“The consequences of epic weather events, including record-breaking droughts, floods and temperature fluctuations, are being recorded in shopper traffic and retail sales.”
Over the last several weeks many retailers have called out the weather as they reported quarterly results. Forbes calls highlights some examples in an article entitled Weather Is Hurting Retail Sales. These 4 Tips Can Help.
“The effects of weather unpredictability go both ways. Unusually warm weather in January was credited with influencing higher-than-expected retail sales that month – 3.2%, according to CNN. But by March, U.S. retail sales declined by 1%, more than twice the 0.4% decline predicted (per USA Today). These unexpected fluctuations, too, disrupt inventory and sales management – think out-of-stocks that cause customer frustration.”
The fluctuations really should not come as a surprise to retailers. Weather volatility is a fact of life, and it does constantly impact traffic levels and sales. It is a huge external variable that cannot be controlled, but that doesn’t mean companies cannot do anything to proactively manage the financial and operational impacts. Planalytics works with retailers and other consumer-based businesses around the world to incorporate weather-driven demand analytics into planning, demand forecasting, and marketing processes and technology solutions.
In addition to some of the larger scale programs retailers are pursuing in areas of sustainability and reducing carbon footprints, the Forbes article offers “a few more tactical steps retailers can take, day-by-day, to better prepare for weather events.”
• Climate-change your analytics – Weather repeats itself from one year to the next just 15% of the time, the National Retail Federation reports, so retailers should not use last year’s weather to predict this year’s demand. Rather, they should incorporate weather forecasting data into their merchandising and marketing insights, to calculate the predicted effects of weather-driven demand.
• Stop thinking of inventory as seasonal – When it’s 82 degrees in March and 40 degrees in May, consumers are likely keeping their winter clothes in the front of the closet longer and putting thoughts of swimsuits in the back drawers of their minds. Retailers can work with Mother Nature and invest in the tech that enables them to balance stock across stores.
• Your supply chain should act as an umbrella –Retailers can require that their top suppliers map out their supply chains to show how well their lower-level fulfillers will come through during a weather events.
• Use loyalty data to add wind to retail sales – Retailers can put their loyalty member insights to work by reviewing year-ago seasonal purchases and sending incentives to members to purchase weather-sensitive categories earlier.
Retailers can be hurt by the weather, but they can also be helped. The key to limiting risk and maximizing opportunities is to use analytics to both understand how changes in the weather influence customers and shopping behavior and to stay a step ahead of the demand swings that will come.