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Deweatherization and the DIY Retail Market

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The beginning of spring is the most important time of year for DIY retailers. This is the period where homeowners start new renovation projects, revive dormant ones, and repair any damage caused by winter weather.  It is also when new construction begins on homes and other major projects that drive new business. However, a poorly predicted demand plan could have a damaging impact on a DIY’s “Christmas” season and cause a surplus or shortage of inventory.  But how can a DIY retailer better predict sales and customer behavior pre-season and in-season to adjust accordingly?

 

Deweatherization Greatly Reduces the Guessing Game

 

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Did you know that the weather only repeats itself year to year about 20% of the time? If you use last year’s metrics to plan for this year’s sales, you will unintentionally build error into your plans. For example, let’s take a look at spring 2015. The 2015 spring season for DIY retailers was better than 2014 because there was warmer weather early-on, providing a strong start. Warmer weather in March was favorable and drove consumer demand. DIY sales leveled off in early summer when wetter weather drowned out many outdoor projects.

By analyzing historical weather and sales, Planalytics estimated a $1 billion favorable weather-driven sales impact for DIY retailers in spring 2015. If those retailers had used 2014’s weather data to make decisions about 2015 spring sales, they would have missed out on excellent opportunities to leverage the warmer early spring weather and may have experienced losses due to the poorer weather later in the season.

Deweatherizing sales to plan from a weather-neutral baseline can greatly enhance a retailer’s ability to mitigate weather-related costs and capitalize on the opportunities. Reviewing last year’s weather data is simply not good enough for predicting what will happen in the upcoming season. While there is no way to control the weather, a retailer can certainly control how it forecasts sales based off accurate predictive analytics.

Planalytics allows DIY retailers to see exactly how customers in a particular region are affected by changes in the weather during a certain time of the year. Weather analytics goes beyond just looking at the data and instead measures how weather volatility affects sales.  This is certainly the case when it comes to the DIY retail market. A warm or cold start to the season or ongoing precipitation could have a significant impact on sales with ramifications that extend throughout the season.

Planalytics can help DIY retailers deweatherize their business, so they are prepared for whatever the weather may bring, especially during the incredibly important early spring retail period. Deweatherizing takes the guessing game out of weather’s impacts.

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Good Weather Data Is Hard to Come By; It Doesn’t Mean Much without Analytics

Compiling and implementing strong data practices to analyze can certainly help to improve strategic decision-making and mitigate risk. It could also help to optimize customer experience and increase process efficiencies across the board. However, while there are certainly many benefits to having data, data does not give you the insights or answers to make quality business decisions. Weather data is one source that many companies use, but struggle to understand. This is why weather analytics is more effective to use when evaluating business weather impacts.

The Problem with Collecting Quality Data

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Translating weather data is difficult enough for any organization. What do you do with all of that data? Many organizations throw tons of weather data at their employees when weather “hurts” the business. But weather data doesn’t provide the answers or insights to how weather is impacting your business.

How Weather Analytics Can Help You Connect the Dots

This is where accurate climate analytics comes in. Trying to do it on your own can be costly, take away from other strategic initiatives, and could create incorrect decision-making based off inaccurate analysis.   What do we mean when we talk about weather analytics to solve this problem? It is a multi-disciplinary, multi-faceted approach that takes into account all of the factors that drive changes in customer behavior due to the weather. Leading weather analytics providers analyze a company’s history sales data along with historical weather data to identify the weather drivers specific to their business. Weather is notoriously volatile as it only repeats itself year-to-year about 15-20% of the time. Business Weather Intelligence from Planalytics can help organizations bridge the gaps of knowledge to achieve a better understanding of how the weather really affects sales.

Therefore, many companies might find it beneficial to enlist Planalytics to help them gain a better understanding of how weather is driving their business sales. Getting clean weather data is difficult enough; knowing what to do with it is a whole other matter altogether.  When companies measure weather’s impact and create a weather-adjusted baseline for planning, retailers improve forecast accuracy and typically recapture 20-100 basis points of profit through inventory optimization improvements alone.

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Why 90° Doesn’t Mean It’s Hot Outside for all Consumers

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Every consumer experiences weather conditions differently. A “hot” day for someone in Buffalo, NY doesn’t affect a resident of Atlanta, GA the same way.. There aremany variables in play that affect perception of the weather, such as location, time of year, and recent weather experiences. This is important for retailers to understand because weather volatility can affect how we shop and what we shop for. Therefore, businesses that understand how the weather shapes consumer behavior and the benefits of weatherization will be best suited to handle weather’s effect on the consumer.

The holiday season is in full swing, which means winter is just around the corner. Although much of the country has been experiencing warmer temperatures this November, cold snaps this time of year can have a dramatic effect on consumer behavior. One very “cold” (temperature is all relative) day in November can drive consumers to make those cold weather purchases such as apparel and hot beverages.

To that same end, the same temperature a consumer experiences in November has a very different affect in early March. That same weathercould drive consumers to start thinking about making warm weather purchases as they have undergone a whole season with colder temperatures. The two examples highlight just a few of the many factors that go into weather perception.  The time of year, your location, and previous weather experiences have an impact on how you feel. 60 degrees in New York City in June would feel a lot differently than 60 degrees in San Antonio. Weather  is relative depending on the variables.

 

Using Weatherization Tools to Better Predict Consumer Response to Weather Volatility

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Retailers that want to understand how variances in weather can affect customer behavior must invest in business intelligence tools that focus on weather analytics. Looking at weather data does not provide the answers to how weather is impacting your business.

Weather analytics from Planalytics can help organizations enhance strategies to effectively leverage the opportunities and mitigate risk associate with weather volatility.  While perception of the weather may be relative, preparation should not be.

Weather volatility, like all other external variables impacting a business, should be managed. Investing in a sophisticated solution like predictive analytics software can allow organizations to improve their merchandising, marketing, labor, logistics, finance, facilities management, and other business areas to support customer demand. Weather analytics removes weather volatility from sales history to create a deweatherization baseline to more effectively align plans.

Given the complicated nature of weather perception, retailers that can best utilize weather analytics to adjust internal processes to maximize profit. Learn more about weather analytics today by visiting www.planalytics.com.

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How the Mere Threat of a Hurricane Can Disrupt (and Benefit) Businesses

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When there is a threat of a hurricane, most people affected will take it very seriously. A hurricane can produce very unwelcome consequences – from damaged homes due to the high winds to flooding and power loss. Fears of these results can create a panic just by the mere mention of a hurricane. Therefore, even if a hurricane does not directly hit a region, it can have major consequences that can affect businesses of all kinds.

Take, for example, some of the headlines we saw in the media for Hurricane Patricia. “Biggest Potential Storm Ever” and “Dangerous Hurricane Patricia” were two phrases that stood out. The best, though, was from Doyle Rice of USA Today: “Patricia’s 200-mph winds will turn planes, vehicles into airborne missiles.” Understandably, residents, travelers, and business owners decided to heed on the side of caution and travel as far inland as possible. The potential consequences of a natural warzone were enough to get them to leave even if it caused some disruption in their lives. Luckily, there wasn’t a panic as meticulous planning and past experience enabled those affected to respond quickly and efficiently.

 

Hurricanes and Hysteria

 

In a blog post for PsychCentral, psychiatrist, John M. Grohol, outlined some fears that could lead to a panic. First and foremost, there is the fear of the unknown. The trajectory of a hurricane can change very quickly, which can create anxiety among those who may be wondering whether or not the storm will make landfall and how hard it will hit. In the case of Patricia, Mexico was for the most part spared. The storm regressed into a tropical depression and landed in a mountainous area of Mexico where the typography was able to sustain it. Still, anyone within the scope of Patricia’s projected path was affected in one way or another.

Then there is the fear of what happens if the worst does occur. A hurricane that directly hits a region could cause extreme damage, leave the area without power, and cause many to wonder whether or not they have enough food and water. What if Patricia didn’t slow down and landed somewhere where the winds would have produced more damage?  What if it had hit a populous area or an area with utilities and other potential hazards? We saw how Sandy disrupted the lives of those in the Mid-Atlantic and New England. What impact would an even more powerful storm have on a region?

 

How Can Businesses Respond to Extreme Weather?

 

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Because of these fears, consumers are more likely to act on the side of precaution when there is a threat of a major storm like a hurricane. They will likely fill up on gas, purchase the necessary food and water rations, and consider getting disaster recovery products, like generators and duct tape, to ensure that they will be ready if the storm does hit.

Notice that the key word in the previous sentence is “if.” When consumers are asking the question of “if?”, then businesses will be affected whether or not the storm actually does hit. This is why companies of all sizes that have locations where hurricanes can hit must consider investing in Weathernomics tools and services to help them plan for consumer demand during hurricane season.

An investment in Weathernomics allows businesses to see how and why customers make purchases because of the weather. Weather data is not enough because it does not tell the whole story. What if there was an aberration in sales during a week several years before, but the weather data showed that there wasn’t a significant weather event during that time? Weather analytics can provide a deeper picture to see whether or not there was the threat of a storm and how consumer behavior changed because of it.

By using Weathernomics, businesses can better plan before the season and update plans in-season due to changes in weather. Businesses can not only make changes in inventory, but also amend marketing plans, logistics, labor, and other operations planning to stay ready for whatever the season may bring.

In the event of a storm, most people will usually prepare for the worst. The weather can produce an emotion-based response in how people shop and what they shop for. Businesses, however, must have a logical response to the weather. They must provide the products and services their customers need based off whatever the weather forecast is. The best way to understand how their business could be affected by the mere threat of a major storm like a hurricane is by including Weathernomics in their higher order strategic planning.

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Does the Media Perpetuate Weather Hype?

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Although Hurricane Joaquin missed hitting the Atlantic coast, there were reciprocal effects that have had some very expensive and far-reaching consequences.

If you lived anywhere on the Atlantic coast, you probably heard a lot about Joaquin. The media coverage was nonstop, discussing  how the storm was very unpredictable and could take several trajectories. Meteorologists did not want to make an exact call, but warned the public about the variety of possibilities to ensure that everyone was on the same page.

However, like any other program, the local news depends on ratings to earn advertising dollars. Therefore, it is going to feature stories that viewers will tune in to see and be willing to wait to see it. There’s a reason why the local five day forecast is usually revealed at the end of a newscast.

News producers do this because they know that viewers are more likely to watch the entire news segment until they hear the weather for the week or about possible extreme weather scenarios in the region, etc. No matter where you live and what you do, the weather will affect you in some way, so viewers have raised stakes in the forecast. A poor forecast could affect how they get to work, whether or not they need to make arrangements if school is closed, what they need to get at the grocery store, etc. Therefore, if there is the chance of a poor weather event, the public will be more inclined to listen.

On one hand, this is great news for the local media because they get more attention. However, meteorologists and other weather experts must still be accurate with their forecasts. We have discussed in the past about the miscalculation of the 2015 NYC blizzard that never happened and how that affected households and businesses in the area. You don’t need to have an extreme weather event to experience many of its effects if the hype is there. Although creating hype can be beneficial to the media, there can be a public backlash that may negate those benefits.

However, as Dennis Mersereau, a meteorologist who publishes articles frequently for Gawker, points out, the Internet has created an environment where anyone can post misleading information to create their own version of weather hypes to increase their following on social media platforms. The Internet has made this information readily available, which can be good, but it still allows individuals without any expertise or consequences to post information that could lead to the proliferation of panic for a storm that may not even happen. This could affect everyone from a parent who just wants to make sure that their child will be taken care of if school is closed, to the small business owner whose sales are affected by people staying at home.

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With all of this hype generated by traditional and new forms of media, it’s important for households to review all of the information out there to make an educated decision. At the same time, businesses must pay closer attention to business forecasting tools  and consumer demand analytics to make sure they know how their operations could be affected by a storm, whether it actually happens or not.

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How Severe Weather – Whether It Hits or Not – Affects Sales

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There’s no question that extreme weather can affect a business’s bottom line. We are nearing the end of the Atlantic Hurricane Season, and, so far, we have had a very quiet season. This isn’t always the norm though. Although the past few hurricane seasons have been relatively mild, 2011 and 2012 were very active, producing two very destructive hurricanes – Irene and Sandy.

2011 was also marked by an East Coast anomaly on the days leading up Halloween when a nor’easter hit, dropping as much as 32 inches of snow to fall in some places. Obviously, Halloween stores that year in the affected areas suffered substantial losses in sales.

The weather can have a dramatic effect on sales during the autumn and winter months, depending on where your business is located. If it’s a warmer season with few storms, your sales will be far different than if you were a retailer in Boston last year during the record snowfalls or NJ in 2012 during Hurricane Sandy.

Severe weather can certainly impact sales, but does the storm even need to hit for it to change customer behavior and affect foot traffic? We will discuss how even the mere threat of a storm can drasticallly affect your sales, and what happens in the consumer’s brain when a looming extreme weather event is announced.

Why Severe Weather Doesn’t Even Need to Occur for It to Affect Sales

Late January last year, New York City was bunkered down preparing for the blizzard of the century. Mayor Bill de Blasio gave a news conference the day before the storm was scheduled to reach NYC and pled with New Yorkers to stay indoors. He even suggested that if residents did go outside, there was the possibility that they could die in a winter storm-related accident.

As a result, New Yorkers complied with the Mayor’s wishes. Schools were closed, stores shut down for the day, and many people stayed home from work. The only problem was that the storm mostly missed New York City with many areas seeing only a few inches – much less than the two feet that was expected. Many meteorologists actually apologized for the disruption they caused for individuals and businesses.

The moral of the story is that an extreme weather event doesn’t actually need to occur to affect businesses and consumers. Although the history books will show that the storm wasn’t that bad in regard to snowfall or property damage, it did have the effect of a major storm on sales as many stores closed and people stayed home before the first snowflake even hit.

How the Threat of Severe Weather Affects Consumer Behavior

The “Bread and Milk” YouTube video by comedian Vic Dibitetto illustrates the psyche of some consumers when there’s a hint of extreme weather in the news. Just go to your local grocery store the day before a storm, and you’ll see long lines of people with carts packed with groceries they didn’t even know that they needed.

In a Time Magazine article on consumer behavior during storms, consumer psychologist, Kit Yarrow, discussed how people often revert to primal survival instincts when they see crowds of people taking everything off the shelves. It is partly a mob mentality that causes individuals to panic and respond to their emotions and crowds rather than think about what is actually going on.

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What Can Businesses Do to Predict How Severe Weather Will Affect their Sales?

While you may not be able to predict when a extreme weather might occur, you can predict how your customers will react to it. As we outlined above, looking at weather statistics isn’t enough. That storm that didn’t hit New York City last year still had a major impact on sales. Grocery stores and hardware stores most likely had increased sales of winter-related goods and perishables. Some stores closed because of the imminent storm.

Businesses looking to enhance their understanding of how extreme weather affects their sales can find analytics from the weatherization experts at Planalytics. They analyze historical sales and weather data to provide you with weather intelligence you can use in a business context to amend your demand planning to account for extreme weather – whether or not it actually occurs. Contact us today to learn more.

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Why Weather Facts Aren’t Enough – the Case for Weather Analytics

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Data is great for businesses. It gives insights into customer demographics, what products perform best, and staffing needs– to name a few. However, data doesn’t provide the answers to help improve your business’s higher strategic planning to boost sales and mitigate risks.

 

Companies who solely use weather data find it extraordinarily difficult to utilize because there are so many variables which makes data aggregation problematic. In the past several years, more organizations have looked at weather data to help them understand how the weather will affect or have affected the sales. Unfortunately, so few know what to do with it. In the end, many executives have an excess of weather data, but little understanding of how to improve their bottom line. Here are several reasons why solely using weather data is unsuccessful:

 

There Are Regional Variances: Temperature is absolute. How temperature feels is relative. For example, it’s the end of summer right now in the Mid-Atlantic region of the United States. If the temperature were to drop to 55⁰ in New York City, that would feel very cold to consumers and they would start buying outerwear and hot chocolate. However, if the temperature were to drop to 55⁰ in Fairbanks, Alaska right now, it wouldn’t have a significant impact on consumer behavior since that is the normal temperature this time of year.

 

There Are Temporal Variances: To that same end, if there was a high of 55⁰ in Philadelphia in September, consumers would feel very cold and look to purchase sweaters or fire logs. However, if the temperature were to hit 55⁰ in the middle of February, consumers would be reaching for their shorts as it would feel like spring. The temperature may be the same in the same location, but the time of year will create major differences in consumer behavior too.

 

Businesses that have weather data but have no idea how to translate that data into weather intelligence are encouraged to check out Planalytics’ business forecasting tools. Planalytics provides weather analytics, actionable intelligence companies need to manage weather’s impact on business and improve their bottom line.

 

Contact us today to learn more about why weather analytics matters.

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Using FlashWeather to Make Better Weather-based Business Decisions

What was the weather like last week in your markets? While you can easily find this weather data, can you use the information to identify sales opportunities? Probably not. This is where weather analytics has been revolutionizing how businesses leverage the weather to improve their sales.  Understanding the weather and leveraging analytics to forecast sales and its effect on consumer behavior is an untapped resource that businesses are only beginning to understand. For example:

It’s 85 degrees in New York City in May. What does this mean for customers there, and how do purchasing trends differ here on a hot day in spring than for customers in Phoenix?

It was a warmer winter last year. How do businesses quantify the impacts and build an effective sales plan for the upcoming winter?

Scenarios like these are commonplace in retail, food service, and other industries, and determining how consumer behavior is affected by the weather by region and by season can greatly impact your bottom line. Planalytics was founded to help companies measure and manage the impact of weather on their business and leverage Business Weather Intelligence® to make smarter business decisions. We differ from others out there because we provide data in a context that managers can use to explain sales and manage their business. We have helped a variety of Fortune 500 companies across a spectrum of verticals use weather intelligence throughout their organization.

Below is a snippet of our FlashWeather report which provides clients with weather analytics and trends of the past week to help them gain a better understanding of what is going on now in their region and industry.  The full FlashWeather report doesn’t just tell the weather, it provides companies with predictive analytics to how weather will affect their bottom line.

For more information about all of our weather intelligence offerings, please contact us today to speak with a Planalytics representative.

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