The role of nearby suppliers after natural disasters

Abstract

Natural disasters disrupt retail operations by simultaneously triggering demand surges and supply interruptions. Restricted access to affected areas raises transportation costs and complicates replenishment, while stores that remain open experience increased demand from displaced consumers and stockpiling behavior. Ensuring product availability becomes critical, forcing retailers to rely on suppliers who can deliver under constrained conditions. We examine whether supplier proximity mitigates these operational disruptions by comparing the sales evolution of products manufactured near each store (“nearby”) to those produced farther away (“distant”). We combine weekly retail scanner data, manufacturing location information, and FEMA disaster declarations for three North Atlantic hurricanes. Using a triple-difference design, we compare changes in sales of products from nearby versus distant suppliers before and after the event, across affected and unaffected stores. Across the three hurricanes, sales of products from nearby suppliers in operational stores located in affected areas increase by 7%–11% relative to products from distant suppliers. Moreover, we find that stockouts of products from nearby suppliers are less likely to occur in the aftermath of the disaster. Furthermore, we find that in two of the three events, products from nearby suppliers experience a price reduction compared to those from distant suppliers. These results show that supplier proximity is an actionable resilience lever: nearby suppliers could be more likely to deliver to affected areas when replenishment is challenging, enabling retailers to maintain product availability and continue serving customers. The findings offer guidance for preparedness planning, emphasizing the value of geographically diversified sourcing and coordination with nearby suppliers.