to making sure they can stock the type and quantity of merchandise that consumers want when they face an impending storm.