CHICAGO –May 8, 2006 – While last year’s hurricane season is still very fresh in the minds of Gulf Coast residents, who continue to be impacted by its devastation, the official start of the 2006 hurricane season on June 1 is just a few weeks away, and forecasters are predicting another highly active season. Hurricane Preparedness Week, which is sponsored by the National Hurricane Center to educate citizens about hurricane hazards and safety precautions, kicks off on May 21.
As individuals, manufacturers and retailers begin their preparation for another hurricane season, learning from last year’s horrific events can help drive more effective planning efforts. To that end, Information Resources, Inc. (IRI), the leading global provider of enterprise market solutions for the consumer packaged goods (CPG), retail and healthcare industries, releases insights from an extensive analysis of CPG product demand before and after the 2005 Gulf Coast hurricanes, which is summarized in a four-part Times & Trends series.
“As leaders in the CPG and retail industries, we must be aggressive about helping consumers not only react, but more importantly, prepare for nature’s disasters,” said IRI President and Chief Executive Officer Scott W. Klein. “We learned from Hurricane Katrina that market demand does follow a fairly predictable cycle. Let’s use this knowledge and start planning for the ‘unplanned,’ so that we can help consumers be ready for this year’s hurricane season.”
Consumer Preparation
The study shows that consumers in affected Gulf Coast markets stocked up on a number of “survival” products the week before Hurricane Katrina. Sales skyrocketed among protein-rich shelf-stable foods, such as canned meat, canned seafood and dried meat snacks, and beverages, including water, aseptic juices, and powdered milk. Alternative cooking sources, including charcoal and charcoal lighter fluid, and products required in power outages, such as batteries, flashlights and candles were also popular purchases.
These products are consistent with the American Red Cross guidelines for preparedness. There were several product categories included within the Red Cross guidelines, however, that actually experienced sales declines in the week before the hurricane, as consumers focused primarily on basic survival. These categories include first aid treatment and accessories, personal care products, such as deodorant, soap, shampoo, bleach, detergent, and baby care.
The study suggests that consumers take a broader view of product planning to include items required for basic comfort in addition to those required for basic survival and to plan for an extended period of displacement--weeks, rather than days–which unfortunately may be required.
Demand Planning
Fluctuations in consumer demand followed a four-to-five week cycle beginning one week before hurricane Katrina across most CPG categories impacted by the Gulf Coast hurricanes. As noted in the summary below, demand was impacted not only in the hurricane-affected regions, but also in surrounding regions, which hosted displaced families/individuals and also across the United States as caring consumers made product purchases for donation to hurricane victims.
Phase One (Week Before Event): Preparation
- Huge surge in demand for “survival” categories, including water, shelf-stable high-protein foods, flashlights
- Declining demand for food and beverages requiring refrigeration
- Impact concentrated in affected markets
Phase Two (One to Two Weeks Following Event): Replenishment
- Increased demand for a greater variety of shelf-stable foods and easy meal solutions
- Spike in demand for personal care necessities, healthcare, baby care and pet care products lost in the hurricane and/or in transit
- Impact felt in affected markets, surrounding regions (displaced victims) and across total United States (donations)
Phase Three (Three to Four Weeks Following Event): Adjustment
- Sales returned to normal or declined as the market adjusted after the highly concentrated period of replenishment
The study encourages CPG retailers and manufacturers within the most heavily impacted categories to leverage this learning in hurricane demand planning strategies and educational initiatives, including in-store informational brochures, signage, and classes as well as reminders included within advertisements to assist consumers in their preparation.
“This study highlights the need for agile supply chains, driven by real-time demand data,” added Klein. “It is imperative that CPG manufacturers and retailers are prepared to address huge short-term demand swings as well as rapid shifts in geographic demand as people are displaced.”
About the Report
Findings presented in Times & Trends special report, “Impact of Hurricane Katrina” are based upon an extensive analysis of store sales data from the IRI InfoScan® Reviews tracking service. The four-part report series was originally published in September/October 2005. “Report Four: One Month After” summarized full study findings. For an in-depth view of the reports, click on http://us.infores.com/page/news/times_and_trends.
About Information Resources, Inc.
Information Resources, Inc. (IRI) is the world’s leading provider of enterprise market information solutions and services, empowering its clients to grow their business profitably in a complex marketplace. Driving the transformation of the consumer packaged goods (CPG), retail, and healthcare industries, only IRI provides a unique combination of real-time market content, advanced analytics, enterprise performance management software, and professional services. The company’s portfolio of services, solutions, and technology enable leading retailers and their suppliers around the globe to see what they are missing, act faster with greater confidence and win at the shelf. Ninety-five percent of the FORTUNE Global 500 in CPG and retail leverage IRI to power their business. For more information, visit http://us.infores.com.