All posts by Tara McAdams

How Climate Change Is Transforming the Way We Shop

By Sarah Kent

Shifting weather patterns are making shopping behaviour harder to predict, adding to inventory management challenges for brands and retailers.

KEY INSIGHTS:


• Weather has always influenced consumer spending, but now manmade climate change is making weather patterns more unpredictable.
• That’s compounding the challenges retailers face when merchandising seasonal products and managing inventory.
• Retailers are looking to more sophisticated data analytics, seasonless products and more flexible supply chains to help navigate the challenge.

The first day of 2023 was a record breaker.

Across Europe, many countries experienced their warmest-ever New Year’s Day, with pictures of Alpine ski slopes denuded of snow making headlines. In the US, a Christmas cold snap gave way to an unseasonably warm start to January in many states.

The unusual temperature swings in key western markets are bad news for purveyors of puffy jackets and cosy winter boots. Warmer-than-normal temperatures and a lack of snow in New York this month are expected to drag down demand for outerwear, hats and gloves by 15 percent compared to an average January, according to Planalytics, a company that measures the impact of weather on consumer behaviour. . . .

Now, the way weather impacts quarterly spending patterns is getting more unusual and unpredictable because of the effects of manmade climate change. In contrast to the unseasonable warmth seen in parts of the US and Europe at the start of the month, countries including Korea, Japan and China in northeast Asia are in the grips of a deadly and disruptive cold snap.

Though scientists have not yet analysed the specific ways in which the climate crisis may have influenced this month’s unusual temperatures, extreme weather events last year — from Europe’s deadly heat waves to flooding in Pakistan — have been directly linked to global heating.

With every fraction of a degree of warming, weather extremes are expected to become more regular and intense, scientists have warned. Last year was the fifth-warmest since records began, according to the EU’s Copernicus Climate Change Service. This year could be even hotter.

To be sure, this impacts all parts of the industry, from raw material production to shopping habits. But in consumer markets, unusual weather patterns are playing havoc with brands’ and retailers’ ability to predict what people will buy and when, playing into hot-button. . . .

“No other external variable shifts store-level sales trends as immediately, frequently and meaningfully,” said David Frieberg, Planalytics’ marketing vice president.

Managing the Weather

Though many brands may not yet think about it this way, climate change is increasingly an inventory management challenge. And it’s compounding a broader market shift away from fashion’s traditional seasonal business model, fuelled by modern shopping habits that tend towards more instant “buy now, wear now” gratification and a more globalised customer base that is harder to fit within the neat box of the traditional fashion calendar. . . .

Brands are also turning to data-analytics services, designed to help improve inventory planning and match the products on shelves and pushed through digital ads to the kind of weather consumers are experiencing in real-time.

Planalytics estimates it can help retailers increase revenue by up to two percent by using data to make smarter choices about what to make, when to stock and where. Targeting ad campaigns based on “weather context” can boost the return on advertising spend by up to four times, according to the data analytics company.

To read the original article, Click Here.


For more information about Planalytics, Contact Us.

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The Friday Checkout: The unexpected impacts of weather on supply chain

By Grocery Dive Staff

An Albertsons senior director shared how predictive weather-driven demand analytics can have surprising results for product forecasting during a session at the National Retail Federation’s conference.

Peanut butter is seen on a shelf in a Target store on July 8, 2022, in Houston. Consumer goods continue seeing shortages as the country grapples with ongoing supply chain issues stemming from the pandemic. Brandon Bell via Getty Images

The Friday Checkout is a weekly column providing more insight on the news, rounding up the announcements you may have missed and sharing what’s to come.

The weather’s impact on consumer behavior and product demand can be a no-brainer. Warm temperatures typically spur demand for cold beverages and ice cream sales, for instance.

But then there are the weather-driven behaviors that retailers and restaurants wouldn’t typically expect. A Tuesday session at the National Retail Federation’s annual conference in New York that included an H-E-B vice president, Albertsons senior director and Chipotle Mexican Grill data science manager explored how predictive weather-driven demand analytics can help better anticipate customers’ needs.

Jeremy Elster, data science manager at Chipotle, noted it’s not surprising when delivery demand spikes when it’s raining. In the Northeast region, it’s common for Albertsons to see demand for chilis and soups to spike when summer turns to fall, said Tyler Scott, senior director of demand planning and retail support at Albertsons.

Other weather-based triggers, though, are not as obvious. For example, Scott said peanut butter demand fluctuates with “spells” in the weather. It’s not immediately clear why that is.

Coffee sales fluctuate 5% on average due to the weather and time of the year, with markets in the Northeast sometimes seeing coffee demand 10% above typical levels when cooler temperatures carry over into spring, according to Planalytics, a provider of business weather intelligence services that also participated in the session.

Planalytics is positioning itself as a way to help companies discover and navigate those unexpected and seemingly weather-driven behaviors. The company’s pitch is that its technology helps clients capture additional sales and margins by having a better grasp on weather volatility.

It’s not just product demand: Foot traffic can dramatically rise and fall around severe weather, especially at convenience stores, Planalytics has noted.

H-E-B has piloted the technology across “select categories,” said Ross Giambalvo, the grocer’s vice president of inventory management. The Texas grocer is getting a better understanding of how weather volatility can impact different categories, Giambalvo said.

The panelists noted overlapping weather data with demand forecasting can provide a better understanding of product demand — influencing inventory management and consumer pricing.

To read the original article, Click Here.


For more information about Planalytics, Contact Us.

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Weather & Retail Myth #5: I’m An Online Retailer – The Weather Doesn’t Impact Me

Weather can impact website traffic, just as it does brick-and-mortar store traffic. Extreme events, as well as simple day-to-day changes in weather, can drive spikes in website traffic rather than into stores and vice versa.

By leveraging weather analytics, businesses can understand the specific times and locations to deliver a product or brand-specific message to a consumer at the exact time they are realizing the need to make a purchase. For example, an online retailer can respond to uncommonly warm weather in a specific market by targeting customers with items like shorts and tee shirts before they would be able to find those items in stores. These same analytics can be used in paid-search campaigns to lead new customers to a retailer’s site at a time when weather is driving demand.

One constant Planalytics has seen in our work with retailers and consumer brands is that campaigns that overlap with favorable, weather-induced demand leads to a larger than expected sales boost. This “synergistic effect” emerges when marketing to audiences where the weather is creating demand and a product is highly relevant to them at that time. Marketing or advertising “in market” products lead to situations where sales were notably higher than the expected promotional lift and weather lift individually suggested the success of these campaigns.

Optimizing digital marketing campaigns becomes easier once retailers have access to demand insights that have translated the complex market-by-market, time of year, demographic, and product-specific interactions of weather and consumer purchasing.

Weather-driven demand metrics does this and businesses that leverage these analytics can get impressive results. One example we saw with a retailer generated ROAS increases that were 3 to 4 times the gains captured with traditional cookie-based behavioral targeting in their social media campaigns.

Check out the 5 Myths About the Weather & Its Impact on Retail from the NRF to learn more.

MORE NRF & PLANALYTICS NEWS:

Planalytics is excited to be exhibiting and participating in NRF 2023 (Retail’s Big Show) in New York City in January. Visit the NRF’s website to learn more and to register!

Visit Planalytics at Booth #3393 and be sure to attend a panel session with H-E-B, Albertsons & Chipotle: “Nailing demand forecasts: From machine learning to replenishment and everything in between” on Tuesday, January 17th. Hear how these leading retailers are using predictive weather-driven demand analytics to better understand consumer purchasing and capture additional sales and margin.

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Weather & Retail Myth #3: Consumers Will Shop During the Holidays Regardless of the Weather

Just because sales peak for many retailers during the November-December holiday sales period doesn’t mean weather’s business impacts disappear. During the holidays, weather not only influences if a customer goes into a store, it also influences the items they place in their basket.

For example, 18 percent of boot sales are influenced solely by the weather in December, while specialty apparel stores see sales fluctuate up to 4 percent on average, depending on weather conditions and location. Even a fluctuation of a few percentage points in sales is significant for any retailer during the highest volume months of the year.

When and where those weather-driven demand changes occur directly affects profitability. Slower sales earlier in the season often lead to earlier and/or steeper markdowns. Conversely, there is a much better likelihood of maintaining profits if the season starts strongly and inventory moves briskly.

Even hardware stores and home centers, which have their “holiday” season in the spring, feel the impact. In fact, December is the third most weather-sensitive month of the year (on a percent of sales basis) for this sector. Winter conditions bring shoppers in for ice melt and snow removal products; warmer and drier weather can extend windows for DIY projects and boost demand for outdoor lighting and holiday decorations.

Check out the 5 Myths About the Weather & Its Impact on Retail from the NRF to learn more.

MORE NRF & PLANALYTICS NEWS:

Planalytics is excited to be exhibiting and participating in NRF 2023 (Retail’s Big Show) in New York City in January. Visit the NRF’s website to learn more and to register!

Visit Planalytics at Booth #3393 and be sure to attend a panel session with H-E-B, Albertsons & Chipotle: “Nailing demand forecasts: From machine learning to replenishment and everything in between” on Tuesday, January 17th. Hear how these leading retailers are using predictive weather-driven demand analytics to better understand consumer purchasing and capture additional sales and margins.

 

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Black Friday Weekend Recap From Planalytics

Mother Nature served up a cornucopia of weather supporting traffic into Shopping Destinations over the Holiday Weekend

Regional Trends featured cold conditions in the West, milder in the East.

The Thanksgiving and Black Friday weekend (November 24 – November 27) featured a variety of changeable conditions. Bitter cold in the East from earlier in the week turned milder over the Thanksgiving and Black Friday weekend. The weekend as a whole was the mildest holiday weekend since 2017, although there were notable regional differences. The strongest warmth over the weekend was focused from the Gulf Coast to the Southeast. The coldest year-over-year conditions stretched from the Rockies to the West Coast.

The entire week was the coldest final week of November since 2018. The coldest year-over-year conditions lifted demand for seasonal categories and also supported traffic into stores and shopping centers. Need-based categories performed well as consumers looked to purchase items such as firelogs, hot drinks, and seasonal apparel including sweaters, gloves, and jackets.

According to Sensormatic, in-store foot traffic on Black Friday was up 2.9% compared to 2021 while visits to stores on Thanksgiving Day increased 19.7%. According to Adobe, online sales on Black Friday were the most on record, topping $9 billion, a 2.3% increase over last year, when many businesses were experiencing supply chain issues and inventory challenges. Heading into this holiday season, many retailers reported strong inventory positions and began discounting and promotional activities much earlier.​​​​

Rainfall was the most since 2019, although most major markets had no traffic limiting weather. Heaviest rain was in the Southeast and stretched into the Mid-Atlantic region over the weekend. The rain likely supported increased traffic into shopping malls and indoor destinations, while limiting outdoor activities such as putting up lights and decorations. Snowfall was the least since 2020 with minimal amounts that were focused in smaller markets.​​​​

Coldest temperatures compared to last year feasted across the West as the Pacific and Mountain regions had their coldest holiday weekend since 2020. Los Angeles, San Francisco, Seattle, Denver, Salt Lake City, Phoenix and Portland, OR were some of the markets in these regions which trended colder than last year. The Great Lakes had its warmest holiday weekend since 2015 and Chicago was warmest since 2011. The South Atlantic, Mid-Atlantic, and New England regions were all warmer to last year with the warmest conditions in the Southeast. Miami, Orlando, Tampa, and Jacksonville had its warmest holiday weekend in over 20 years. In the Mid-Atlantic and Northeast, New York City, Boston, Philadelphia, and Baltimore all trended warmer than LY.

Rainfall was the most since 2019 and was focused in the Southeast and Mid-Atlantic regions. Total amounts for most major markets were not extreme and supported foot traffic into malls and shopping destinations. Snowfall for the weekend was well below normal. Black Friday was ideal for traffic as no measurable snowfall was recorded in the largest markets, the first time this has occurred since 1986.

Looking ahead, Cyber Monday (November 28) will lead into high volume shopping days in December. For reference, December 2021 was the warmest December in 127 years of recorded history. Colder weather in December on a year-over-year basis will have a significant influence on shopping patterns as well as the items consumer place into their baskets. The National Retail Federation (NRF) expects total holiday sales to grow between 6% and 8% compared to 2021.

For more information or to learn how weather can impact your business, Contact Us.

 

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Black Friday Weekend Gives Retailers Hope, No Guarantees on Days Ahead

By David Moin

Traffic and sales were strong on Friday then tapered off by Saturday afternoon, leaving retailers a bit more positive and expecting modest gains for holiday 2022.

Black Friday washed away some retail blues, at least for the weekend.

Stepped-up discounting, weather conducive for getting out of the house, and renewed consumer enthusiasm for shopping the malls helped retailers reverse weak trends seen through October and most of November — and for the moment eased anxieties about how holiday 2022 will play out.

Though it wasn’t the blockbuster of years past when shoppers stampeded for doorbusters, this past weekend saw decent sales gains online and in stores. Americans responded to the surge of pre-price promotions, which were most often in the 25 to 50 percent range and preplanned, after holding back on gift spending earlier this year.

In addition, major stores stayed closed on Thanksgiving, abetting Black Friday’s business, while services increasingly being offered — such as extended deadlines for receiving packages in time for Christmas; buy now, pay later, and buy online, pick up in store — also helped. . . .

. . . “The main story was that there were no traffic-limiting weather events,” said Evan Gold, executive vice president of Planalytics, which provides weather forecasting that helps retailers in their planning. “There was some rain in the Southwest, but no snow in any major market in the country. Today [Sunday] it’s a little rainy in New York and a few other markets, probably keeping some people from putting up outdoor decorations, but nothing significant enough to keep people at home.”

Gold said December “should be a great month for demand in seasonal items, which are in better inventory positions. If you look at the next five to seven days, the warmth in the east is going to move out. The month will be colder than last December, which was the warmest December ever recorded for the country overall.” . . .

KEY HOLIDAY 2022 TRENDS

• Stricter budgeting by shoppers.
• Normalizing post-pandemic sales patterns.
• Dressier styles show gains; casual styles moderating.
• Retail inventories still high, though less bloated.
• Business robust on Black Friday; traffic waned by Saturday afternoon.
• Nominal U.S. holiday 2022 sales seen increasing 6 to 7 percent.

To read the full article, Click Here.


For more information about Planalytics, Contact Us.

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A warmer October could force lead to steeper discounting for some UK retailers

The Evening Standard highlighted how UK retailers battled sales headwinds in October as warmer temperatures slowed demand for seasonal merchandise.

In the article (“Retailers forced to discount winter wear as mild weather continues”), the writer reports that “Met Office figures suggest that last month was the seventh warmest October since records began in 1884, and temperatures could reach 18 degrees in some parts of the country this week, according to forecasters. And this has meant British shoppers have delayed buying coats, boots and hats and other cold weather gear – heaping pain on an already under-pressure retail sector.”

Planalytics’ weather-driven demand metrics quantify the influence of weather conditions on consumer purchasing and the numbers for October confirm the negative impacts. For example, overall footfall for UK clothing stores during the month was down about 2% due to the weather. For winter season products, weather-driven demand metrics for the second half of October show categories including outerwear, knitwear, and hats & scarves down -5 to -15% compared to the corresponding year ago period.

The unfavorable weather resulted in a slower start to the winter selling season and this already has retailers considering more aggressive discounting and promotions. However, retailers that have visibility into weather impacts for the weeks ahead may be able to preserve margin if more positive weather scenarios are on the horizon. A Retail Dive article (“You can mark this down. Retailers preserve margin with predictive demand analytics.”) pointed out that “by considering when, where, and how much the upcoming weather will impact consumer demand, a retailer can take advantage of favorable conditions to delay markdowns for a period of time or reduce the depth of markdowns (e.g. 30% off instead of 50% off).” Check out the article to learn the various ways weather-driven demand analytics help retailers minimize margin erosion.

Have additional questions? Get in touch with us.

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