The Grayson Company
By: Evan Gold, Planalytics
Over the past several decades, tropical storms and hurricanes in the Atlantic and Eastern Pacific oceans have experienced an increase in terms of the overall occurrences, as well as size and intensity. Combine this with the number of retail stores (and population) who live in hurricane and flood prone areas, and you will note the significant risk and exposure that retailers have from extreme weather events.
While we can not control the weather, there are a number of things retailers can do to proactively plan for, and react to extreme weather events.
• Measure First, then Manage. The first step is to have a foundational understanding of the risk and exposure to weather. Analytics can help quantify the financial impacts weather has on product demand as well as store traffic across all markets and time periods. This ‘single version of the truth’ will serve as a baseline to proactively put plans in plans.
• “The time to repair the roof is when the sun is shining”. This quote by John F. Kennedy is apropos for retailers who are looking to proactively manage the impacts of extreme weather. Once the weather exposure has been quantified, the next step is for retailers to define and communicate plans for their stores, facilities, personnel, and supply chain. This occurs well before any individual weather event occurs. Each storm represents times when retailers are executing to that plan.
• The Forecast Being Wrong Isn’t Necessarily Wrong for Business. Consumers have constant access to weather forecasts on TV, radio, web, phones, tablets, smart speakers, and more. When it comes to extreme events, shopping patterns are influenced by the forecasted weather as much as it is by the actual weather that occurs. Typically there is a spike in need based purchasing before an extreme weather event occurs, driven on the forecast. The ability for a retail chain to successfully tune their business before a storm hits is as important to how they react and respond once it passes. Of course, after the storm passes, the execution of a well defined plan will allow the most nimble retailers to recover quickly.
Weather Can be a Reason, but Never an Excuse
While the extreme weather is what makes the headlines, it is the day in and day out weather that has a greater economic impact. Many retailers typically see 2-8% of their total annual revenue affected by the weather. At the category level, highly seasonal products can experience up to 40% of weather-based swings annually. Planalytics and The Grayson Company have collaborated to help retailers plan for this volatility. This enables retailers to make sure they are prepared to execute in situations when their customers are counting on them the most, leading to increased loyalty as well as higher profitability.