It could be something as routine as a power failure or as catastrophic as a terrorist attack, but whenever business continuity is threatened, retailers must be prepared to respond pro-actively and decisively. That takes planning, of course, and as a result of man-made
and natural events of the new millennium, retailers have become more sophisticated in their preparations.

“Not only are businesses more pro-active to weather-related crises,” says Roberta Witty, research vice president for Stanford, Conn.-based IT research and advisory company Gartner, but also “to any type of event that could impact their day-to-day operations and the welfare of the communities in which their stores operate.”

Gone, she says, are the days when retailers thought of business continuity and crisis management as primarily being the responsibility of the IT department. Today, it is typical for retailers and other businesses to engage “teams of key corporate executives who help coordinate a pro-active response across all their key business processes, from procurement through community and public relations,” Witty says. “It’s also seen as necessary to protect their brand images along with the security and safety of their customers, associates and facilities.”

It is no coincidence, she says, that the retailers most acclaimed for their crisis management planning skills and solutions have developed a broad, corporate-wide approach to emergency planning.

The business continuity plan in place at Home Depot, for example, relies on a company-wide initiative focused on key functional business areas: IT, asset protection, store operations, supply chain, merchandising, HR, procurement and public relations, as well as the Home Depot Foundation (which manages charitable giving) and its government solutions department.

As a crisis of significant magnitude emerges, Home Depot sets up a command center, utilizing space set aside for such eventualities at its Atlanta headquarters.

“As a company, we take a very holistic approach functionally,” says Chris Canoles, senior director of environmental health and safety for Home Depot.

Stakeholders in each business area convene to discuss the situation as it develops, and “we use a third-party disaster and emergency management consulting firm and its weather forecasting service to track a storm, its intensity and the approximate landfall areas,” Canoles says.

Home Depot maps the stores it believes are in harm’s way, “and then there is a whole series of conference calls and action items that are followed to ensure that our stores are adequately prepared in the days and hours leading up to the event — and just as important, that they are prepared to open successfully and restore business to our customers as quickly as is practical,” he says.

Home Depot uses what loss prevention vice president Mike Lamb describes as a “network of communications” to tie its various teams together to best provide for each store’s safety. “Some people might argue that we’re at our best in the aftermath of a natural disaster,” Lamb says. “That may be because we are among the earliest respondents to a natural disaster, and we had a lot of practice at that in hurricane seasons 2004 and 2005.”

Home Depot’s philosophy: to be the last store to close and the first store to open “without putting our associates or customers at risk,” Lamb says. Many small to mid-size retailers have also created business continuity plans that cover all the key functional areas of their business.

Julie Davis, a spokeswoman for Lebanon, Tenn.-based Cracker Barrel Old Country Store, says that as hurricanes approach, a cross-functional team of key executives gathers to put crisis management plans into action. Afterward, that same team meets to analyze “what we did well and to determine where we need to do better next time — how to make sure that everything that needs to be done is done and that it all works,” she says.

The Cracker Barrel team is composed of representatives from operations/facility planning, finance, strategic sourcing (procurement and logistics), human resources, corporate affairs/government relations and legal. It focuses on three priorities, Davis says: “people, facilities and our products.”

Joe Hardman, Cracker Barrel’s senior director of loss prevention, says that employing a third-party weather service to aid advance planning for weather-related threats “is useful for a number of things, including travel arrangements, logistics and local preparations. People across the business functions who need to know about severe weather conditions are informed in a timely fashion.”

Once emergency notification services have been activated, retailers and other responders quickly transition into incident management.

Activating a command center
After receiving notification that an emergency is developing, it takes about two hours for Lamb and Canoles to convene the respective teams and activate the full Home Depot command center, which consists of four rooms. The command center for operations is considered the nerve center; the other rooms are dedicated to HR, IT and merchandising/supply.

As a crisis develops, Home Depot’s computer systems automatically send warnings to the stores and district managers that might be impacted. The e-mail also contains “action items,” steps that need to be taken to safeguard those stores.

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