Why Integrating Weather-Driven Demand Analytics
with Promotion Management Can Improve Retailer’s Bottom Line
How Weather Impacts Promotion Performance
One of the major keys to a successful promotion is if it’s customer-centric. Today, top retailers follow these strategies to ensure their promotions align with their customer’s behaviors:
One area that is often overlooked? Understanding the weather’s impact on your customer’s priorities.
By combining both promotion management strategies and weather-driven demand analytics, retailers can further optimize their promotions by providing the right products, at the right price, in the easiest obtainable way for their customers.
Here are a few examples of how weather impacts promotion performance:
Better Forecasting, Better Predictions
Use Case Scenarios
Now that we understand the impact weather has on promotion performance, let’s provide a few use-case examples of how weather analytics can work alongside a promotion management solution.
Tina works in buying and forecasts promotions for inline and online items. She is going to run a key wintertime promotion on a product and wants to forecast how many units she should purchase.
By utilizing business weather intelligence within her promotion solution, Tina is able to gain insight into the:
1. Promotional lift
2. Weather lift
Through her analysis, she was able to see that where the weather had been favorable, the sales were higher than the promotional and weather lift suggested. This synergistic effect shows Tina that the product is highly sensitive (in a positive way) to weather and will perform even better when paired with a promotion.
By having access to this information, Tina is able to:
– Create a successful promotion
– Generate orders ahead of the demand spike
– Avoid out-of-stock situations
Enhance Decision Making
Phil, a category merchant for a grocer, has created a promotion on hotdogs to run throughout the heat wave in New Hampshire and submitted it for approval. Two weeks before the promotion is set to run, he receives an alert about drastic changes in the weather. The weather went from warm and sunny, to gloomy and heavy rain.
Since hotdogs are grilled outside, there has been a drop in demand than what was originally anticipated. Phil can either kill the promotion, reduce the amount of product, or run a different promotion on another product that will perform better.
An abnormal snowstorm is predicted to happen in Minneapolis, Minnesota when a grocery merchant plans on running a promotion for a fresh product. Though the merchant is running the same promotion across all of the stores in the US, the promotion in Minneapolis is no longer predicted to run as well.
With the help of weather analytics, merchants are able to see two weeks in advance the drastic drop in demand for that specific region. Because the product on promotion is fresh, they risk dealing with waste.
To avoid having too much product on hand, the merchant changes the amount that needs to be ordered ahead of time.