Any time there’s a natural disaster in this country, the local heroes tend to be ordinary citizens, rescue personnel and ... retailers?
According to a study just released by researchers at George Mason University, big-box retailers consistently outperform the federal government when it comes to disaster relief. Companies like Home Depot, Lowe’s and Wal-Mart are first on the scene with truckloads of emergency supplies. In the case of Hurricane Katrina, the retailers had their stores reopened before the Federal Emergency Management Agency (FEMA) arrived on the scene. Other disasters -- the wildfires in San Diego and the bridge collapse in Minneapolis -- show a similar pattern.
Steven Horwitz, an economics professor from St. Lawrence University, has taken a close look at this phenomenon. “Making Hurricane Response More Effective: Lessons from the Private Sector” argues that big boxes are more adept at handling natural disasters because they’re familiar with local markets, they encourage individual decision making and, at the end of the day, they’re out to make a profit.
“Engaging in disaster relief is in these companies’ long-term self interest,” Horwitz acknowledged in an interview with Home Channel News. “It helps the communities they depend on for their business and creates goodwill among their customers.” But profit isn’t the only motive Horwitz found, nor does it fully explain the leadership and agility that made the retailers so effective.
“Private sector firms take risks every day,” Horwitz said. “Government agencies don’t have that culture of competition that rewards risk taking.” Even rank-and-file employees often find themselves with some degree of autonomy during rescue operations. As Hurricane Katrina was bearing down on the Gulf Coast, Wal-Mart CEO Lee Scott reportedly issued the following edict: “A lot of you are going to have to make decisions above your level. Make the best decision that you can with the information that’s available to you at the time, and above all else, do the right thing.”
At least two Wal-Mart employees took him at his word. One Kenner, La., sales associate used a forklift to knock open a warehouse door to get water for a local retirement home. In Waveland, Miss., a store manager ran a bulldozer through her store to collect undamaged goods, which she piled in the parking lot for local residents. Then she broke into the pharmacy because the local hospital was running out of medication.
During the San Diego wildfires last year, two Home Depot associates turned the parking lot of a store under construction into a makeshift animal shelter for evacuated families. They coordinated food, water and veterinary care for 35 horses, 10 dogs and assorted guinea pigs, hamsters and snakes.
According to Horwitz’s research, which included interviews with local officials and citizens as well as media reports, the first responders after Hurricane Katrina were Wal-Mart, Home Depot and the Coast Guard. The retailers were able to get water, food and other necessities to the hardest hit areas. Home Depot used buses to transport 1,000 employees into the area to help with relief efforts. Wal-Mart provided free merchandise, including prescription drugs, to evacuees at the Houston Astrodome and the Brown Convention Center.
Several days before Hurricane Katrina made its landfall on Aug. 25, 2005, Home Depot had activated its “war room” at its Atlanta headquarters, negotiated donations and logistics with vendors and staged trucks at the perimeter of the hurricane “strike zone.”
Initially, Home Depot sent more than 800 truckloads of bottled water, tarps, chainsaws, bug spray and other “early response” supplies into Louisiana, Mississippi and Alabama. Then the retailer switched from disaster relief to recovery, with roofing tiles, charcoal grills, propane and other products. By the first week in September, seven weeks after Katrina’s landfall, Home Depot had sent nearly 1,000 trucks into the area.
Although FEMA has been roundly criticized for its slow response to Hurricane Katrina, Horwitz’s study avoids finger pointing in favor of a more dispassionate explanation. Government agencies like to play it safe -- i.e. avoid risks -- by not overreacting. “Suppose FEMA had moved stocks of food into place very early, perhaps even before the storm, only to see them spoil or go unused if the storm missed the area?” Horwitz asked. “The visible waste would be harder to explain than the less visible consequences of waiting to react.”
Horwitz argues that the private sector is better equipped to handle disaster response because it has both the motivation and the means. Retailers like Wal-Mart, Home Depot and Lowe’s already have a nationwide distribution system set up; moving goods is what they do every day.
Retailers have also worked with government agencies -- including FEMA -- on disaster preparedness education campaigns for consumers. But until they’re given an official status as emergency responders, private sector trucks full of emergency supplies may still get turned back when they try to enter disaster zones.
“[Authorities] have to know that a company like Wal-Mart is authorized to act,” Horwitz said. “These folks have to start talking to each other.”