Research lauds retailer role in disaster recovery
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.”
Ace receives $10,000 for eco initiatives
Ace Hardware will receive a $10,000 grant from the Sacremento, Calif.-area Placer County Air Pollution District to help fund continued testing of pallet trucks powered by zero-emission hydrogen fuel cells.
The trucks are based out of Ace’s Retail Support Center in Sacremento. The 1,028,000-square-foot facility represents the co-op’s second largest distribution center in size and volume. Testing for the initiative began in February, according to a press release issued by Placer County. Initial testing consisted of replacing lead-acid batteries with hydrogen fuel cells.
“We’re encouraged by the initial findings and anxious to see the complete test results to determine the viability of expanding the use of this hydrogen fuel cell technology in this and other facilities,” said Bill Bauman, vp-retail support for Ace Hardware.
In 2005, Ace began testing biodiesel fuel — an 80/20 mix of vegetable oil and diesel fuel — in several tractors in its Midwestern fleet. Today, Ace uses biodiesel in the entire fleet for its Retail Support Center located in Princeton, Ill., and has plans to roll it out to several other distribution centers across the country.
Other environmental initiatives by Ace have included installing energy-efficient T5 lighting in the majority of its distribution centers and reducing volatile organic compounds in private-label paint products sold at retail.
Also on the consumer side, Ace developed “Helpful Earth Choices,” a labeling program meant to help customers identify environmentally friendly products and sustainable items.
Sales up 25 percent at Lumber Liquidators
Lumber Liquidators, the specialty retailer of hardwood flooring, saw net income nearly double to $4.3 million from $2.23 million in the first quarter. Sales rose 25 percent to $114.55 million from $92 million in the same period last year.
“We are very pleased with our strong results in the first quarter and our ability to maintain the positive momentum we experienced in the second half of last year,” said Jeffrey Griffiths, president and CEO. “We are pleased with the strong contributions of new stores that we have opened in the last year as their results are exceeding our expectations.”
So far this year, Lumber Liquidators has opened 15 new stores — one each in Arizona, Colorado, Maryland, Michigan, Missouri, New Hampshire, New York, North Carolina, Ohio, South Carolina and Texas; and two each in Illinois and Pennsylvania. The Toano, Va.-based company said it maintains plans to open 30 to 40 new stores in 2008.
The company currently operates more than 130 stores in the United States.