Tumultuous events shaped the year 2005, and consumers and retailers alike took notice. While no retail chain can predict the future, Spartan Stores Inc., Grand Rapids, Mich., is stepping up its business-continuity plans to better prepare for unforeseen events.
Regardless of where a retailer operates, chances are they were affected by at least one of the crises that occurred in 2005. Many chains and their consumers struggled to overcome a devastating hurricane season; others felt the threats associated with the Avian flu. Unexpected power outages affected the United States’ Northeast, and America watched as terrorist bombings shook London.
For Spartan Stores however, it was the devastating events on Sept. 11, 2001, that prompted the company to renew its business-continuity planning efforts.
“These events remind us that crises can happen anytime,” said Tim Bartkowiak, director of loss prevention, Spartan Stores, a grocery wholesaler and retailer with more than $2 billion in annual sales. He spoke during the session, “Business Continuity Planning: Next Steps Beyond 101 Level.” The session was held at the FMI Convention, sponsored by the Food Marketing Institute, in May.
“That’s why we need the best plan in place that will help us mitigate risk,” he added.
Before Sept. 11, retailers (like most other organizations) had very manual, even paper-based disaster-recovery and business-continuity plans. “This included manually accounting for people at pre-assigned assembly points,” said Kevin Ashton, VP of marketing, Cambridge, Mass.-based ThingMagic, a company that specializes in RFID technologies.
Following the terrorist attacks in 2001, many retailers began re-evaluating their business-continuity strategies. Unfortunately, many retailer programs were put to the test (some unsuccessfully) during a severe hurricane season in 2005. As chains began to understand the depth of displacement and isolation of employees and shoppers the hurricanes caused, companies renewed their attention on internal and external communications strategies.
For example, “Some retailers now sport sophisticated solutions, including GPS [global positioning systems] and satellite telephones so they can stay in touch with employees during a potential crisis,” said Joe LaRocca, VP of loss prevention for the Washington D.C.-based National Retail Federation.
For Spartan Stores, upgrades to its communications strategies have become commonplace. “We have upgraded telecommunications equipment managed by our IT department, and we have tightened the IT systems that are secured in an offsite location,” explained Bartkowiak.
The company also disperses executives’ mobile access onto different networks. Similar to how companies don’t like executives to travel together on the same plane or in the same car, Spartan applies a similar rule with its telecommunications.
“We have a better chance of upholding communications by putting executives on different cell-phone carriers, including Alltel and Sprint,” he said. “We also want our employees to use and master text messaging. Our system is not perfect, but it is an ongoing process and our efforts continue to get better.”
The company also regularly updates all employee contact information, including home and cellular telephone numbers, he said.
While telecommunications are critical, this was only one step in the company’s business-continuity planning upgrade. Spartan Stores’ business-continuity program also includes strategic partnerships, including:
Collaborating with federal and public government agencies;
Scheduling regular meetings with local “first-response” teams who tour their facilities and learn what is expected of them during a crisis;
Working with supplier partners to improve product traceability. “We are sharing item-movement data with vendors to learn how fast we can get crucial information during a crisis,” he explained; and
Backing up all planning procedures, IT and communications systems in an offsite location.
“The best advice I can give is that if a company has a disaster-recovery and business-continuity plan sitting in books on a shelf, dust them off and make sure all of the procedures are still worthy,” he said. “Then add these points to strengthen the plan and stay prepared.”
Sears comps hurt by energy costs
HOFFMAN ESTATES, Ill. Sears Holdings today reported net income of $216 million, or $1.40 per diluted share, for the first quarter ended May 5, compared with net income of $180 million, or $1.14 per diluted share, for the first quarter ended April 29, 2006.
“In part, our domestic operating results reflect the impact of some of the same challenges being faced by our customers, such as rising energy costs and a slower housing market,” said Aylwin Lewis, Sears Holdings’ ceo and president. “However, as an organization, we need to overcome these factors by better controlling costs and developing innovative solutions that better meet our customers’ needs and allow us to generate a more reasonable level of profitability even in the face of such challenges.”
Domestic comparable-store sales declined 3.9% during the first quarter of fiscal 2007. Sears domestic comparable-store sales declined 3.4% for the quarter, while Kmart comparable-store sales declined 4.4%. We believe these declines reflect both increased competition and the impact of external factors such as rising energy costs, a slower housing market and poor weather conditions during the latter part of the first quarter of fiscal 2007. Kmart experienced lower transaction volumes across most merchandise categories, most notably within home goods, health and beauty products, and food and consumables. Similarly, Sears domestic recorded comparable-store sales declines across most merchandise categories and formats, with a notable decline in home appliance sales, which we believe reflects both a slower U.S. housing market and the impact of increased competition.
Big Lots 1Q net sales up 3.4%
COLUMBUS, Ohio Big Lots today reported first quarter fiscal 2007 income from continuing operations of $29 million, or 26 cents per diluted share, compared to income from continuing operations of $14.5 million, or 13 cents per diluted share, in the first quarter of fiscal 2006. Including the impact of discontinued operations, first quarter fiscal 2007 net income totaled $28.8 million, or 26 cents per diluted share, compared to $13.7 million, or 12 cents per diluted share, in the prior year.
Net sales for the first quarter ended May 5, increased 3.4% to $1.13 billion, compared to $1.1 billion for the same period in fiscal 2006. Comparable-store sales for stores open at least two years at the beginning of the fiscal year increased 4.9% for the quarter.
For the second quarter 2007, the company expects income from continuing operations of 7 cents to 10 cents per share versus income from continuing operations of 4 cents per share last year. Comparable-store sales are expected to increase 2% to 4%, compared to a 5.2% comparable-store sales increase recorded last year.
For fiscal 2007, the company expects income from continuing operations of $1.25 to $1.30 per share versus income from continuing operations of $1.01 per share last year.