NEW ORLEANS -- Twelve weeks after the most destructive natural disaster in U.S. history, grocery retailers have come to realize that property damage and product loss are not their only concerns.
"Staffing our stores has been one of our most difficult issues since the hurricane," said Glen Dickson, vice president of operations for Sav-A-Center, owned and operated by A&P, Montvale, N.J. All 28 Sav-A-Center locations in the greater New Orleans and Mississippi Gulf Coast areas were affected by the storm, with seven still unopened. The retailer has hired more than 300 people since September, and still has an undetermined number to go, as employees and customers alike are still uncertain of where to call home.
"Even if there were 50,000 jobs available, the problem we have is housing," said Ed Pratt, spokesman for the Louisiana Department of Labor.
Some displaced residents simply do not see an immediate need to return to work, he said, as they are taking the time to rebuild their lives, and may not return to the workforce until they feel ready. Pratt also noted that 339,200 applications for storm-related unemployment insurance and disaster unemployment assistance have been filed for the months of September and October, and over $300 million has been paid thus far in unemployment benefits, compared with $20 million in September 2004.
Of the more than 500,000 evacuees from affected areas flooding surrounding regions, about 40% to 50% have indicated an unwillingness to return, according to a survey by www.wikipedia.org.
Many retailers are taking a wait-and-see approach for their stores in the hardest-hit areas, as the future there is uncertain. For the retailers trying to entice employees back, though, many have been forced to offer incentives that wouldn't be offered under usual circumstances.
Dickson said Sav-A-Center was offering "competitive wages" and signing bonuses for employees who stay at least 120 days. The chain is also working with the Federal Emergency Management Agency to acquire temporary trailers for displaced workers. "Our No. 1 concern is getting our displaced workforce back in the workplace and helping them rebuild their lives," he said.
Winn-Dixie has also "taken some pretty aggressive steps in trying to attract workers, such as increasing employee referral programs, taking out full-page newspaper ads and increasing starting salaries," said Terry Derreberry, a spokeswoman for the Jacksonville, Fla.-based chain. Of 125 stores in the Gulf region affected by the hurricane, 14 were still closed this month. But even with so many stores closed, she said sales overall are just about the same as they were before the storm, and shopping patterns are back to normal. Donald Rouse, president of Rouse Enterprises, Thibodaux, La., a 15-store operator, identified hiring workers as the No.1 concern for getting his business up and running again. Rouse said overall sales are up in the "double digits," but a lot of work still needs to be done.
Fourteen of his 15 stores are operating, although two at reduced hours because of a lack of employees, and a new store scheduled to open in New Orleans in December -- which was set back a month in construction -- has only about one third of the needed employees at this time. The company has been running full-page newspaper ads for help, and has increased its employee referral bonus program, offering up to $2,000 for three hired referrals. Rouse Enterprises is "being competitive and will remain competitive with pay," Rouse said.
Retail giant Wal-Mart Stores is using its size to its advantage, and doesn't see the worker shortage as a major problem. About 2,000 displaced employees from the seven stores not yet open are working at stores other than their home stores, said Sharon Weber, a company spokeswoman, who added that no Wal-Mart employee is out of a job because of Katrina. Some stores are operating at reduced hours because of lack of employees, and Wal-Mart has been busing employees from other area stores to temporarily staff the stores with limited help in two- or three-week shifts. Dormitories have been set up in previously occupied stores to house visiting workers. The retailer has not increased starting salary or benefits, saying that it is "already very competitive."
Like other retailers, Wal-Mart's volume has increased tremendously in many of the surrounding areas. "It's like Christmas every day," Weber said.
The evacuation of people from the region has created an estimated 15% population increase in outlying areas such as Baton Rouge, La., and Jackson, Miss., according to David Livingston, an independent supermarket consultant with about a dozen clients in the Gulf area. "Sales volumes of stores [in the outlying areas] are doing very well," he said, "and they now have to make an adjustment [in reaction to] new development in those areas."
Sales are about level for Associated Grocers of Baton Rouge, a cooperative wholesaler serving about 300 independent grocers in five Southern states, according to Jay Campbell, president and chief executive officer. The stores are "selling more merchandise to fewer customers," he said. "For us there has been a demand shift. We had to realign where the demand is coming from."
According to Campbell, however, retailers in the devastated areas where residents have yet to return are facing a catch-22. The dilemma: Should employees return first, or the customers?
John Curtis Sr., owner of Big Star of Many, a four-store operator in Many, La., considers himself one of the lucky retailers. Located in west-central Louisiana, his stores were some of the few who actually benefited from the evacuees. In three of his four stores, sales more than doubled for four weeks after the storm, but are starting to level off.
Frank's SuperValu, a five-store operator in Larose, La., has seen a steady 25% increase in sales since the storm, and David LeBoeuf, president and chief executive officer, is looking for additional employees -- not to replace anyone who has left, but to help handle the increased business. He is running newspaper ads for new employees, "but so is everybody else," he said, although with less than 10 new positions open, his situation isn't critical.
Although many retailers have noted they are trying to get back to normal, observers don't know if that will ever happen.
"Normal has been redefined, and I don't know what that is anymore," said Campbell of AG-Baton Rouge. "[Many of] our stores are open and operating, and that is the important thing."