Retailers still 'committed' to Gulf states
But they say the post-hurricane 'population shifts' will determine where they open new stores.
By Parija Bhatnagar, staff writer

NEW YORK ( - As the festive spirit of Mardi Gras descends on the Big Easy, some of the nation's top retail chains are adding to the cheer by saying that they're still committed to opening more stores in areas of the Gulf coast that were walloped by last year's twin hurricanes Katrina and Rita.

At a "2006 Gulf South Idea Exchange" conference organized by the International Council of Shopping Centers (ICSC) in New Orleans this week, senior executives from four of retailing's top players -- discounter Wal-Mart (Research), drugstore chain Walgreens (Research), and department store chains JC Penney (Research) and Dillard's (Research) -- participated in a panel discussion about their business outlook for the region.

James Maurin, former chairman of ICSC and currently chairman of Louisiana-based retail real estate firm Stirling Properties, who moderated the session said all four companies were "pretty positive" and planned to reopen most of their stores that were shuttered because of the storms.

"My sense is that only a few stores may not open at all because they were so badly damaged," Maurin said.

At the same time, these retailers also indicated that future store openings would likely be determined by the post-hurricane "demographic shifts" that occurred in places like New Orleans and the East Baton Rouge parish in Louisiana.

"For example, Orleans parish had about 470,000 people before the flooding. It's probably down to 150,000 now," Maurin said. "But more people moved into the East Baton Rouge parish, making it about 25 percent bigger today than it was prior to the hurricane. Most of these displaced people who moved into Baton Rouge represent a permanent population shift and these are the areas where retailers say they're interested in developing new stores."

Moreover, Maurin said he expected the $8 billion "Go Zone" tax incentive approved by Congress late last year to spur more retail activity in the area.

"These tax incentives are associated with rebuilding, relocating and creating jobs in the communities," he said. "The sooner these companies start to rebuild, the faster they can take advantage of these tax breaks."

Michael Polvin, spokesman with Walgreens, said the company originally had 74 stores in New Orleans and the Mississippi Gulf Coast prior to the storms.

"Right now, fewer than 20 are still closed and all of these stores are in New Orleans," he said. Polvin confirmed that the retailer was monitoring the population shift "closely," saying that it could have a "big impact where we have future stores."

"In the past, Louisiana, Alabama and Mississippi haven't been our top expansion markets although we are heavily concentrated in Texas and the Florida Panhandle," he said. Going forward, he said Walgreens was interested in having more stores in the Gulf coast region.

"This is a hurricane-prone area but at the same time, we're getting lots of experience dealing with hurricanes," Polvin said. "From a business point of view, hurricanes can be good or bad. Certainly they cause plenty of disruption but we also get an uptick in business from people preparing for them."

He declined to comment on the company's interest in the federal tax incentives.

Wal-Mart spokeswoman Sharon Weber called the Gulf Coast an "important market that represents a growth opportunity" for the No. 1 discount chain.

"We are committed to opening more Wal-Mart supercenters and neighborhood markets but we are still gathering information and evaluating the shifts in population," she said.

JC Penney spokesman Tim Lyons said the company wants people to know that it still views the region as a "viable" place to do business.

Penney currently has 20 stores in Alabama, 18 in Mississippi, 14 in Louisiana and 80 stores in Texas.

"We're monitoring where the population moves to how the repairs and reconstruction work progresses," he said, adding that the company has not as yet developed any detailed expansion plans for the region.


Click here to read more about retailers who aren't spooked by Wal-Mart. Top of page

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