Home Improvement Retailers Capitalize on Hurricane Katrina Destruction

Rebuilding efforts in the Gulf Coast region have become a bonanza for home improvement retailers, with Home Depot Inc. and Lowe's Cos. selling billions of dollars' worth of lumber, sheetrock, and other supplies. The catastrophe has created a huge business opportunity, prompting the companies to increase their staffs in the region and consider opening more stores.

As the region's residents and contractors scramble to rebuild their homes, Home Depot and Lowe's are working around the clock to keep up with the demand. With thousands of trucks packed with supplies and hundreds of employees on the ground, the retailers are doing their best to provide essential materials to those in need. Analysts estimate the rebuilding effort could generate up to $4 billion in sales for retailers, as customers seek to repair and rebuild their homes.

Key Takeaways:

• Home Depot operates about 60 stores in the afflicted region, while Lowe's has about 45.
• The retailers plan to increase their staffs in the region, adding distribution centers and new stores to support the rebuilding effort.
• Analysts estimate the rebuilding effort could generate up to $4 billion in sales for retailers.
• Home Depot has already set up six temporary sites stocked with lumber and other supplies in the affected areas.
• Lowe's has created new selling areas adjacent to its stores in the region, stocked with additional lumber and related products.
• The retailers are incurring higher expenses to increase their Gulf Coast presence, but these costs should be offset long-term by sales that will grow out of customer loyalty.
• The public confidence and trust in Home Depot and Lowe's is at an all-time high, providing a "halo effect" for the companies.

Statistics:

• Home Depot has dispatched over 4,000 trucks packed with supplies like generators, tarps, and plywood to the affected region.
• Lowe's has dispatched almost 2,000 employees to help with the rebuilding effort.
• There are approximately 50,000 to 60,000 homes that were severely damaged or destroyed in the Gulf Coast region.
• The rebuilding effort is expected to require an estimated $4 billion in materials and supplies.
• Home Depot operates over 60 stores in the Gulf Coast region, while Lowe's operates about 45.

Sources:

• "Katrina's devastation creates huge business opportunity for home-improvement retailers" by Anne D'Innocenzio and Adam Goldman, The Associated Press (Oct 10, 2005)
• Kurt Salmon Associates, a consulting firm (no specific date)
• Strategic Resource Group, a consulting firm (no specific date)
• Burt Flickinger III, managing director for Strategic Resource Group, as cited in "Katrina's devastation creates huge business opportunity for home-improvement retailers" by Anne D'Innocenzio and Adam Goldman, The Associated Press (Oct 10, 2005)