Hurricane Harvey, the category four storm that made landfall on Friday and is considered the strongest to hit Texas in decades, continues to wreak havoc on the Houston area, where businesses remain shuttered and roads impassable due to flooding. The weather event is expected to have a $1 billion economic impact in lost sales over the duration of an extended period. Planalytics estimated stores in Houston will be closed another five to seven days, and quite possibly longer.
Evan Gold, executive vice president of global services at Planalytics, pointed out that Houston accounts for 4 percent of the U.S. population and 4 percent of the country’s gross domestic product.
“Restaurants and traditional apparel retail will take a hit,” he said. “Anything that’s not need-based is going to take a hit. Some of that business might come back, but by then, there will be margins to deal with.”
The storm will reverberate beyond Houston. Refineries in Texas account for about a quarter of U.S. gas production, supplying the Southeast and Northeast. “Gas futures were up this morning,” Gold said. “The refineries could be down for a week or two, which could cause gas prices to go up in most of the country. People will have less money in their pockets.”
Rockport was the hardest hit, with Houston and Corpus Christi, the location of the eye of the storm, seeing major damage.
Overnight Saturday, Harvey was downgraded to category three — and made a second landfall along the northeastern shore of Copano Bay — before being downgraded all the way to category one as it weakened. But even as a category one storm, winds were still around 90 miles an hour.
Wal-Mart Stores Inc. on Monday said 92 stores in Texas remain closed, including Sam’s Clubs, Supercenters, Neighborhood Markets and distribution centers. “Due to Hurricane Harvey’s impact on the Gulf Coast, stores and clubs are closed for the safety of our customers and associates,” the company said. Three units are in the process of reopening.
Retailers with a high percentage of locations in Texas include Stage Stores, Dillard’s, Stein Mart and Ross Stores.
A Sears Holdings spokesman said, “Our first priority is the safety of our associates, members and customers who work and reside in the region impacted by Hurricane Harvey. Leading up to landfall, our stores and facilities followed the necessary hurricane precautions. As of Monday morning, we have temporarily closed 35 locations — Sears stores, Sears Auto Centers, Kmart stores and other facilities — in the region primarily due to flooded roads and thoroughfares that make access restricted. We will continue to actively monitor the region.”
“The Galleria is closed today due to inclement weather,” a Simon Property Group spokeswoman said. “We’re monitoring the situation and will continue to evaluate conditions.”
Paula Rosenblum, a managing partner at retail research firm RSR, said the impact from Harvey will be huge. “Sales will obviously be down, since [retailers] are going to lose at least a week, if they’re lucky. If stores have any physical damage, there will be prolonged closures. As soon as stores can reopen, expect an explosion of sales in grocery and home improvement stores. As soon as the waters recede and airports reopen, expect a huge influx of online sales. Back-to-school was supposed to be today, and that’s not going to happen…but I don’t know how much shopping was done before the storm.”