Big retailers bulk up for Gulf's rebuilding
The Associated Press
Ronald Hill was moving quickly on a recent morning at a Home Depot in Biloxi, Miss., loading a trailer with slabs of Sheetrock. He had a house to rebuild after Hurricane Katrina ripped through his neighborhood.
Hill, who has already spent $13,000, will spend another $47,000, buying "basically, everything but the studs and bricks."
Katrina's devastation has created a huge business opportunity for Home Depot and Lowe's. With both home-improvement retailers expected to sell billions of dollars in lumber, Sheetrock and other supplies to homes and businesses, they plan to increase their staffs in the region.
Home Depot, the nation's largest home-improvement merchant, is thinking about opening more stores.
"There is going to be a whole new network to support the rebuilding along the Gulf Coast," said Jim Neal, a strategist at consulting company Kurt Salmon Associates. He foresees the retailers adding new distribution centers and increasing their store count beyond what they currently operate in the area pummeled by both hurricanes Katrina and Rita.
Home Depot operates about 60 stores in the afflicted region, while Lowe's has about 45.
Already, Home Depot — which set up six temporary sites stocked with lumber and other supplies along the Gulf Coast — is searching for more locations in New Orleans; Port Arthur, Texas; and Lake Charles, La., said Executive Vice President Carl Liebert.
"This is a sustained effort," Liebert said.
Meanwhile, No. 2 Lowe's has created new selling areas adjacent to its stores in the region and stocked them with additional lumber and other related products.
"We need to build the best level of service possible," said Karen Cobb, a spokeswoman at Lowe's.
She declined to say if Lowe's would add more stores beyond the three it had already planned in Waveland, Miss.; South Metairie, La.; and Crowley, La., before Katrina hit Aug. 29. All three are expected to open next year.
$4 billion in sales
Analysts couldn't put a dollar estimate on the rebuilding, but Burt Flickinger III, managing director for New York-based Strategic Resource Group, estimated there's a $4 billion potential sales opportunity alone for all retailers in the region just for cleanup and minor repairs.
The big companies are incurring higher expenses to increase their Gulf Coast presence and to transport workers and merchandise to the area. But those costs should be offset long term by sales that will grow out of customer loyalty, analysts said.
"The public confidence and trust in Home Depot and Lowe's is at an all-time high, where public confidence in the government is at an all-time low," Flickinger said. Their efforts are providing a "halo effect," he said.
Over the past few years, Lowe's and Home Depot have refined the way they respond to natural disasters. After last year's four hurricanes in Florida, they further adjusted their emergency procedures.
Within 24 to 48 hours after hurricanes Katrina and Rita struck, the retailers were able to reopen most of their stores. As of yesterday, only two Home Depot stores remain closed — one in New Orleans, the other in Chalmette, La., a suburb. Lowe's one unit, in New Orleans, remains shuttered.
Home Depot credits its speedier response in part to the consolidation of its crisis-command center on one floor at its Atlanta headquarters. In the past, the staff, which includes teams from its logistics, human-resources and merchandising departments, was dispersed on different floors.
Since the days before Katrina, Home Depot has dispatched more than 4,000 trucks packed with supplies such as generators, tarps and plywood, and almost 2,000 employees to help out.
Meanwhile, Lowe's, based in Mooresville, N.C., turned to its hurricane war room in nearby Wilksboro, N.C., to coordinate the delivery of supplies before and after the hurricanes. Cobb noted the company has been able to better use its regional distribution centers to maximize the speed of deliveries.
At a Lowe's in Biloxi recently, people streamed in and out of the store, clutching everything from paint and toasters to chain saws. Flatbed trucks filled the parking lot.
Ed Harrington, an assistant store manager, said the store is getting 15 to 20 deliveries a day, and his employees are working six days a week to keep the shelves stocked.
"They're waiting at the door when we open and waiting when we close," he said.
Even with such efforts, keeping up with customers' demands is a challenge. The Lowe's and Home Depot stores in Biloxi are usually packed with customers, and merchandise sells out fast. The crowds are only expected to get bigger as insurance checks arrive.
"[The stores are] getting it in, but there are so many people coming in to get the materials," said Carl Christensen, a professional carpenter and painter, who was recently at the Home Depot in Biloxi.
He said getting the items he needs hasn't been easy at either retailer; he's looking for wood and other supplies to rebuild his 3,000-square-foot home in Saucier, north of Gulfport.
Christensen said he has about $20,000 in repairs to do on his house. He expects to do the work himself.
"The way I'm doing it, I can't afford to hire it out," he said. "I'm probably looking at two to four months."
Home Depot's philanthropy came under criticism in a recent published report that said the company gave a much smaller share of its profits in donations in 2004 than did some of its big business peers like Coca-Cola and Wal-Mart.
According to the article in The Atlanta Journal-Constitution, Home Depot's donations of $35.5 million were about half as much as Coca-Cola's, the retailer generated more than three times Coca-Cola's revenue.
Home Depot spokesman Jerry Shields said the article "was about last year, and we are working on this year." He said the retailer has already donated $5.5 million in cash and materials to the communities affected by Katrina and Rita. It also is matching up to $1 million in customer contributions.
Home Depot also has already donated 300,000 hours in volunteer work helping out the communities, Shields said.
Associated Press reporter Adam Goldman in Biloxi, Miss., contributed to this report.
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