Retail Q3 Weather Impacts: Year-Over-Year Opportunity May Be Best in the West

U.S. retailers are in the middle of reporting Q2 results, and some chains have begun to warn about second half performance and lower earnings expectations due to mounting financial pressures on consumers. Inflation, interest rates, rising credit card debt, and the restart of student loan payment are some of economic headwinds retailers are facing as the summer fades into the background.

Once Labor Day weekend passes, the important fall selling season will be in full focus, and many will be keeping a close eye on another key external sales driver – the weather.  Cooler, crisper conditions in September and October would support demand for seasonal items – from fleece and outerwear to hot foods and beverages and more – and help counter the negative macroeconomic trends.

Weather sensitivity is a metric Planalytics provides to isolate and quantify the degree to which changes in the conditions outside can swing the sales of a product category during a given period.  The examples below show how the weather alone (outside of economic factors, pricing/promotions, etc.) can significantly move sales, either positively or negatively.

Weather sensitivity is often much higher for specific weeks of the year and in certain markets, but even at a national level for a 3-month period the influence is huge.

Planalytics’ Weather-Driven Demand (WDD) show some opportunities to grow sales compared to last year for seasonal products in September. WDDs quantify the percentage lift or drag that the weather will have on traffic or the sales of specific products. The best opportunities on a comp sales basis will be in the West, where many cities including Las Vegas, Los Angles, Portland, Salt Lake, and Seattle logged their hottest September in more than a half century. Those conditions will not be repeated, and retailers should be able to beat soft comps in those markets.  For example, WDD outlooks vs. LY for the month show Fleece +14% in Salt Lake and Rainwear +25% in Kansas City.

WDD projections for October point to comp sales risk in the easter half, especially in the Southeast which is coming off its coldest October in a decade 2022. In Atlanta, for example, Planalytics is projecting -25% WDD vs. LY for Heaters.  Once again, the best opportunities will be in western locations.  In Portland, for example, Planalytics is projecting +14% WDD vs. LY for Boots.

Contact Planalytics for more information on predictive weather-driven demand analytics or request additional WDD insights for specific product categories.