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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 truck loads 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 en courage 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 a 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 employee s 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. A Kenner, La., sales associate used a forklift to knock open aware house door to get water for a local retirement home. In Wavel and, 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 drugs.
During the San Diego wildfires last year, two Home Depot associates turned the parking lot of a store under construction into a make shift animal shelter for evacuated families. They coordinated food, water and veterinary care for 35 horses, 10 dogs, and assorted guinea pigs, hamsters and snakes.
Individuals who are willing to take charge—never mind the risks—explain only part of the success outlined in Horwitz’s study, which was funded by the Mercatus Center, a policy think tank at George Mason University in Arlington, Va. There search also found that big boxes have become incredibly adept at staging materials before, During and after natural disasters.
Wal-Mart has an emergency management department comprised of four divisions that deal with preparedness, long-range planning, emergency operations, and mitigation and recovery. The Bentonville, Ark., team responds to all hazards, including floods, ice storm, blizzards and man-made disasters. When the Minneapolis bridge collapsed, Wal-Mart was there with bottles of water, sunscreen and power bars. Wal-Mart employees also brought supplies to the World Trade Center collapse in New York on Sept. 11, 2001.
“We have different levels of activation, depending on the situation,” said Bryan Koon, the company’s senior operations manager for emergency management. Koon pulls team members from merchandising, facilities maintenance, legal, finance, logistics and corporate giving. Meetings are sometimes held by videoconferencing.
Wal-Mart also has its own meteorologist on staff and a proprietary storm tracking system that overlays its store locations. “We need access to real time weather data so we can prepare our facilities and employees and know where the safe areas are to put down equipment and supplies,” Koon said.
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 employee sin to 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.
During the Florida hurricanes of 2004, Home Depot hired Kuehne & Nagel, a global logistics net work, to manage an Orlando-based distribution center to support relief efforts. Both Home Depot and Lowe’s were able to resupply their stores immediately after Hurricane Charley hit southern Florida in 2004. Lowe’s delivered 51 truckloads of batteries, 87 truck loads of plywood and other supplies within the first 36 hours.
Several days before Hurricane Katrina made its landfall on August 25, 2005, Home Depot had activated its “war room” at its Atlanta head quarters, negotiated donations and logistics with vendors and staged trucks at the perimeter of the hurricane “strike zone.”
Initially, Home Depot sent more than 800 truck loads 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 firs t 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 s tocks 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 asks. “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.
Horwitz would like to see the role of the private sector during disaster response officially recognized by various government agencies. He gives various examples of how protocols and bureaucracy stood in the way of companies who were trying to bring in supplies and personnel to impacted areas. Horwitz would also like to see Good Samaritan laws extended to cover the private sector firms engaged in disaster relief.
Companies like Home Depot and Lowe’s are already coordinating their relief efforts with other non-profit agencies. Lowe’s works closely with the Red Cross, and Home Depot has partnered with the Salvation Army in several relief efforts, two examples being hurricanes in the Southeast and tornadoes in Texas and the Great Lakes area.
Retailers have also worked with government agencies—including FEMA—on disaster prep a redness 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.”