Post-disaster predictions

The fallout from the season's natural disasters will continue to play out. Executive Perspective, a strategic business information service being developed as a joint project by ACNielsen, Progressive Grocer, and other companies under the VNU umbrella, makes some predictions of what's likely to transpire in the coming months and years:

•New Orleans will recover and rebuild. The rebuilding of New Orleans will spur the local economy, bring in new residents, and create new opportunities.

•There will be a population shift not unlike the Dust Bowl migration during the Great Depression. Evacuees from New Orleans and other Gulf Coast cities have relocated, at least temporarily, in Baton Rouge, La. (500,000 evacuees), Dallas (25,000), Houston (25,000), San Antonio (25,000) and Memphis, Tenn. (10,000). Retail business should boom in those markets that have absorbed so many people.

•Baton Rouge, with a population of 728,000, could almost double in size. There are currently 219 food, drug, club, and mass retailers, with sales totaling $1.8 billion, in the city. This will potentially increase retail sales in Baton Rouge by 25 percent to 30 percent. The leading retailers that stand to benefit include Dollar General, Family Dollar, Dollar Tree, and Wal-Mart.

•Many manufacturers might benefit from an expected robust jump in construction activity when rebuilding begins in New Orleans and across the Gulf Coast. Building materials suppliers are already increasing inventory levels as construction begins. Attendant job production and consumer goods consumption should follow.

•Gas prices will stabilize (expect $3 per gallon or less to become the norm) as long as there isn't another supply disruption.

•Consumer spending will be adversely affected for this holiday season, but don't count out the resiliency of the American consumer. Consumers spent through a recession in 2001, the Sept. 11, 2001 terrorist attacks, unprecedented accounting scandals, the war in Iraq, historic levels of energy prices, and persistent uncertainty!

For information about the VNU Executive Perspective and to find out how you can receive ongoing access to monthly and weekly executive-level reports on the consumer packaged goods industry, please contact James Russo, director and chief market strategist, at (516) 429-8086 or james.russo@ vnuinc.com.