Weathering Retail Sales

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Here in Denver, we were recently socked in by a winter storm for about 24 hours. It made for messy conditions for the morning and evening commutes. Meanwhile, the Colorado mountain communities were full of glee, reveling in snow powder that attracts ski and snowboard business.

As with ski resorts, it’s no secret among retailers that weather can have a profound effect on sales. Seasonal changes – as well as daily and weekly fluctuations – must be accounted for when making consumer sales projections. These ebbs and flows not only impact the type of items being sold, but also the manner in which consumers shop. For brick and mortar retailers, the good weather generally fuels business, generating an increase in foot traffic which leads to an uptick in sales. But inclement weather? Well, the results can be mixed.

 ‘Tis The Season To Be Jolly (for Retailers)

The first phase of the holiday season is now behind us, and it appears that shoppers were out in big numbers, according to the latest retail data from the National Retail Federation.

But warmer-than-normal weather patterns wreaked havoc for some stores who were hoping to capitalize on this the busiest shopping season of the year. A report from data analytics firm Planalytics shows that U.S. stores lost $185 million in November sales. This slide is largely attributed to an unusually warm weather pattern in the Midwest and along the East Coast. So far, this trend has continued into December, with outerwear sales plummeting over 30% in cities like Boston, Chicago, New York and Philadelphia.

In an interesting yet not surprising juxtaposition, retailers like Nike and Lululemon Athletica, with their emphasis on leisure outdoor wear, continue to be well-positioned to capitalize on the warmer temperatures.

Weather forecasters point to a late start to winter, with the average temperature in October registering in nationally at 57.4 degrees Fahrenheit. This temperature is the highest since 1963, significantly above the historical average of 54.3 degrees. For retailers, patterns like this tend to depress the sales of cold weather items like gloves, boots, hats and other winter season products.

By way of an example, global clothing retailer H&M noted that their sales estimates were off in both North America and Europe because of unseasonably mild weather kept people outdoors and away from the stores.  Weather Trends International says that sales of winter apparel can fluctuate 3% to 5% per degree of temperature shift.

A Winter Wonderland of Virtual Shopping

It’s long been documented that online sales continue to experience an upward climb, fueled by the proliferation of the internet. But does weather have a measurable effect on this mode of shopping? Most retail experts agree that it does. Consumers are more apt to do their shopping online when temperatures are colder and raining while preferring to shop at brick-and-mortar locales when the weather is warm and sunny.

This is why many retailers have embraced both a physical and an online presence. The thinking here is that one revenue portal can compensate for the other, amid these often unpredictable weather shifts.

Weather and Package Delivery

As the Christmas season approaches, the number of packages being sent to and fro tends to spike to its highest level. Again, weather can play a role here, particularly with respect to delivery timeliness.  A winter storm rears its ugly head and it creates havoc for package transport and delivery, as roads become jammed or impassable. With nearly $105 billion in online holiday sales, the Post Office, as well as package delivery companies like FedEx and UPS, find themselves under the gun to stay ahead of Mother Nature and the elements in order to ensure arrival at their intended destination on time.  For the retailers and the package deliverers, sound weather-planning is paramount to a profitable holiday season.

Michael Scott is a Denver-based journalist examining economic freedom and the new digital economy. His work can be found on BitDisrupt

 

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