National retailers are beginning to bounce back from the damage wrought by Hurricane Harvey and the largest mall in Texas has reopened after five days, but experts agree that it will be weeks or months before the Gulf Coast returns to normal. Consumers will have a much harder time drying out after catastrophic flooding compared to corporations, and while the storm may ultimately be a boon for the building and auto industries, shoppers are likely to have less cash in their pockets.
Hurricane Harvey’s initial impact on retail due to lost sales was estimated to be about $1 billion by Planalytics, while the storm’s negative impact to the economy has been pegged at $160 billion by AccuWeather. Considered one of the worst weather events in U.S. history, the category 4 storm dumped as much as 59 inches of rain on Houston and its environs and has claimed at least 38 lives so far.
“Harvey has essentially shut down retail spending for the Southeast Texas region, an economy that makes up roughly 3 percent of the nation’s output and income,” said Chris G. Christopher Jr., executive director of U.S. economics at IHS Markit. “The lost wages of non-salaried workers will total an estimated $25 billion to $35 billion annualized in the final week of August alone, and totals will rise as people remain unable to work.”
Christopher expects Hurricane Harvey to slow consumer spending in the third quarter, with consumer spending growth of 2.7 percent to 2.8 percent. The original projection had been for around 3 percent spending growth. He expects some of the lost spending will be made up in the fourth quarter, which is likely to bump up real consumer spending growth by a few tenths of a percentage point. The estimate prior to Harvey was 2.6 percent for the fourth quarter.
“Whether it’s Superstorm Sandy or even 9/11, the American consumer is incredibly resilient, and virtually always underestimated by economists,” said Craig R. Johnson, president of Customer Growth Partners. “Whether it’s groceries, tech or apparel, there’s very little that can come between the American consumer and his or her favorite stores.
“A year or so from now, we may find that Harvey, after this week’s tragic and heartbreaking disaster, planted the seeds for a multiyear economic boom, creating thousands of jobs, an increase in household earnings, and higher, not lower, retail sales,” Johnson added. “This is what we’ve seen from past disasters, and our analysis suggests that the same pattern will become evident with Harvey.”
Home Depot’s 20 area stores and Lowe’s’ 15 were all up and running Thursday, and seven of Costco’s eight units reopened, with only the Humble, Tex., store shuttered for a few more days. Target Corp. on Wednesday said it had reopened the majority of the 30 affected stores in the Houston area.
The Galleria in Houston, the fifth-biggest mall in the country, reopened Thursday, and was operating on a regular schedule after being shuttered for five days.
Donations to aid victims continue to pour in, meanwhile.
Wal-Mart Stores Inc. and the Wal-Mart Foundation on Thursday committed up to $20 million to support relief efforts in the Gulf region of Texas and Louisiana. The pledge includes $10 million to support American Red Cross shelters and $2 million in support of the Hurricane Harvey Relief Fund at the Greater Houston Community Foundation established by Houston Mayor Sylvester Turner.
An additional cash and product donation of $10 million was pledged to support the Salvation Army, Feeding America, Convoy of Hope, Team Rubicon and Greater Houston Community Foundation, among others. The commitment is an increase from Wal-Mart’s previously announced $1 million of in-kind donations for immediate relief.
The world’s largest retailer operates nearly 600 Wal-Mart stores, Supercenters, Neighborhood Markets and Sam’s Clubs in Texas and employs more than 169,000 sales associates in the state. On Thursday, about 45 out of the 95 units in the impacted region reopened.
Wal-Mart, which is known for its distribution and logistics prowess, has shipped more than 1,060 truckloads to the impacted areas, including 930-plus truckloads of water, and is sending truckloads of food, water, board games, TVs, clothing and daily essentials to the George R. Brown Convention Center sheltering operation in Houston.
Thomas Chubb 3rd, chairman, president and chief executive officer of Oxford Industries, on Thursday said in a letter to employees, “Hurricane Harvey has wreaked havoc on millions of Americans, including many of our fellow employees and their families. Many of you have indicated a desire to help.” The company will match contributions to the American Red Cross of up to $25,000. Oxford’s Tommy Bahama has stores in Highland Village and the Galleria in Houston; Woodlands, Tex., and outlet stores in Katy and Texas City, Tex.
The Dallas Market Center on Thursday revealed DMC Cares, an assistance effort for its neighbors and customers impacted by Hurricane Harvey. The goal is to raise $1 million in support, including financial and product donations.
A large-scale clothing drive next week will gather clothing from showrooms and manufacturers for distribution to the stricken area. Operation ReStore, a program to help affected retailers and reps in the region, will provide special travel packages to help them attend trade events at Dallas Market Center.
The National Baseball Association and the National Basketball Players Association committed to donating $1 million to the ongoing Hurricane Harvey relief efforts in Houston and the surrounding area, while the Houston Rockets Fanatics said it will donate 100 percent of net profits of the sale of its Fanatics-branded red “Houston Strong” T-shirt to the Hurricane Harvey Relief Fund, $24 at store.nba.com.
Arizona Family Florist, a local retailer in Phoenix, partnered with a family-owned live flower farm in California to offer 10 stems of California sunflowers in exchange for a donation of items from a much-need list of essentials, which will be given to the Salvation Army chapter in Phoenix for distribution to Harvey victims.