Harvey Blasts Brands: Could Cost More Than $1b In Sales

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The economic impact of Harvey, the Category 4 hurricane expected to drop more than 50 inches of rain on Houston, Texas, will be substantial, according to a new report. Lost revenue to area restaurants and retailers alone will total around $1 billion, said Planalytics, which provides weather analytics for businesses.

Sixteen years ago, Tropical Storm Allison flooded Houston with 28 inches of rain; Planalytics' estimate of the economic impact from that storm was $5 billion.

While restaurants such as PF Chang's and Chili's, and stores such as Dillard's and Stage Stores—which have a large percentage of locations in the region—are the most affected, independents could also feel the impact. Evan Gold, exec-VP of global services at Planalytics, says that the storm will affect discretionary purchases over the next week or so as consumers hunker down and refrain from spending on Labor Day or back-to-school. Houston's surrounding population controls roughly 4% of the spending power in the country, he adds.

"[Consumers] will wind up having to spend on need-based items to get their lives back in order," Gold notes. "Right now, the focus is on life and property."

Local automobile dealerships contending with floods are also in trouble, Automotive News reported. The National Automobile Dealers Association Foundation estimates between 30,000 and 35,000 dealership employees in Houston and the surrounding area could be affected.

Many marketers with area locations are using social media to get in touch with consumers about in-stock products or closed locations, or just to show their support. Stage Stores, an apparel chain, tweeted on Saturday, "We hold Texas deep in our hearts during this difficult time. #CommunityCounts #HurricaneHarvey." Gold notes that stores are executing on supply-chain and marketing strategies previously put in place for catastrophic events.
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Home improvement brands, including Home Depot and Lowe's, likely saw increased traffic last week as shoppers prepped for the storm. Both brands have donated to relief efforts, as have companies including Amazon, Starbucks, Wells Fargo and Walmart. PepsiCo and the PepsiCo Foundation, which employs some 10,000 in Texas, will give $1 million to the American Red Cross, it says, while Anheuser-Busch sent emergency drinking water to Texas and Louisiana on Monday.

The larger fallout to brands could come in the months ahead, as businesses gear up for the holiday shopping season. The Houston area is home to more than 20% of U.S. oil refineries, which ship to regions including the Mid-Atlantic, Gulf Coast and Southeast. Gold says that those areas will likely see a spike in gas prices, which could further impact the discretionary spending of consumers on events like the holidays.

By Adrianne Pasquarelli
August 28, 2017
Source: adage.com