Wal-Mart Makes Disaster Relief a Central Part of Its Operations

When Wal-Mart executives first learned of a storm about to strike the Gulf Coast in late August,

they planned to spend $2-million for relief efforts. But as Hurricane Katrina intensified rapidly, gaining incredible force along the way, so did the company’s response.

“As everyone became aware of how large, and what a dramatic impact it had, it became clear that this wasn’t a normal disaster,” says Brad Fisher, director of corporate giving for the Wal-Mart Foundation, in Bentonville, Ark. “We had quite a large response the year before to the hurricanes in Florida, but this was on the scale of something we hadn’t seen before.”

The company, which gave more than $236.1-million in cash to charity in 2005, has donated more than $18-million to support Katrina relief and recovery efforts; recipients have included the American Red Cross, the Bush-Clinton Katrina Fund, the Salvation Army, and the Texas Disaster Relief Fund.

Through its Associate Disaster Relief Fund, the company also provided another $14.5-million in cash assistance to more than 20,000 of its employees, whom it calls “associates.” Through the fund, workers affected by the storm could immediately receive $250 in goods from any Wal-Mart store in the country. Employees whose primary residence was damaged by the hurricane could also receive up to $1,000 to help with immediate needs.

Trucks Ready to Roll

In addition to cash, Wal-Mart donated 100 truckloads of merchandise, such as water, ice, batteries, blankets, and diapers, valued at upward of $3-million.

The company, which earned pretax profits of $17.4-billion in 2005, attributes its quick response to the operations it relies on daily to run its 3,900 stores in the United States.

“Every day we send truckloads of merchandise to every store across the country. The only difference during Katrina was, instead of sending them to a Wal-Mart store or Sam’s Club, we were sending them to the Astrodome, or a parking lot on the corner of a cross street,” Mr. Fisher says. “So really it wasn’t changing what we do normally on a daily basis in terms of logistics, it was just complicated by the scale of the disaster.”

However, some critics of the company say that more was at work: They say the company was motivated to make a big push on Katrina aid in part to burnish its image, which has been tarnished by controversies over how it treats its workers and its impact on local economies.

As the storm unfolded, Lee Scott Jr., Wal-Mart’s chief executive officer, led twice-daily conference calls focused exclusively on the hurricane to ensure that the company stayed up-to-date on the status of stores and communities affected by the storm.

Participants included regional vice presidents who reported what they saw firsthand and discussed with community leaders, Wal-Mart executives, and staff members from the company’s foundation and emergency-operations center.

“The primary purpose of those calls was to raise specific issues and then task people with addressing those issues,” says Mr. Fisher. “The expectation was that if an issue was discussed on the eight o’clock call in the morning, then when everyone got back on the five o’clock call that night, someone reported back on how we addressed and overcame that challenge.”

One of the company’s first moves was to make a $1-million cash donation to a charity it has supported in the past, the Salvation Army. The charity says the timing and size of that gift helped make other companies and individuals realize that relief groups were going to need a lot of money to carry out one of the biggest disaster-relief responses in history.

“Nobody knew the size of the catastrophe we were about to embark on,” says Melissa Temme, a spokeswoman at the Salvation Army, in Alexandria, Va.

But it wasn’t only Wal-Mart’s cash that impressed Ms. Temme, she says. She received a call from Wal-Mart at the end of the week the storm hit, after she’d been on the phone at all hours with her colleagues, trying to prop up the charity’s Web site while it was being deluged with online donations and people searching for information about survivors.

Wal-Mart had noticed that the Web site had broken down, and the company had a suggestion: How about we pay IBM to remedy this situation? It was part of the company’s generosity that did not get a lot of attention in the press, Ms. Temme says.

“It was one of those moments where you feel the ray of sunshine come through the clouds and beam just on you. It was one of those moments of peace,” she says. “They really came in and scooped us out of a hole.”

Ultimately, Salvation Army raised $40-million on its Web site, which was running at full strength within a couple of days of the intervention by Wal-Mart and IBM. Altogether, Wal-Mart and the Walton Foundation, owned by the family that owns Wal-Mart, gave the Salvation Army as much as $8-million in cash and products, Ms. Temme says.

The company itself took a hit from Hurricane Katrina, with 126 stores in the Gulf Coast region closing due to storm damage and only some reopening in the past year.

Early this month, in Waveland, Miss., the company reopened a store that had been so damaged by Katrina it had been operating out of a tent for months.

To mark the opening, Wal-Mart gave out the last of the $8.5-million in hurricane-relief donations made by customers shopping at its stores. It awarded $50,000 to the Hancock County Chamber of Commerce, in nearby Bay St. Louis, to help rebuild small businesses in the region.

“Wal-Mart was here before the storm, during the storm, and is still here,” says Tish Williams, the chamber’s executive director, who notes that the company gave away products to residents when Waveland’s other grocery stores closed as a result of Katrina.

She praises the help of Wal-Mart and other donors, but says recovery is going to be a long haul for the community: “It’s not over. It’s going to take another decade before this effort is complete.”

A ‘Convenient Storyline’

Before Hurricane Katrina hit, Wal-Mart bore the weight of heavy criticism, leveled in recent years by labor organizations, environmentalists, and others who favored improved business practices at the giant retailer.

Internally, Wal-Mart was working on its image before Katrina. A 2004 study commissioned by the company found that 54 percent of respondents to a national survey said Wal-Mart was “too aggressive,” 38 percent said it was “too powerful,” and 24 percent said it was “ruthless.” A later memo on employee benefits, prepared for a fall 2005 meeting of company executives and reported on in The New York Times, said “only 22 percent of Americans find it very believable that Wal-Mart provides health insurance to 900,000 people.”

Nu Wexler, spokesman for the watchdog group Wal-Mart Watch, in Washington, which provided the 2004 study to The Chronicle, said that the company’s post- Katrina giving coincided with other changes that had already begun in an attempt to improve its public profile.

The notion that Katrina was a turning point for the company, he said, is “a convenient storyline for many, but there were other pressures that brought about this change.”

However, Mr. Wexler, whose group is a project of the Service Employees International Union, the Sierra Club, and others, does not want to discount the significant contributions Wal-Mart made in the aftermath of Hurricane Katrina. “Wal-Mart stepped up to the plate and set an example for American business,” he says.

Melissa O’Brien, a spokeswoman for the company, dismisses critics who say the company responded generously to Katrina largely for public-relations reasons. “Certainly people saw that we did just what everyone else and what other businesses tried to do,” Ms. O’Brien says.

Emergency Responders

Today, Wal-Mart is working on ways to make sure future disasters are less deadly. It is continuing its efforts to coordinate with emergency responders to prepare for hurricane seasons, and providing support to local charities that are working on rebuilding efforts in the Gulf Coast.

Wal-Mart sees helping its stores and its communities as one and the same.

“Our stores serve individual, local communities. When disasters happen in those communities, they affect our stores and our associates,” says Mr. Fisher. “So clearly we have an interest in supporting those communities when disaster strikes.”

He adds, “We look at getting our store operations up as a service to the community, because we’re able to get our associates back to work, which brings folks back into the community and drives the economy, and provides a little bit of a sense of normalcy, as much as that’s possible.”

Mr. Fisher said Hurricane Katrina provided an opportunity for Wal-Mart to use those attributes sometimes held against it, such as its power and scale, for the benefit of individual communities. Amid such alternating criticisms and praise, the company’s call to action has been made clear from the top down, he says:

“How can we strive to be, every single day, the company that we were during Katrina?”