Hundreds of big stores are shut tight from the Carolinas to Maine. Traders and investors paralyzed as the stock market and most major exchanges closed. Millions of workers are stuck at home for another day.
For some retailers that specialize in emergency equipment, orders have been coming in practically non-stop since warnings about Hurricane Sandy went into effect last Thursday. That includes online retailers who have had their busiest days in a 10-year history.
Hurricane Sandy is shaping up to be one of the biggest storms ever to hit the United States but even with the severe damage that is expected, the blow to the economy is seen as short-term.
Economists say impact caused by businesses closing will be offset by reconstruction efforts, and point to catastrophic storms like Katrina, which devastated New Orleans but did not have lasting damage to the national economy. Some economists predicted Monday that, barring a catastrophic event, Hurricane Sandy would slow growth in the short term but have a negligible impact on, and possibly even boost, fourth-quarter growth.
While natural disasters take a large initial toll on the economy, they usually generate some extra activity afterward, Moodys Analytics economist Ryan Sweet wrote on the firms website Monday. We expect any lost output this week from Hurricane Sandy will be made up in subsequent weeks, minimizing the effect on fourth quarter GDP.
Jason Schenker of Texas-based Prestige Economics said hurricanes like Sandy usually lead to a bump in economic growth, mainly through stronger retail sales. In a note to clients, he cited to the last minute run to hardware stores and supermarkets, or after-the-storm replacement of furniture, windows, cars, and other damaged durable and non-durable goods. He said that, barring major damage to infrastructure in the mid-Atlantic region, Sandy will likely help retail sales in November.
Many power equipment suppliers, home improvement stores, and shipping companies are processing orders on a rush basis but are quickly running through inventory.
Power equipment companies and major DIY chain retailers will continue to process orders as long as the major shipping companies it uses, such as FedEx, UPS and R&L Carriers, are still moving freight. Major chain retailers such as Lowes Cos. Inc., No. 47 in the 2012 Internet Retailer Top 500 says its e-commerce site will remain online and open for business during the storm. In the last few days in the run-up to Hurricane Sandy, Lowes.com has been fulfilling a steady stream of orders for batteries, flashlights, water, extension cords, sump and utility pumps as well as snow throwers, snow shovels, ice melt and additional products for areas forecasting winter weather.
Automation is critical to retailers that sell the types of items in demand during a natural disaster. Item population to inventory synchronization enables these retailers to keep products moving and customers buying during events like Sandy. Heres just a few ways they keep everything moving through the demand chain.
Most large retailers have automated item population to bring necessary repair, protection, and disaster related products to customers faster. Monitoring and managing drop ship status, order/shipping inquiries, delivery preparation and delivery expectations will be critical to getting people back on their feet as well as minimizing disappointment.
Accurate visibility to inventory availability will be important to keeping buyers updated on what products are available. Understanding customer re-order needs, item replenishment timeframes and high-demand item access will be important during this time. Real-time integration that scales for growth and agility is profitable, productive and allows retailers to drill into new channel opportunities without adding overhead.
We expect Hurricane Sandys impact on the East Coast to be mixed, Deborah Weinswig, a Citigroup analyst, said in an e- mail. The storm will disrupt last-minute Halloween sales and mall traffic but drive stock-up trips to the discounters.
Lowe’s emergency command center anticipates customer demand during severe weather. Replenishing store shelves quickly is a priority.
W.W. Grainger Inc., No. 15, which sells building maintenance and supplies equipment, experienced an increase in demand from customers in the Northeastboth currently and in the days leading up to the stormfor hurricane related products such as generators, extension cords, plug, batteries, gas cans, flashlights, a Grainger spokeswoman says. It also is positioning products to make them available for the cleanup. Grainger is aggressively working to get inventory into the market to serve those storm-related needs. And in anticipation of customer needs following the storm, we are in the process of moving critical supplies such as batteries, duct tape, lanterns, rain suits, pumps, gloves, tarps and boots into the affected markets, she says.
Large retailers also say they have back-up web disaster plans in place if needed, but as of now dont anticipate massive outages. The recovery after the storm, they said, could actually pump up growth temporarily in a few sectors, like construction and retail sales, when cleanup begins in earnest in a few days.
Oliver Chen, an analyst for Citigroup, wrote in a research note that he estimated shopping could be down as much as 40 percent for the week in affected areas, and November comparable-store sales could be down by as much as 2 to 3 percent. However, he said, stores that sell emergency supplies, food and other staples should see an uptick in traffic and sales.
The other good news is economists do not foresee long-term impact from the storm, even if it results in billions of dollars in property damage from the high winds and lashing rain.
The most powerful hurricanes come along once or twice a decade like Katrina or Andrew and can actually increase economic activity. Eventually, most spending or other activity is simply pushed forward, a phenomenon known in economics as intertemporal substitution.
Such a disaster can prove profitable or miserable for retailers unprepared to support demand. If youre a retailer that offers products that supports or complement recovery efforts learning from how the big guns steer the ship in stormy waters can help you should you find your business in a similar situation.
Automating item population to your online channels can assist in getting products visible in your web store faster. Automated inventory synchronization can assure customers that you have what they need and leave a lasting impression long after the storm has gone. A good Plan B can never hurt either. Anticipating what products your customers will need and planning to have inventory available can help retailers navigate through tough times and hopefully leave a lasting impression on customers that will be grateful you took the time to plan ahead.