In The News


You may loathe this frigid weather — but certain retailers love it

The Washington Post

By: Sarah Halzack

When you walked out your front door this morning into the frigid sting of the polar vortex, you probably thought to yourself, “this is the worst.”

But more than a few retail industry executives probably felt that same icy chill and thought, “this is terrific.”

That’s because our holiday shopping patterns can be strongly shaped by weather. And this latest cold snap, coupled with a preceding stretch of wintry temperatures, is likely to help many retailers ring up bigger sales than they might have otherwise. In fact, weather analytics firm Planalytics estimates that, thanks to chillier conditions, apparel stores will get a $350 million jolt in sales between Dec. 4th and Dec. 24 compared to the same period last year.

So how exactly does weather influence spending?

“It affects what we buy, when we buy and how we buy,” said Paul Walsh, meteorologist and director of weather strategy at IBM Global Business Services.

In particular, experts say that when its nippy outside, we’re primed to buy coats, boots, scarves and other cold-weather apparel. When temperatures are mild, and we’re not wearing these items as often, we tend to put off replacing last year’s gear.

A number of clothing retailers learned this the hard way in 2015, when it remained unseasonably warm in the run-up to Christmas and beyond. In Washington, for instance, temperatures soared to 71 degrees on Christmas Eve, part of the warmest December on recordin this region. Macy’s was among the retailers that the weather created major drag on sales; the department store chalked up 80 percent of its decline in sales at stores open more than a year during the holiday season to weak interest in cold-weather garments.

So, apparel sellers, in particular, look poised to benefit from 2016’s frosty conditions. In fact, Walsh says “they’ve got to be doing conga dance right now” based on how the weather has shaped up so far in December.

Outside of encouraging us to spend money on bundling up, experts say a wave of cold weather can also help retailers by putting shoppers in a holiday state of mind.

“There really is a Christmas spirit that comes about when it looks and feels like Christmas,” Walsh said. “It’s not really quantifiable…but when it is cold, there is that emotional feeling that is a tailwind for retailers.”

When the wind blows, maybe you’ll spring for other seasonal items, such as a crock pot to make stew or holiday decorations for the mantle.

But, wintry weather isn’t all upside for the retail industry — especially once you include the possibility of snow, which could keep shoppers off the roads and at home. Now, you might be thinking: During a snowstorm, won’t a horde of bored consumers just shop online while they’re holed up at home by the fireplace? Surely. But Scott Bernhardt, president of Planalytics, said it’s not quite that cut-and-dried.

“The whole purpose of getting people into the mall is that they impulse buy a little bit, they self-gift a little bit,” Bernhardt said. “And a lot of that is lost in the online sale.”

Plus, it’s worth noting that Amazon gobbled up 40 percent of all online sales last November and December, so if weather pushes shoppers online, it might be funneling them straight to the biggest enemy of many mall stalwarts.

Experts also say that while weather drives what items you put into your shopping basket, it tends not to affect how much money you spend overall. So, if you splurge on a new cashmere scarf for your husband, that may end up replacing the gadget you would have put under the Christmas tree for him otherwise. This could mean that the streak of cold weather indirectly creates challenges for sellers of items such as toys and electronics.

And then there are restaurant chains, which can be hit particularly hard when brutal cold or snowy conditions make people want to huddle up inside.

“If you were to miss Starbucks this morning because it’s too cold, you’re not going to buy two cups tomorrow,” Bernhardt said. That’s a lost sale the coffee chain is not going to make up.

While there is little retailers can do to change what kind of inventory they’ve got on their shelves, you’ll likely see them react in more subtle ways to this bout of frigid temperatures. They might tailor their digital advertising and e-mail promotions to emphasize their cold-weather offerings. And they might adapt their promotions and discounts. Consider this: Last year, many retailers ended up offering heavy discounts on coats and the like in January and February because they simply had to get rid of them. The December arrival of the polar vortex could prompt the opposite affect.

If your competitor goes 50 [percent] off, you might want to go 40 [percent] off,” Bernhardt said. “Because you know you’re going to sell it anyway.”

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