In The News

  

The winter holiday season gets the glory, but summer is an important time for retailers to save up and even build their businesses.

WWD

By: Evan Clark

. . . There are good reasons for that on the weather radar.

Evan Gold, executive vice president of global partnerships and alliances at weather intelligence firm Planalytics, said the last few spring selling seasons have been “very warm,” while weather-driven demand for cold-weather looks has been below normal.

The mind jumps to global warming, but it’s not a simple connection.

“Global warming/climate change is really a long-term thing and, while the planet is ‘warming,’ it really translates more to increased volatility in weather — think more ‘extremes’ and ‘events,’” Gold said. “The extremes ultimately lead to more weather-driven purchasing, which can be both warm-weather categories like cutoffs and bikinis, but also need-based products like boots, gloves, A/Cs, bottled water, shorts and Ts.”

Gold said weather volatility in general is pushing customers to buy closer to need even as many stores continue to move warm-weather gear onto the sales floor in February.

While that practice has long been criticized, stores have plenty of incentive to be ready when the weather breaks.

“Weather sensitivity is typically higher earlier in the season (March/April for spring and September/October for fall),” Gold said. “This means that a warm March and April will drive more sales — and typically more full price/higher margin sales.”

And companies have to keep the lights on and supply chain humming even as shoppers trade the boutique for the beach.

“It’s important as a business to figure out ways to be meaningful year-round because your expenses typically aren’t variable,” said Matt Kaden, managing director at MMG Advisors Inc. “You have a line of fixed expenses, often the largest ones, that are constant throughout the year,” Kaden said. “You want to try to create consistency of cash flow because you don’t want to have periods of burn.”

But even more summer sales, and at full price, can still mean less for the retailers’ top and bottom lines compared with winter duds.

“The dollar value for summer products tends to be much lower,” said Bryan Eshelman, a managing director in AlixPartners’ retail practice and formerly chief operating officer of Aldo. “If you think of flat sandals versus high-cut boots, even if they have the same margin rate, the price-point differentiation could be two, three, four times depending what end of the spectrum you are on. So the dollar contribution to profit in the summer tends to be much lower.”

Even so, the warm months are a time to prepare for the future.

“Retailers look at that period of time as hopefully building a buffer for the volatility that’s to come for the fall season and the holiday season,” Eshelman said. “Retailers think about trying to put money in the bank to hedge against what they may or may not achieve through holiday.”

As people buy more according to their immediate needs, Eshelman said retailers in September and even October in some parts of the country see plenty of opportunity to sell warm-weather styles.

And that trend seems to hold beyond the West and Southeast. Summer’s not only heating up, it’s lasting longer than ever.

Warming Up and Cooling Down

Edited ran a spot check of in-stock and sellout rates for a variety of seasonal goods at U.S. online merchants and found interest in summer goods is on the rise. The analysis looks at online activity for warm-weather gear in April, May and June, compared with a year earlier, and activity for cold-weather looks in October, November and December.

Summer

Wrap dresses:
In stock: Up 44%
Sellouts: Up 46%.

Denim shorts:
In stock: Up 20%
Sellouts: Up 28.6%

Linen apparel:
In stock: Up 13%
Sellouts: Up 22%.

Espadrilles:
In stock: Up 12%
Sellouts: Up 26%.

Winter

Wide pants:
In stock: Up 19.4%
Sellouts: Down 1.1%.

Sweaters:
In stock: Up 13.9%
Sellouts: Down 5.5%

Insulated garments:
In stock: Up 9.5%
Sellouts: Up 19%

Boots
In stock: Up 4.6%
Sellouts: Up 3%

View original article.

share this article