At 8 a.m. last Wednesday, as New Orleans filled with water, Wal-Mart Chief Executive H. Lee Scott Jr. called an emergency meeting of his...
At 8 a.m. last Wednesday, as New Orleans filled with water, Wal-Mart Chief Executive H. Lee Scott Jr. called an emergency meeting of his top lieutenants and warned them he did not want a “measured response” to the hurricane.
“I want us to respond in a way appropriate to our size and the impact we can have,” he said, according to an executive at that meeting. At the time, Wal-Mart had pledged $2 million to the relief efforts.
“Should it be $10 million?” Scott asked.
Over the next few days, Wal-Mart’s response to Katrina — an unrivaled $20 million in cash donations, about 100 truckloads of free merchandise, food for 100,000 meals and the promise of a job for every one of its displaced workers — has turned the chain into an unexpected lifeline for much of the Southeast and earned it near-universal praise at a time when the company is struggling to burnish its image.
While state and federal officials have come under harsh criticism for their handling of the storm’s aftermath, Wal-Mart is being held up as a model for logistical efficiency and nimble disaster planning, which have allowed it to quickly deliver staples such as water, fuel and toilet paper to thousands of evacuees.
In Brookhaven, Miss., for example, where Wal-Mart has a distribution center, the company had 45 trucks full of goods loaded and ready for delivery before Katrina made landfall.
Employees: At its height, Hurricane Katrina displaced more than 34,000 Wal-Mart employees.
Closings: 17 Wal-Mart facilities remained closed yesterday; 89 were damaged.
Goods: Wal-Mart sent more than 1,900 trailer loads of emergency supplies either for sale or for donation at shelters.
Donations:$15 million to the Bush-Clinton Katrina Fund, $1 million each to Salvation Army and American Red Cross. $3 million more in customer donations was given to relief agencies, and the company contributed $3 million in merchandise.
Source: The Associated Press
To keep operating near capacity, Wal-Mart secured a special line at a nearby gas station to ensure its employees could get fuel to make it to work.
Wal-Mart has much to gain though its conspicuous largesse; it has hundreds of stores in Gulf Coast states and an image problem across the country. But even those who have criticized it in the past are impressed.
“Wal-Mart has raised the ante for every company in the country,” said Adam Hanft, chief executive of Hanft Unlimited, a New York branding and marketing firm. “This is going to change the face of corporate giving.”
Wal-Mart, in turn, has been showered with praise. Scott, its folksy CEO and chief defender against critics, has appeared on “Larry King Live” to discuss the chain’s response to the storm and was singled out by former Presidents George H.W. Bush and Bill Clinton during a joint news conference Monday in Houston.
Clinton, who is leading a hurricane relief fund-raising effort with Bush, said he hoped the plan to allow relocating employees to take jobs at Wal-Marts across the country “will give some guidance to our members of Congress.”
The praise comes at a time when Wal-Mart faces lawsuits over allegations of wage-and-hour-law violations and gender discrimination.
But the chain’s huge scale is suddenly an advantage in providing disaster relief. The same sophisticated supply chain that has turned the company into a widely feared competitor is now viewed as exactly what the waterlogged Gulf Coast needs.
Burt Flickinger III, managing director for Strategic Resource Group in New York, noted Scott was groomed as a trucking manager and used his expertise to make sure the company was ready for the crisis.
“Unlike local, state and the federal government, which didn’t react until days after the hurricane hit, Wal-Mart was at work around the clock before Katrina even hit land to have the stores fully stocked with full pallet positions of water, flashlights, batteries, canned soup, canned meat,” Flickinger said.
“Wal-Mart served the city far better than any private or public institution,” he said.
Flickinger praised Home Depot, Lowe’s and Walgreens, but said Wal-Mart’s quick aid reflects the chain’s nature. Kurt Barnard, president of Barnard’s Retail Forecasting in Upper Montclair, N.J., also said the response provides a telling reflection of the company.
Wal-Mart spokeswoman Mona Williams said the company does not want to pat itself on the back.
“The folks in these affected areas are our customers and associates,” Williams said. “They’ve always counted on us to do the right thing for them. Wal-Mart is uniquely suited to respond in a big way.”
Gerald Celente, director of Rhinebeck, N.Y.-based Trends Research Institute, which publishes a journal on economic trends, said Wal-Mart could shake the effect of recent negative impacts to its image from union attacks, lawsuits alleging bias against women and other court actions.
“Wal-Mart stepped to the plate,” Celente said. “They didn’t have to do that.”
“We try to refrain from making value judgments — what the motive is. But the fact is that [Wal-Mart was] there with trailer trucks being turned away. Amazing, isn’t it?”
Chris Kofinis, a spokesman for the union-backed group Wake-up Wal-Mart, praised Wal-Mart for its storm response. But he said the crisis that followed the storm illustrated the “economic divide in this country that we are fighting as a group to address.”
“Our hope is that what comes from this is that Wal-Mart will take seriously our concerns and millions of people who want to see Wal-Mart do the right thing every day,” Kofinis said.
The company is rushing to set up mini-Wal-Marts in storm-ravaged areas, handing out clothing, diapers, baby wipes, toothbrushes and food. With police escorts, it delivered two truckloads of ice and water into New Orleans. It is shipping 150 Internet-ready computers to shelters caring for evacuees.
During a tearful interview on “Meet the Press” on Sunday, Aaron Broussard, president of Jefferson Parish outside New Orleans, told host Tim Russert that if “the American government would have responded like Wal-Mart has responded, we wouldn’t be in this crisis.”
Not everything has gone perfectly for Wal-Mart. Several of its New Orleans stores were looted, and 126 of its stores in the region have been closed at some point.
“We did not try to stop the looting or take merchandise out” of the stores, spokeswoman Williams said in an e-mail.
Yesterday, Wal-Mart said only 17 of its stores and one call center remain closed, a minor portion of its 3,800 outlets. Despite reiterating that Katrina could hurt September sales, Wal-Mart shares climbed $1.14 yesterday to $45.69
Comments from analysts Burt Flickinger III, Kurt Barnard and Gerald Celente, and Wal-Mart’s stock price, were provided by The Associated Press.