Hurricane Harvey to Result in $1 Billion in Lost Sales at Retail
The nation’s fourth largest city has been paralyzed for a fourth day following hurricane Harvey. The category 4 storm it the Gulf Coast on Friday, resulting in 20 inches of rain in the first 24 hours.
Early estimates say Harvey will result in at least $15 billion in losses for the area, based on the effects of hurricane Charley in 2004, the last storm of that strength to make landfall in the U.S., according to business weather intelligence company Planalytics. But it’s too soon to know for sure as the area is still facing a deluge. Another two feet may fall before it’s all over.
The storm effects have been compounded by the city’s complex bayou, channel and creek system. The Army Corps of Engineers has begun releasing water from area reservoirs that are at capacity, spilling more water into the city creating additional flood conditions in some areas.
Businesses and retailers have been closed, with the only real activity in the city generated by rescue workers. In terms of the retail/consumer sector, the weather event could total $1 billion in lost sales—losses that will not be recouped. The effects of these losses will be felt over the coming months as consumers continue to focus on basic needs first.
The hardest hit retailers are likely to be those directly in the storm’s path, such as Dillard’s, Stage Stores, 99 Cent Only Stores and Hibbett Sports. The only retailers that could see an uptick would be home improvement chains like Home Depot and Lowe’s, though they too will lose sales while the city is unpassable.
Reverberations from the storm will be felt nationwide. More than 6,400 flights have been canceled due to the storm with more cancelations expected. Also, more than 20 percent of U.S. refineries are in the Gulf Coast region, and many have shut down during the storm. With lower production, higher prices at the pump are anticipated. From there, as gas prices eat into discretionary spending, retailers can expect fewer sales.
Federal Emergency Management Agency chief Brock Long has called the deadly storm a “landmark” disaster. Though just five deaths have been attributed to Harvey at this point, local officials have already indicated that many more fatalities are expected to be counted once the storm passes and the full scale of the damage has been assessed.