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Stores Struggle in Wake of Hurricane Ike

Power outages and widespread damage affect recovery.

As authorities tried to restore power to more than 1.7 million customers, retailers across southeast Texas struggled with the widespread damage caused by Hurricane Ike and a dusk-to-dawn curfew in Houston.

This story first appeared in the September 16, 2008 issue of WWD.  Subscribe Today.

A few major chains, including Macy’s, Target, Sears and J.C. Penney, were able to open some stores, and key shopping centers, such as the Galleria and Memorial City Mall, reported that a majority of units had reopened.

Seven of Macy’s 17 stores in greater Houston were doing business. Target, which shut 40 stores, had relaunched 33 by Monday morning, with two more close to opening. Fourteen of Sears’ 24 units were closed. Penney’s said eight of 26 Houston-area stores escaped damage. Among the remaining 18, three were set to reopen and the others were still without power.

Insured losses from the hurricane could range from $8 billion to $18 billion, according to EQECAT Inc., an extreme-risk modeling firm.

More than 30 deaths have been reported in nine states as the storm pushed into the Midwest with torrential rains and flooding.

Macy’s in downtown Houston was open as well as both full-line units at the Galleria and stores in First Colony Mall; Memorial City Mall; West Oaks Mall, and Willowbrook Mall. In addition to the 10 units still closed around Houston, a store about 90 miles away in coastal Beaumont, Tex., was also shut.

“Our associates who are able [to travel] want to come in,” said Ed Smith, Macy’s regional vice president. “When a good part of the city is without power, after a while, a family starts getting cabin fever and they want to go someplace…what better place than a mall?”

In the aftermath of a disaster, consumers shop for necessities, noted Scott Krugman, a spokesman for the National Retail Federation. “Later, not immediately, we do see pent-up demand that ends up culminating in therapeutic shopping,” he said. “In some cases, it takes about a month.”

Target stores suffered varying degrees of damage. “I’m sure there will be some financial loss, but in the larger scheme of things, 40 is just a fraction of our 1,600 stores around the country,” said spokeswoman Amy Reilly.

Sixty Gap, Old Navy and Banana Republic stores, as well as outlets, were shut in southeast Texas and Louisiana. Thirty had reopened by Monday.

As of noon Monday, Wal-Mart and Sam’s Club had reopened 137 of the 240 company facilities closed or affected by Ike, the company said. A total of 62 stores, clubs and distribution center facilities were closed in Texas.

At Houston’s Galleria, 300 of 375 retail and food tenants were open, said Nicole Davis, marketing director.

Among the luxury tenants that remained closed Monday were Bottega Veneta, Chanel, Jimmy Choo, Cartier, Lalique, Fendi, Giorgio Armani, Ralph Lauren, De Beers, Tiffany, Gucci and Christian Dior.

“We have a lot of people here to charge their cell phones and laptops and things like that,” Davis said.

Nordstrom and both full-line Macy’s were open, and anchors Saks Fifth Avenue and Neiman Marcus were expected to open Tuesday.

Neiman’s “had minimal merchandise damage, no structural damage,” said Ginger Reeder, vice president of Neiman Marcus Group. “We will be open limited hours tomorrow, 10 to 6, with limited staff.”

Sherry Burton, marketing director at Memorial City Mall, said that about 70 percent of the stores were open, with Wi-Fi-accessible areas being the most popular.

More than 75 of 120 stores were open at Houston Premium Outlets, as well as 175 of 200 units at Katy Mills in suburban Katy, Tex., said Ashley Pearce, spokeswoman for Simon Property Group.

David Kayle, senior vice president of the Retail Connection consulting and brokerage, said some stores in the area were opening without power on a cash-only basis.

Boyce Pryor, manager of Tina’s fashion and home decor boutique in Galveston, the city that suffered the worst devastation, said, “We have tons of customers who have no home to go to. It is bad.”

In Atlanta, fears of gas shortages because of Ike fueled panic buying over the weekend, causing some stations to run out of gas.