Photo: @maginnis via Twenty20
Study says retailers could stand a little more sunny or snowy weather
According to a new university study, sunny and snowy conditions trigger consumers to visualize using products associated with the respective weather, which lead them to place a higher value on the items.
The mental simulation, however, was found to only work for sunshine and snow because these weather conditions have a positive association with outside activities.
“There are not many activities that are enabled by rain,” said JoAndrea Hoegg, study co-author and associate professor at from Vancouver’s UBC Sauder School of Business, in a statement. “Most products associated with the rain, such as raincoats and umbrellas, are just to protect oneself against the rain and not to enable activities.”
Prof. Hoegg said online retailers could benefit by incorporating local weather information into the algorithms that determine which products to feature and how those products are priced.
Past research offers different insights into how weather influences purchasing decisions:
- Research from Richrelevance found between a 10 to 12 percent increase in online orders for apparel and home/furniture on cloudy days versus sunny days;
- A study from professors at the University of Alberta and the University of Western Ontario found that exposure to sunlight improves consumers’ moods, to the extent that they were willing to pay 21 percent more for orange juice and 37 percent more for green tea;
- A study from Columbia University and The Hebrew University of Jerusalem found exposure to physical warmth “activates the concept of emotional warmth, eliciting positive reactions and increasing product valuation.”
A 2018 study from British Retail Consortium found nearly half of U.K. retailers say the weather is among the top three external drivers of demand. The impact is strongest during the summer to fall transition when warmer weather delays fall buying. According to the study, for each degree warmer from mid-August to early October over the previous year, growth in sales is reduced by 1.1 percent.
Mild winter hurt and helped some retailers during the holiday quarter. For instance, the weather led to soft portable heater and outerwear sales at Tractor Supply, but facilitated construction, boosting sales at Home Depot.
- Consumers value products more on sunny and snowy days but not when it rains – ScienceDaily
- What Happens With Online Shopping When It Rains? Linking Online Shopping To Weather And Exploring Drivers Of Noise In Sales Data – Richrelevance
- Study of Seattle consumers shows how weather influences online shopping – GeekWire
- The Effect of Weather on Consumer Spending – Elsevier
- Does the warmer weather really affect retail sales? – Fashion United
Discussion Questions
DISCUSSION QUESTIONS: Are retailers overestimating or underestimating weather as a marketing and merchandising tool? Are adjustments based on weather feasible on an hourly, daily, weekly or monthly basis?
Poll
BrainTrust
Shelley E. Kohan
Associate Professor, Fashion Institute of Technology
Peter Charness
Retail Strategy - UST Global
Weather is a huge issue to many businesses, especially retail. Obviously there are seasonal opportunities, but what I’m thinking about is the ability to predict weather related to logistics, distribution and inventory. There’s a reason IBM bought the Weather Channel. They wanted to take data and use AI to predict business needs and opportunities.
Many retailers don’t even handle seasonal conversion well, much less give themselves the ability to adjust daily, weekly or monthly. Too much fall too early and too much winter too late, at what have to be horrific margins. All they can do is plan for the unpredictability of the weather and be prepared for those moments when the weather is either friend or foe. “Buy now, wear now” used to be a good mantra, but I don’t see it well executed very often. Less overall inventory and more frequent deliveries of weather sensitive product would be helpful. How horrible would it be to sell out of weather sensitive product at healthy margins rather than be dependent on one more snow storm to come out alive?
The weather has a definite and immediate impact on retail. There are many technological applications that retailers can use to integrate with their existing systems to better anticipate weather-related issues. Weekly, monthly and seasonal weather projections can be used to help stores optimize products that are impacted by these factors at a corporate level. For example, in a pull supply chain, a faster response to unseasonable weather can minimize over-stocks and markdowns. Whereas the hourly or daily weather implications can be best addressed by the store management teams. For example, on a bright sunny day, displaying products that revolve around the sun near the front of a store or on endcaps. Weather should not be an understated consideration.
Weather absolutely has a direct correlation with the performance of certain categories (i.e. outerwear and cold weather merchandise) and retailers would be smart to do geo-targeted marketing ahead of big storms in specific regions to be ahead of their competition.
While it won’t save a retailer’s results, it’s actually a way they can manage erratic weather patterns.
This is a data and demand issue and weathered (pun intended) retailers have factored weather conditions into their estimates. There are financial institutions that incorporate detailed weather reports into their corporate stock analysis and there is definitely a bump in impact, but it needs to be one element of an otherwise crowded field of parameters when forecasting. The broader impact will come from not the items in the store but how easy they are to transport. Customers might see changes in delivery date or shipping costs before they see a higher availability of certain types of products.
The weather has a strong impact on demand and in a country like the U.S. with many regional variations, being able to localize assortments and pricing is vital. I have lost count of the number of stores in the Phoenix metro area that have excess stock of heavy winter sweaters and coats from October through February. Sure, a limited assortment is useful as people do travel, but sending the standard package of stock to a part of the country that is hot for most of the year isn’t sensible! This is basic stuff and a lot of retailers still don’t get it right!
I’m curious about the cost of a study that reveals what every retailer already knows — weather conditions drive sales. (Speaking as somebody who used to merchandise sunglasses and gloves, among other things…) There is a clear correlation between cold weather (not just snow) and sales of coats, boots, cold weather accessories, windshield de-icer…the list goes on. Conversely, warm weather (not just sunshine) drives sales of shorts, tees, sunglasses, tanning products, barbecue supplies, and so forth.
I don’t think this is rocket science, but there is definitely a trend toward rapid-fire localized email marketing based on weather conditions. (Eddie Bauer and L.L.Bean, to name two, are very alert to local forecasts if my inbox is any indication.) There is room for a lot more sophistication than simply wheeling the umbrella fixture to the front of the store on a rainy day.
Weather has always been very influential with consumers’ shopping decisions. Merchandising organizations, especially those that carry seasonal categories and need to seamlessly transition between seasons, leverage valuable weather-related analytical insights into their assortment and planning decisions.
It’s challenging enough to drive these transitions and account for the weather shifts year to year, however the leading retailers are not equipped to adjust the strategies based on hourly, daily or weekly weather shifts. With that said, we are not far off from dynamic pricing capabilities that empower retailers to adjust their strategies in-season and account for demand and, potentially, weather shifts.
Most retailers underestimate the impact weather has on their business, and so very few factor in weather and apply it to their forecasts, staffing or promotional plans. The impact of weather on retail is real. That is why Planalytics built a business around helping companies effectively assess and proactively address how the weather impacts their business.
How often retailers should or can make adjustments to decisions depends on the type of business and the agility of their business.
Weather has always been a key factor in retail sales but doing something about it in real time has been a challenge because of the disconnected architecture of retail technology. When retailers had only one location it was easier to act quickly to capitalize on changing weather. With growth into national chains we lost that central nervous system concept, that stimulus and response we had with one store because we instituted two things. A decentralized technology environment with islands of automation and a command and control organizational structure that doesn’t permit local decision making. Retailers need to change one or the other or both to take full advantage of weather.
…and a forecast of snow assures stores will run out of snow shovels.
The conclusions of the studies are quite logical and not at all surprising. But I question the ability of, or even need for, a retailer to act and react based on weather forecasts.
Weather is actually a major factor in retailing of most kinds. I remember a couple winters ago it was warmer than normal, and stores were left with massive overstock. Staying close to the weather and linking it to your forecasting and buying as tightly as you can, based upon your best possible lead times, is the way to go. Localized, up-to-the-minute weather data truly drives inventory management.
Weather is certainly a factor, and for many retailers the impact is clear (and if it isn’t they need better analytics). Of course there’s always the Monday morning meeting excuse bucket where the weather can be the reason for slow sales whether it’s sunny or rainy. “The weather was too nice this weekend and people didn’t go to the malls,” or “the weather was rainy and people did (or did not) go to the malls.”
Wow. It sounds like every retail operation should run out and buy “The Farmers Almanac of Weather Impact on Delivery of Categorical Buying.” It is easy to talk about and point out buying errors due to the weather during and after the fact. The best suggestion I have read here is to create very nimble and immediate strategies for seasonal presentations, pertaining to daily weather, that can be implemented in-store in minutes. During my 38 years in the department store industry, I found the vendors very challenging regarding cooperating with me during our discussions of the staggering of deliveries I desired due to projected weather impacts. I wish I could have gotten their cooperation.
At the risk of stereotyping, I would question the value of such a studies (done in the U.K. and B.C., where gloomy weather is endemic) to the U.S. … at least as far as the specific numbers cited.
As for the more general issue: yes, of course, weather affects (some) retailers; the problem of trying to utilize this info lies with the unpredictability and day-to-day fluctuations. Or to paraphrase the old joke “everyone complains about the weather, but nobody can market with it.”