HEB store in Austin, TX area, Feb. 16, 2021 – Photo: Getty Images/PorqueNoStudios
Do grocers need to get better at planning for weather-related disasters?
Texas is currently experiencing an environmental catastrophe some are comparing in its severity to Hurricane Katrina. Unprecedented winter weather has caused a long list of infrastructural problems on multiple fronts that are putting citizens in harm’s way, not least of which is the breakdown of grocery supply chains.
Regional grocer H-E-B described the supply chains as having experienced a severe disruption in an NPR report late last week. Shoppers, after waiting in long lines outside attempting to secure supplies, have been sharing images of entirely empty grocery shelves on social media at that chain and many others. Grocers are reported having stock-outs on staples like meat, eggs and potatoes.
To make matters worse, food has been spoiling in refrigerators due to lengthy power outages, putting customers in even more dire need of food. By Friday night, power had been restored to the region but water systems remained crippled.
On Thursday, H-E-B announced the temporary closure of some stores and reduced hours of operation due to power outages and water shortages, according to Supermarket News.
A growing list of retailers outside of grocery have also been forced to close throughout the region.
For instance, Dallas-based Neiman Marcus and J.C. Penney had to close locations throughout the state, according to Yahoo!Life. It is estimated that the catastrophe will inflict somewhere in the neighborhood of $50 billion of economic damage on the Southern U.S.
Even as the weather warms there are additional causes for alarm. The New York Times reports that experts fear increased temperatures over the weekend could lead to a thaw that could result in exploding pipes, and that there might not be enough plumbers available to mitigate the damage.
This is not the first time in recent memory that a natural disaster in the U.S. has led to a compromise of the integrity of vital food supply chains.
In April of 2020, the novel coronavirus pandemic began impacting food supply chains from various angles. Hoarding grew commonplace, creating artificial scarcity on staples. Meatpacking plants closed down due to rampant COVID-19 infection among workers and farmers dumped food normally sold through restaurants that were not able to operate.
- Several Days Into The Texas Deep Freeze, Food Is Scarce – NPR
- Live Updates: Power Comes Back in Texas, but Water Systems Are Crippled – The New York Times
- H-E-B scales back operations in winter storm-ravaged Texas – Supermarket News
- Neiman Marcus and JCPenney Are Among the Texas Retailers Forced to Close Stores as Winter Weather Deals $50B Economic Blow to Southern US – Yahoo!Life
- Is America’s food supply chain nearing its breaking point? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Should grocers be expected to take the lead in preparedness for weather-related disasters and other disruptions by purchasing generators and taking other steps to keep stores open so customers are not left without groceries? What steps could grocers take in the future to prevent customers from being put in potentially dangerous positions due to the breakdown of supply chains?
Poll
BrainTrust
Gene Detroyer
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
Ricardo Belmar
Retail Transformation Thought Leader, Advisor, & Strategist
In exceptional weather and during exceptional events things become disrupted, and that includes in the grocery industry. It is possible to put in safeguards, such as generators, but those things come with costs attached which potentially means higher prices for consumers. It’s a trade off as to whether such investments are worth it for the relatively few times disruption hits. That said, where there is a weather forecast, retailers should be able to prepare by stocking up on products they know will be in demand. That’s just part of ongoing operations.
No. Grocers, like all retailers, need to manage their business. Disaster preparedness is not part of this. Grocers will decide which steps are critical for their business model and which steps are not smart. At the end of the day, a grocer is really no different than any other retailer. Both need to stay in business for their target market’s needs, but not at the cost of going out of business.
While they did experience shortages, it was a severe situation and the industry did much better than utilities and government entities.
That being said, they would be well-served to improve forecasting, supply chain and store operations to address future demand spikes which seem to be coming with alarming frequency.
Retailers or any company should not plan for unprecedented events. It is extremely costly and the probability of an “unprecedented” event is quite low. The matching of investment and the chance of the event happening don’t match in any way and, in the end of course, it will be a cost to whoever the customer is.
When we lived in Rochester, NY, for the six years the kids went to school it snowed almost every day in the winter. Rare was it that they would lose a day of school. We moved to Connecticut and in the first year there, the schools were closed more days because of snow than the entire time in Rochester. That winter was extraordinary. Should our town in Connecticut have invested resources as Rochester did? Of course not.
Retailers should not take the lead, that is what we have governments for. Local, state and federal. We can blame part of the horrors of the Texas disaster on the weather, but, if their infrastructure was well invested, modern, and controlled, the horror would have been considerably less.
While I see what you’re saying about extraordinary events, this is the third time since 1999 (so about once every 10 years) that Texas has one of this extraordinary winter events. Climate change data suggests that weather occurrences such as this are more, not less, likely to happen going forward.
…therefore, the Texas state government should prepare. A business can not and should not prepare for extraordinary events that occur once every 10 years or even every five years. It is the ol’ 80/20 rule. That preparation will divert resources from today’s and tomorrow’s needs and future investment and innovation. Investment is finite. Do we really want to spend it on something that happens irregularly?
In Rochester, NY snow is far from an irregular occurrence. In Texas what do we prepare for? Cold weather? Snow? COVID-19? Hurricanes? Third-world infrastructure? Government has a responsibility. The Texas government failed miserably. Let’s not put the burden on retailers.
I don’t think anyone would seriously argue that the state government and the largely unregulated utilities in Texas need to do better. That doesn’t change the equation for retailers who if the above were true would still be reliant on parties other than themselves to protect against foreseeable events.
Are we agreeing or disagreeing or just having a discussion?
Both, I think. ;o)
Grocers have an opportunity (a business decision) to build brand loyalty, and a sense of community involvement, by improving preparedness for weather related disasters. When storms devastated the Florida Coast BJ’s was able to open the following day, ( five to seven days in advance of most other grocery stores) by having generators to run the clubs in all of its locations, pre-staged tankers to keep the generators running, pre-staged truck-loads of water and canned foods. The communities were grateful and loyal for a long time. To a limited and reasonable point grocers should invest in the community by trying to be as prepared as possible for weather events. However they need to take a realistic approach and focus on the basics and when possible coordinate with the local communities in advance. That said, we need to be careful that some over zealous legislature does not try to regulate the individual grocer’s decisions on how to invest as many can not afford the additional overhead.
Everybody gets the same weather reports, so it’s on the customer as much as it’s on the grocers to be ready for unusual weather, or life, events. The pandemic gave me a whole new perspective on “pantry planning.” I now have a one or two week cushion of most non-perishable food in the house. Between frozen and packaged goods, it’s not difficult to be prepared for events that will cause an interruption in the ability to get to the store. And even when you can get to the store, the rolling outages that occurred for many weeks and months during the pandemic finally suggested a new strategy for maintaining the household pantry. It’s not doomsday planning. It’s just recognizing that some simple planning can make the household a lot more prepared for unusual events. Turns out they are not as unusual as they used to be.
This is a first to market issue: those that figure out how to become more agile will win in the future and those that stay in big hairball mode (past focused) will lose. There’s an obvious sense that agile is now vastly superior to the ’90s Six Sigma indoctrination that occurred over the last 30 years with very tight supply lines and “just in time” shipments. Given what we’ve learned in the past year about the need to adjust on the dime, that all has to change (easier said than done), and the first to figure it out will win on a massive scale. Like Amazon did to retailers in the teens, remember that?
My answer is no wrapped in a yes. No, stores should not remain open – taking safer measures means keeping people off the streets in an ice storm, etc. Grocery stores and other essential retailers should have micro-fulfillment capabilities that are flexible and unimaginably close (think bike or scooter or even walking) to the end-consumer so that roads can remain clear, and people can stay home. The idea that people have to go TO the store vs. having the store go TO the people, especially in a crisis, is dated. There are modular, micro-fulfillment options on the market such as nanofulfillment.com and attabotics. Also, news footage of stores running out of essentials and/or food is absurd. Endless aisles in micro-fulfillment centers will also solve this.
Generators may keep the freezers and cases running but they won’t keep them full. Given the nature of the events in Texas the best supermarkets could do was to attempt to fill the stores as full as possible and then refill them as soon as possible.
With supply chains based on typical purchase patterns it might not have been possible to overload the stores. I’m not sure of the lead time they had in Texas — delivery trucks are generally are fully loaded and on tight schedules. I expect the lessons learned from this event will be applied should another disaster occur.
Having lived through the winter event (in Austin), I can definitely speak to both the challenges and the opportunities of last week. I don’t personally believe that grocers should “take the lead” in preventing or mitigating disasters – but they should have plans in place for such event and should respond appropriately. H-E-B won on the PR front by allowing shoppers to take home their items without paying when their power went down in their Leander store – something everyone in Central Texas will remember. After a futile week of shopping frustration, Amazon ultimately won my dollars as it was the first retailer to actually be able to provide my family with groceries. Meanwhile other grocers remained closed, canceled pickup times or filled their trash bins with spoiled products when they lost power. Even if nobody had the imagination to think that Texas would run out of energy, it was clear that some retailers were more prepared and reacted better than others and it benefited them last week and may have gained them some new loyal customers.
I agree with this 100%. Those who are Texas residents know the value of a corporate leadership like this in the community. This drives BRAND LOYALTY which is an opportunity that other retailers and grocers aren’t capitalizing on.
I believe it takes a coordinated effort of retailers, suppliers, city, state and federal governments to provide holistic support to affected communities. Retailers should have generators, emergency products supply, and nimble supply chain systems to react. Suppliers need to have nimble inventory and logistics organizations, processes and technology to focus on these disasters and government needs to prepare. Having your own power grid when 47 other states share to avoid disruption is not preparing to say the least.
Monday morning quarterbacking is easy, but I think we have to be realistic here. This weather event has never happened in living memory, similar to COVID-19 in terms of its rarity. It is possible to build systems and capabilities to withstand such rare occurrences, but it would push the cost beyond what is meaningful and affordable. A specific high-risk asset such as a nuclear powerplant is appropriate to be protected for such rarity or even worse, but for every day retailers, we have to be realistic.
That said, I am sure there are a number of lessons to be learned. Stocking up salt trucks, shovel supplies, and pipes that withstand frigid temperatures for an extended period of time are all relatively low tech and commonsense solutions.
Perfectly said, “It is possible to build systems and capabilities to withstand such rare occurrences, but it would push the cost beyond what is meaningful and affordable. “
I don’t believe your assertion that no such similar weather event has happened in living memory in Texas is correct, but don’t take my word for it. You can check out the National Weather Service, which breaks out “significant snow fall events” by regions within the state. Here’s the one for North Texas.
To Gene’s earlier point, he’s absolutely right that different places are better equipped than others to deal with unusual events such as a snowstorm in Texas. The reality, however, is that some places that have historically been able to deal with the rarity of such events are finding them increasing in frequency. The primary responsibility, in this case, lies entirely with the state’s elected officials and the power providers. That said, essential businesses that Texans depend on for their health need to be prepared.
I hated the poll question because it asks about all grocery stores. It needs to be broken down. For example, I live in Houston, Texas so my answer is that HEB does an outstanding job. If I lived in Florida, I would say Publix does an outstanding job. When it comes to the others, I would give most of them a C+, but that is more than I can give state and federal government.
Preparedness has its limits. Here in the Bay Area (and other parts of Northern California) where we have periodic blackouts for fire safety reasons, some of the more canny retailers have taken to renting portable generators for the events. That’s a reasonable expectation (the events are announced, hence predictable, and of limited size and duration). Expecting retailers to anticipate — and prepare for — for a statewide collapse of infrastructure is not. Sure, someone could have backup generators and days — weeks? — of fuel to power them, but that may not make sense financially for rare events.
I think that we need to start talking about how the government and grocers can work in tandem to ensure citizens have a consistent food supply during environmental disasters. All data points to the fact that what’s happening in Texas is just the tip of the iceberg and, if taxes go to anything, they should be being used to ensure we have a consistent, sustainable food source.
There is only so much a retailer can do on their own without the support of their extended “world” — suppliers, utilities, local governments, etc. Does it make sense for grocery retailers to have backup generators for extended power outages when they have significant inventory contained in cooler cases? Sure, especially if there is any historical data where power outages are known to have occurred. That implies there’s a bit of predictability to plan against.
Beyond that, there will be tremendous costs to “over prepare” for disaster-level occurrences and this is where retailers, and just about any business, is supposed to have the ability to rely on the government to provide the necessary controls around them — be it utilities, public works (say, snow removal?) and so on.
Is it reasonable for TX to have the same snow preparedness level that NY has? Probably not. But at this point in the climate game, we all know the rules are changing and the weather is getting more and more extreme, not less. Time to start planning for that and support businesses rather than hinder them.