The news of Whole Foods’ Hepatitis A crisis event in Detroit went viral quickly. And, there is good reason. The clock is ticking as the post-exposure vaccine must be administered within two weeks to be effective. Officials recommend that anyone who purchased food or beverages from the prepared foods section of the store speak to a physician and seek preventative treatment. While a definitive link has not been established between the second case and the store, Whole Foods is properly responding to the crisis. As one would expect of a remarkable and compassionate company, Whole Foods is fully cooperating and working with authorities to assist in the notification efforts to ensure that post-exposure vaccination efforts reach each and every customer and beyond.
The current crisis event is another case study from which other hypermarkets, supermarkets, and groceries can learn how to be better prepared, pre- and post-crisis.
The financial impact was immediate. On the day the news broke about the potential outbreak, Whole Foods’ shares closed lower. The fall in share price continued the next trading day as well. Locally, the store is likely to find that its community is viewing the store with caution and taking their desire for prepared foods and other grocery needs to nearby competitors. Some will not return.
The company and store must also prepare for the longer-lasting financial fallout from the crisis event. As the media continues to broadcast information about the crisis event, your company’s brand and balance sheet are in danger. Business customers, retail consumers, lenders, and other stakeholders must render immediate critical decisions about whether to continue a relationship with you. And, if your company and store are not seen as quickly and properly responding to the crisis event, these critical decisions can lead to catastrophic results for your brand and balance sheet.
As we discussed in our recent blog article published last month (https://news.leavitt.com/business/grocers-restaurant-risks/), revenue from prepared foods has doubled to over $28 billion for hypermarkets, supermarkets, and groceries. New customers are attracted to stores they ordinarily would not visit in order to buy prepared meals for their families. The increased customer traffic and notoriety are a significant boon to grocers. Unfortunately, the outbreaks associated with prepared foods have also doubled over the past year, which threaten the increased market share and revenues.
In order to expand operations to include prepared foods, the C-Suite and management must understand the broader and increased risk implications. New safety protocols are required as cross-contamination risks are significantly greater. In this most recent incident, an issue exists as to the source of the Hepatitis A contamination and whether it is isolated to the prepared foods area or if it can be found in other sections of the store. The C-Suite and management must also hire a new workforce with different and enhanced skill sets, who must be properly trained. The store’s entire operation and insurance risk portfolio must be analyzed to comprehend and correctly assess the increased exposures.
Recalls and contamination events happen to all companies, including best-in-class companies. Everybody, including every company, suffers a bad day. In our world of complex supply chains, broader exposures, and hostile regulatory agencies, crisis recall events and outbreaks are inevitable. These crisis events are no longer an aberration but a consistent and constant threat. Best-in-class companies are not immune to recalls or production contamination incidents. And, they are not immune to the brand, financial, and operational disruption and losses caused by such crisis events. If a company does not properly assess its operational, supply chain, and contractual exposures, a recall or product contamination event can be catastrophic.
Leavitt Group is the only product contamination insurance (PCI) underwriter or broker who has been granted authority to develop and offer a unique multi-disciplinary crisis policy specifically designed for hypermarkets, supermarkets, and groceries. This distinctive policy expressly addresses the wide range of risks and exposures standard PCI policies are unable to address. Leavitt Group is also the only PCI underwriter or broker to develop and offer unique PCI coverages for criminal strict liability, third party crisis costs, and expedited claims preparation. We are the only underwriter or broker granted underwriting authority of $50 million. Additionally, we are the only PCI underwriter or broker able to properly manuscript PCI coverages specifically tailored to a company’s unique risks and exposures. We are also the only PCI underwriter or broker to create a network specifically dedicated to the PCI marketplace, which includes ReposiTrak, crisis consultants, forensic accountants, facility sanitation companies, banks, law firms, and insurers.
Leavitt Group is assisting its hypermarket, supermarket, and grocery clients to properly prepare for and respond to crisis recall and product contamination events. Please contact us to discuss your unique risks and exposures before a crisis hits.
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