Hurricane Dorian reportedly is expected to wipe away up to $1.5 billion in consumer spending.
Foot traffic at apparel stores is expected to fall 25%, while visits to outlet centers will decline 32%. Restaurant traffic is expected to decrease 14%, CNBC reported, citing data analytics firm Planalytics.
Home centers, grocery chains and convenience stores are going to see surges as consumers stock up on emergency necessities, CNBC said.
“Home centers are going to be on the front end of that surge of sales and groceries as well. But when you start talking about department stores, specialty apparel, and basically non-need items, that business goes away,” said Paul Walsh, director of consumer weather strategy at IBM. “That business moves to the other channels, so there’s a big disparity in terms of who gets the business.”
Evan Gold, executive vice president at Planalytics, said companies with a large presence in the southeast are particularly vulnerable, such as BJ’s Wholesale, Dillard’s, Disney, and supermarket chain Publix.
Gold also noted that there are a large number of ports in the Carolinas, which retailers rely on to receive goods, CNBC said.
“August and early September is a time when a lot of the holiday goods start getting shipped in, and those ports are very busy,” he said. “The storm is so large that I’m sure there will be some ripple effect. I’m not sure to the average consumer that they’re going to significantly notice that goods may or may not be on the shelves come Christmas time but I’m sure there’s disruption happening now.”
However, Walsh said that despite any sales declines, that spending is usually made up during the recovery phase.
“That can take months to years depending on the scale of the disruption, and that ends up becoming a stimulus. When you take a very wide angle view of the overall impact, generally the stimulus smooths out the overall impact,” he said.
Dorian could cause insurance industry losses of up to $25 billion, according to analysts at UBS.
UBS analysts updated their model to reflect a wider potential industry insured loss range of $5 billion to $40 billion and raised their base case to $25 billion from $15 billion, with solvency capital at risk, Reuters reported.
The analysts estimate about $70 billion of natural catastrophe losses for 2019 and added this could erode excess capital and raise prices.
Insurers faced record bills from hurricanes, earthquakes and wildfires of over $135 billion in 2017 and got some relief in 2018.
Meanwhile, hurricane survivors on Wednesday picked through the wreckage of homes ripped open by fierce winds, struggled to fuel generators and queued for food after one of the most powerful Caribbean storms on record devastated parts of the Bahamas.
The most damaging storm to strike the island nation, Dorian killed at least seven people, but the scope of the destruction and a humanitarian crisis was still coming into focus as aerial video of the Abaco Islands in the northern Bahamas showed wide devastation, Reuters said.
In the United States, South Carolina was preparing for a record storm surge and major flooding when Dorian hits the coast on Thursday or Friday.
Dozens of people in the Bahamas took to Facebook to search for missing loved ones, and aid agencies estimated that tens of thousands of people out of the Bahamas population of 400,000 would need food and other support.
“We are in the midst of one of the greatest national crises in our country’s history,” Bahamas Prime Minister Hubert Minnis told a news conference. “We can expect more deaths to be recorded. This is just preliminary information.”
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