Would Mobile Have Helped Retailers During Hurricane Irene's Power Outages?

As Hurricane/Tropical Storm Irene swept through the East Coast late last month, an interesting—albeit mundane—piece of technology proved to be an unintended retail differentiator: power generators. But the storm also raised questions about an unintended potential benefit of mobile payment and M-Commerce strategies, namely whether they could help retailers function—and function better than rivals—during power outages.

Although there are lots of factors at play here, the primary power benefit of mobile is its battery power supply and, to be quite cold about it, the fact that the customer's device is powered by the customer. The power benefit of M-Commerce is that its power supply is probably a long distance away, somewhere not impacted by whatever is causing a store's power outage.

One simple approach is for customers standing in the store to order and pay online using their phones, then select immediate in-store pickup. The customer displays the electronic receipt to the associate, and that load of plywood and plastic sheeting is ready to load.

That cuts out the need to run power-hungry in-store POS systems. It also works if the storm has taken out the store's network connection. It would require software adjustments, though, and lots of complicated reconciliation once the store's POS and inventory systems are back online. But if you can keep the store open when a storm has shut down everyone else in town, those behind the scene hoops will probably be paid for in sales and good publicity.

In most mobile implementations, the mobile devices retain no card data and immediately pass it along to a store router via Wi-Fi. In a dead-power situation, a contingency plan could have the phones retaining payment data and transmitting it for authentication once the power emergency passes, temporarily bypassing the server. "You could at least keep it limping along," said Ann Taylor CIO Michael Sajor, assuming the store is willing to deal with the risks associated with retaining the card data.

There are, of course, many reasons why these approaches may not help in a power outage. If the datacenter handling back-end operations is also impacted by an outage, mobile won't help. Plus, if the customers are impacted by the outage, they may choose to be ultra-conservative with their mobile battery power, preferring to save it for emergencies and not to make retail purchases. (Yes, consumers can be so selfish.)

But therein also lies a potential benefit. If a store is powered by a generator, why not flip this around? Offer consumers rows of power outlets for them to charge their phones with while they shop, all under the watchful eye of a security officer who would be taking IDs. (Think airport luggage pickup, but done in a secure manner.) "Plug in and charge while you shop." Not a bad banner for the front of the store during a power outage.

Sajor cited his own personal experience during Irene purchasing a power generator from Home Depot online, with plans to later pick it up in-store. He was impressed with two storm-related moves from Home Depot. First, the store quickly sold out of generators and store employees resisted the temptation to sell his already-paid-for unit, despite the fact that it was sitting in plain view of customers with his name clearly on it.

He wondered why people didn't claim to be him—his name was quite visible—and pick it up. Sajor had to produce extensive identification to pick it up, ultimately waiting for the store to call his wife at home and let her verify him, too.

The second impressive aspect of Home Depot's weather efforts was some IT magic. The chain rerouted all generators destined for non-hurricane areas and sent them to flood-ravaged communities. "The fact that Home Depot could dynamically influence stock in flight," he said, was surprising and impressive.

To be clear, this is not intended to suggest E-Commerce and M-Commerce as emergency options. Yes, those are wonderful options always. But in a community hit hard by a natural disaster, waiting for the UPS or FedEx delivery days from now is hardly the solution. This type of situation brings communities together. It's a time when they see their retailers as fellow boarded-up victims or as saviors to sell them what they truly need. (Note: I hope it doesn't need to be said that increasing prices during such a disaster is a remarkably bad idea.)The nature of mobile's power needs is such that very low-tech options could exist, depending on how widespread the power outage is. Do many associates live outside out the outage area? Could they bring the iPad—or whatever mobile device is needed—into the store from home? And then perhaps use staggered shifts to bring in freshly powered devices? Hardly efficient, but if it makes the difference between being able to operate or not, it's worth considering.

Therein lies one interesting takeaway from Irene's destruction: the level of marketing differentiation possible by a generator and/or creative power plans. When Irene hit areas not accustomed to long power-less durations—in our area of Northern New Jersey, stores that hadn't seen outages of more than 50 minutes in two decades were dealing with as many as six or seven days of power-less retailing—most merchants just shut down. The few who had invested in high-end generators along with ample fuel to sustain operations for more than a week, however, found themselves the only game in town.

They were swamped with appreciative customers who spent far more than normal. Those customers were often first-timers who were impressed with the new store they discovered, powered partly by the emotional appreciation that the store had the foresight to invest in sufficient back-up power.

Typically, when a chain moves into a new town, it mimics what other merchants have done. "Should we get a generator? Only if the locals have, given that they know this community best." Interestingly enough, it was the retailers who chose to go it alone that ended up benefitting the most.

Some veteran retailers remembered the pre-POS days, when they used mechanical cash registers immune to power outages. If only during daylight, most believed that, were it not for POS, they could have functioned. It made more than a few think hard about a mobile future.

Of course, even an almost perfect power-outage plan won't guarantee an advantage over competitors who have gone dark. Two days after the storm passed, I had to make the rounds of stores, trying to purchase some repair products to fix storm damage. Most were closed due to lack of power. One store that had power—Home Depot—was inaccessible due to closed roads and washed-out bridges.

And even the generator route was challenging. There are two primary fuels for generators: gasoline and natural gas. Many gas stations sold out of gasoline, and closed roads prevented them from getting quickly resupplied, due to evacuation demand plus tons of consumers and businesses purchasing gallons of the stuff for their own generators. So the gasoline route would have required a retailer to have stockpiled a huge amount of gasoline. Those who stockpiled a more nominal amount found themselves running out of fuel within hours or a day or two.

Natural gas, though, has its own issues. It has a much better supply, is not bothered by closed roads and requires no stockpiling. But the flood waters caused disruptions in some natural gas lines.

Mobile and generators won't be a cure-all for the next extended power outage. But if they could even salvage 20 percent of sales, that might be enough to cut losses and generate an awful lot of customer loyalty.