Retailers Use Lessons Learned From Irene

Retailers preparing for the worst of Hurricane Sandy as it hit the East Coast on Monday looked back to only a year ago to Hurricane Irene for a blueprint.

From when to get product into the region before a storm hits, to keeping track of workers when the hurricane comes, Irene provided important lessons, retailers said.

"Irene was something unprecedented last year. We learned a number of things from that," Terry Johnson, Lowe's (NYSE:LOW) senior vice president of store operations, told Reuters.

Irene which ranked as the fifth-costliest hurricane in U.S. history, slammed much of the U.S. East Coast last year. The lessons from that destructive hurricane have helped many chains prepare better this year.

For instance, Lowe's started deploying products like generators, tarps, batteries and electric cables to distribution centers early last week to avoid facing delays due to potential road closures. The company, the second-largest U.S. home improvement chain, started stocking up on products even before it could get a good read of the exact path of Hurricane Sandy.

"We are thinking a little bit bigger (this time)," Johnson told Reuters by phone.

Products that retailers moved closer to where the hurricane will hit also include bottled water, flashlights and dry food.

For Target Corp (NYSE:TGT), the lesson from Irene was to have the products in the region five to six days in advance.

"What we've learned in responding to these in the past is finding the sweet spot in reloading the area with product," Target spokeswoman Amy Reilly said of having supplies in a region for shoppers to stock up on during a hurricane.

Hurricane Irene hit the region on the final weekend of August 2011, causing flooding and power outages during the back-to-school shopping season, one of the busiest shopping seasons of the year.

If there is good news for retailers, Hurricane Sandy is hitting in what is typically a slow time, between back-to-school and the all-important holiday shopping season.

"The timing is far enough away from any major holiday, so it's unlikely to have a meaningful impact on the overall holiday sales unless there is a catastrophe of Hurricane Katrina proportions," said Joel Bines, managing director of AlixPartners' retail practice, referring to the storm that devastated New Orleans in 2005.

Still, Target, Sears (NASDAQ:SHLD), Starbucks (NASDAQ:SBUX), Walmart (NYSE:WMT), Home Depot (NYSE:HD) and other closed hundreds of stores Monday as the hurricane hit.

"Every day lost for a lot of these retailers, if they're nice-to-have items, they're just sales you're just not going to get back," said Evan Gold, a senior vice president at Planalytics, which advises retailers on business weather intelligence.

Gold estimated that most major U.S. chains have at least 10 percent of their stores in Sandy's path.

Spending on generators and storm clean up is also likely to cut into budgets people have for holiday items, he said.

LOGISTICS MATTER

Irene, and other hurricanes, also taught retailers how logistics related to their employees and stores.

Sears spokesman Chris Brathwaite said that from Hurricane Irene and, more recently, Hurricane Isaac, the retailer is better able to track its workers and determine if they have been affected by the storm and needs support.

The retailer also has a better communication system in place for notification if a store is going to close.

Other retailers learned which stores could serve many customers.

"We looked very closely at store sales trends from Irene and which stores would be most essential for us to keep open to serve communities with multiple locations," said Eric Harkreader, a spokesman for drugstore chain operator Rite Aid (NYSE:RAD)

"Also like Irene, we have generators positioned strategically around the storm's path in the hopes we'll be able to move in quickly and get the most essential stores back up and running quickly should they lose power," he said.

Of course, if the Internet - or the mobile device - keeps working, a big storm could benefit some retailers.

"Online ordering may be up. It is a good day to order holiday gifts if the kids aren't driving you crazy," said Al Sambar, retail strategist at consulting firm, Kurt Salmon.