Eye of the Storm
When it comes to dealing with natural and man-made disasters, the best plans for retailers are predetermined.
37.3 trillion gallons.
That is how much rainwater fell over the state of Texas in May, according to the National Weather Service—an all-time record. Spread out, it would be enough to cover the entire Lone Star State with eight inches of water. Of course the rain did not fall evenly. Some areas, including Houston, Austin and their surrounding suburbs were quickly inundated with several feet of water. Normally placid rivers crested more than 40 feet above flood stage, hundreds of houses were swept away off their foundations and dozens of people drowned.
Luckily, Safeway’s Randalls and Albertsons stores were not severely damaged and were quickly back up and running, although several experienced prolonged power outages.
“Our store on Brodie Lane in Austin experienced the most significant outage lasting 14 hours,” says Dawne Proffitt, community relations manager, for Randalls/Albertsons in Houston. “Power outage procedures were put into effect. Refrigerated trucks were sent to Brodie Lane to secure perishable products. Randalls Myer Park store on West Bellfort was surrounded by floodwaters and several employees had to take shelter in the store.
“Fortunately, we have our disaster plans in place and were able to quickly activate them to limit loss and serve our customers,” she adds.
“Randalls implemented our in-store Disaster Relief Campaign to benefit the American Red Cross Disaster Relief with media partners in Houston and Austin,” Proffitt says. “We’re collecting donations in our stores from customers and employees and matching up to $100,000. We coordinated receiving water and snacks donated by our vendor partners, and their delivery to the Red Cross field kitchen at First Baptist Church in San Marcos and supplied one of our trailers to the Houston Red Cross field kitchen at Braeburn Valley Baptist Church for two weeks for the refrigeration of perishables,” Proffitt says.
Not all supermarkets are so well prepared when it comes to dealing with disaster.
Take the case of the independent Sea Bright Supermarket located in Sea Bright, N.J., a narrow spit of land in northern Monmouth County between the Atlantic Ocean and Shrewsbury River. “Superstorm Sandy was a big, big disaster for us,” says Manny Amin, manager. “The storm went right through and everything ended up on the floor—all the meat, grocery, all the liquor. There was nothing we could save.”
Originally a Foodtown, the store has been the anchor of the tiny downtown for decades. Built to withstand the flooding that often hits Sea Bright, the sales floor is elevated a good five feet above street level and shoppers have to ascend a steep ramp to enter. Still, that was not enough protection against Sandy’s wrath. “We still had about five and a half feet of water inside the store,” Amin says. “It took us two to three months to take everything out. We had 10 to 15 people working to throw all the garbage away,” he says.
“We were closed for nine months and then reopened with everything new—all of my refrigerators, all the grocery aisles, the liquor aisles, everything we had to buy new,” Amin says.
Amin says the store has changed its insurance policy to provide better coverage against storm damage.
Every retailer needs to have plans in place to cope with various kinds of disasters, both natural and manmade, including hurricanes, tornadoes, floods, earthquakes, blackouts, civil unrest, workplace violence and the new threats of cyber theft and cyber terrorism, say industry observers.
“It is amazing how many people do not have a crisis plan in place,” says Cheryl Miller, CEO of At the Table Public Relations, a Tampa, Fla.-based agency that specializes in crisis communications. “A lot of people just wait until it happens and that is the worst time, especially if you are not prepared—and it really can ruin you.”
“It is not a matter of if something will happen, it is a matter of when something will happen,” says Greg Ferrara, vice president, public affairs at the National Grocers Association, based in Washington, D.C.
He should know. His family-owned Ferrara’s Super Market was a mainstay in New Orleans for 99 years. Then Hurricane Katrina struck and filled the store with 10 feet of water when the levee of a nearby drainage canal was breached. Almost everything was destroyed.
“Flood waters will do amazing things,” Ferrara says. “They’ll flip over 36 feet of freezer cases like it is nothing, but the aisle where we had all of our wine was left immaculate. Not a bottle fell off the shelf.”
It is important for retailers to think about the unthinkable, Ferrara says.
“You have to have a contingency plan written down, and quite frankly, you need to review it at least once a year,” he says. “You need to think in a world where what you have today is probably not going to work.”
That includes things like refrigeration, registers, websites, social media and payroll.
“The No. 1 thing that people don’t think about is how to contact employees and key vendors,” Ferrara says. “If the phone lines are down you should have the ability to put things on your website. The key is you want to get as normal as you can as quickly as you can, and you want to keep those key employees engaged with you.”
Ferrara had the foresight to grab a key computer and a box of payroll checks before Katrina inundated his store. “Because of Katrina, my employees were scattered all over the place, as far away as Atlanta and Arkansas. We found out many were going to our website, to the customer contact form, and sending out information that they were safe in a Holiday Inn somewhere, but could I please send them their paycheck because they needed funds,” he says.
Employing a software system can help retailers in times of crisis by helping with tasks like work order management and inspection schedules, say observers.
“If a hurricane or tornado is approaching we can identify a site or group of sites that might be impacted and our Verisae System would give maintenance crews and site operations crews a generated inspection checklist that says here are specific assets that need to be reviewed both pre- and post-natural disaster,” says Mike Parks, vice president, customer innovation at Verisae, based in Minneapolis.
Verisae software can also come in handy for catastrophic manmade situations, like if a customer accidentally drives a car through a store or if a customer sues because of negligence.
“Our software certainly helps in a reactive state because work order history is priceless,” Parks says. “The Verisae System records all work order history for any asset, site or location that has been done, including repairs that have been made and inspection notices, and ensures that we can protect our clients and retailers that due diligence was done. It helps with liability claims of neglect.”
Inward and outward
Supermarkets have to deal with two types of crisis—inward and outward, say At the Table officials.
“If it is an inward crisis—meaning something has happened to the store—then they have to realize how to represent their credibility and responsibility during that time,” says Bill Barlow, senior branding strategist at At the Table. “An outward crisis—anything from a crime, shooting, or natural disaster like an earthquake that devastates an area—the crisis planning has to take into consideration how the store will open, when they will open, what will be available and under what conditions.”
Supermarkets should seek out a public relations agency that specializes in crisis management and keep them on retainer, Barlow says. Look for one that has experience and client references for either building crisis plans or managing a real crisis situation, he suggests.
“Do-it-yourself crisis preparation doesn’t work when you don’t have the experience,” Barlow says. “Even if you have the experience, our advice has always been to take the advice of someone who does and who specializes in this type of thinking and planning.”
Miller says at the minimum, retailers have a cell phone list and hierarchy of who to call. It is also imperative to have someone to manage social media. “The social media thing just adds a whole different element to our world these days,” Miller says.
In a modern world where just about everything runs on electricity, an emergency generator is a necessity to getting stores back up and running after a crisis. Yet many types of generators are available, and retailers need to find the correct one for their particular store, say observers.
“We are really trying to push education out to grocery store owners,” says Amber Hegeman, commercial marketing manager at Generac, based in Waukesha, Wis. “We have partnered with Agility Recovery to promote our webinars and we are dealing on a more educational front for business owners so that they better understand the steps they need to take to protect their grocery stores.”
Retailers typically reach out to an authorized service deal or an electrician to help them select the appropriate generator for their store, says Jake Thomas, director of product management at Generac. “Depending on the size of the store, if they want to back up everything it can be an extremely large system, but if they only want to back up cash registers, some emergency lighting and coolers it could be a much smaller system,” he says.
Several types of generators are available, including units that run on natural gas, liquid propane (LP) and diesel. “If there is natural gas available at the site, that’s ideal because you basically will have an unlimited fuel source for an unlimited outage,” Thomas says, but cautions against installing them in earthquake prone regions.
“For applications in seismic-related areas, LP or diesel would probably be the best option because the one natural disaster where they do turn off natural gas is after an earthquake,” Thomas says.
For a company that wants to back up an entire average size store, a 150 KW generator, costing about $30,000, is ideal, Thomas says, adding that both permanently installed and portable versions are available. “In our mind, a permanently installed solution is the best solution because it is going to kick on in as little as 10 seconds,” Thomas says. “It is not just about spoilage of food and things like that, but a lot of business owners don’t understand the amount of money they can make by being the only guy in town that is still open.”
Diesel units are ideal for providing power to gas stations, Thomas says. A 48 KW to 50 KW unit is usually sufficient, and the ability to pump gas during an extended power outage can be crucial to building sales and customer loyalty.
One negative issue with generators is that flooding may disable them, which is why retailers in flood zones and hurricane-prone areas often put them on roofs or elevate them. “Generators are capable of being put on stands, and that is a very common practice in some Southern areas on the flood plain, and in some areas it is a requirement of the local codes,” Thomas says.
If a store is in a flood zone they may want to keep a supply of FloodSax on hand. A modern version of the traditional sandbag, FloodSax are made of super polymers and wood fiber, take up less storage space and are noticeably lighter when dry. They come packaged in a box of 20 that weighs a total of 34 pounds, but when deployed in water a FloodSax holds 45 pounds of water.
“You can make a wall out of FloodSax,” says Rod Redlin, president, Environmental Defense Products, the Watertown, S.D.-based agent and distributor for FloodSax in the Americas. “You can put them in the doorway to keep water from coming in, and also roll them up and put them in toilets and drains to keep them from backing up. It works on both ends—preparedness and cleanup,” he says.
An added benefit is that retailers can also sell FloodSax to consumers for home use, Redlin notes.
Assuring insurance plans
Carrying the right insurance policy is also key when dealing with a disaster aftermath.
“If you own a grocery store you have to identify what concerns you the most—is it your inventory, customers or the building itself? Then you have to select the insurance that will help make you financially secure,” says Sheri Wilson, senior vice president, national property claims director at Lockton Cos., a Kansas City, Mo.-based insurance broker. “For a grocery chain, the most important thing would likely be inventory, followed by equipment, including shelving, compressors, etc. You want a property policy that is going to cover that. You evaluate your exposure and then go to your insurance broker.”
Deductibles typically are priced depending on where a store is located. A store along the Mississippi might have a higher deductible for flood insurance than one located in Phoenix, for example, Wilson says. It is also important to read the fine print.
“The policy itself should really tell a story about the risk, so you have to read the entire content of the policy,” Wilson says.
It is best to contact a broker, rather than a specific insurance company, when shopping for a policy, Wilson says. “A broker helps you identify your exposures, how much insurance you would want to carry, and then accesses markets on your behalf and puts you with an appropriate insurance company. Certain companies like certain risks. There are insurance companies out there that like the grocery business, others may focus on heavy machinery,” she says.
Still others focus on the latest disaster to face the retail channel—security breaches and cyber theft. “If criminals capture payment card data, a cyber insurance policy would typically cover the company for the cost that it incurs to investigate the situation, to notify affected customers, to pay for public relations expenses that the company has to incur to respond to the incident, legal expenses, lawsuits, and even cover the costs to set up a toll-free call center for customers,” says William Boeck, senior vice president, insurance and claims counsel at Lockton Cos.
“These policies are not something you would look to the State Farms of the world to provide,” Boeck says. “They are available through P&C (property and casualty) insurers, and the government is not involved at all.”
According to Boeck, different policies providing different breadths of coverage are available. As the number of incidents of cyber theft increase, rates are on the rise. “Rates are going to depend more on how well prepared a company is,” he says. “Do they have appropriate safeguards in place? Are they prepared to respond to a breach if one happens? If an underwriter is satisfied that a company is prepared and has appropriate technical safeguards and information governance practices in place, their rate should be fairly good.”
Going with the Flow
With its tropical temperatures, balmy sea breezes, breathtaking sunsets, luaus, surfboarding and laid-back lifestyle, Hawaii may be seen as complete paradise, but when disaster strikes it takes on a form rarely, if ever, seen on the mainland—like the potential for having a supermarket swallowed up by a river of flowing red-hot lava.
That is what almost what happened to the Malama Market Pahoa supermarket in Pahoa on the Big Island. The 10,000-square-foot store had to be shut down on December 18, just before the peak Christmas shopping season because it was in the path of a slow-moving lava flow.
“We had a three-day sale on all merchandise in our store prior to closing,” says Sheryl Toda, senior director of marketing and corporate communications at Sullivan Family of Companies, the Honolulu-based operator of the store, as well as the Foodland chain. “Product that was ordered and in transit to our store was redirected to sister stores on the island.”
Company officials made the decision to close the store based on guidance provided by the Hawaii County Civil Defense. “We were in daily communication with the Hawaii County Civil Defense team who closely monitored the flow of lava in the area,” Toda says.
The County Civil Defense officials predicted the lava flow would hit the store on Christmas Eve. “It took three days to move all of the fixtures and equipment out of Malama Market Pahoa,” Toda says. “We moved all equipment, cases, shelves and fixtures into more than 20, 40-foot containers and placed them at various secured locations on the island,” she says.
With the store closed, Pahoa residents had to trek 10.4 miles to the nearest full-service supermarket, sister store Foodland Kea’au.
Luckily Madame Pele, the fire goddess, goddess of volcanoes smiled down on Malama Market, and the lava flow changed direction, sparing the supermarket and its neighboring gas station.
It also gave company officials an opportunity to conduct an extreme makeover. The store was reset and re-merchandised with a greater variety and new items, including expanded natural and gourmet offerings and specialty items, and a new selection of wine and spirits.
The store reopened on March 18.
“Customers were ecstatic when we reopened,” Toda says. “Our store was cleaned, refreshed and fully merchandised to look like a ‘brand new’ store. On opening day customers stood outside in line for hours waiting for us to open. They lined up around the building waiting to get in. Once inside, customers were excited to shop in their store again and to reconnect with friends and family in this community gathering place. The camaraderie and warmth displayed by customers was like a family reunion.”
But the danger still persists.
“Kilauea volcano is still active and lava continues to flow,” Toda says. “Therefore we cannot say that we are permanently out of harm’s way.”
Wellspring of Support
Water, water everywhere and not a drop to drink, was the unfortunate scenario that played out across large swaths of Texas in May when the Lone Star State was besieged with pounding rains of biblical proportions that caused some rivers to crest 43 feet above flood stage.
The deluges contaminated municipal water systems with sewage and pollutants, prompting Anheuser-Busch to swing into action. The St. Louis-based brewer converted a line at its Cartersville, Ga. brewery to canning water instead of beer, and donated approximately 2,000 cases (50,000 12-ounce cans) of water to Houston, Austin, Texas and neighboring Oklahoma City, Okla.
“Our Cartersville brewery packages and ships all emergency water donations on behalf of Anheuser-Busch,” says Pete Kraemer, vice president, supply. “Anheuser-Busch’s local distributors help identify those communities most in need of water and then Anheuser-Busch works with relief organizations such as the American Red Cross to make sure the water gets where it’s needed. We rely on local partners to determine the safest way to get water where it is needed,” Kraemer says.
On May 28, the Cartersville brewery produced thousands of cans of water in its semi-annual run of emergency water that is used for donations throughout the year in partnership with American Red Cross.
Anheuser-Busch’s role of helping in time of disaster runs deep, dating back to 1906 when founder Adolphus Busch made a donation to the American Red Cross for victims of the Great San Francisco Earthquake. Since 1988, the company has donated more than 73 million cans of emergency drinking water; 1.6 million during 2012-2013 alone.
“Today, in addition to providing emergency drinking water, Anheuser-Busch is a member of the Red Cross Annual Disaster Giving Program, which enables the Red Cross to respond immediately to the needs of individuals and families impacted by disaster anywhere in the U.S.,” Kraemer says. “Anheuser-Busch works hand in hand with local distributors to identify people most in need of drinking water, and then directly with the American Red Cross to deliver the water to people in communities, most recently in Oklahoma and Texas,” he says.
Help on Wheels
To help it cope with natural disasters, like earthquakes and fires, Stater Bros. Markets took a trailer truck and converted it into a 40-foot emergency command center, equipped with a communication system; a flat screen monitor; a conference area with tables, chairs and dry erase boards; a storage area with cabinets and an HVAC system, along with space to accommodate a computer system.
However, the 168-unit San Bernardino, Calif.-based chain retired the command center back in 2010. In June, it donated the mobile emergency command center to the San Bernardino County Sheriff’s Department, which is going to use it for special events and emergency situations.
“This donation from Stater Bros. greatly benefits the San Bernardino County Sheriff’s Department by providing the flexibility of having multiple emergency command center sites,” says Lieutenant Sam Fisk of the San Bernardino County Sheriff’s Department. “Having multiple sites, strategically placed for special events and emergency situations allows us to better meet the needs of both the San Bernardino County Sheriff’s Department and the community.”
According to Stater Bros. officials, when the mobile emergency command center was retired it was not replaced.