In the winter of 2015, much of the country experienced a heat wave. In fact, temperatures for the week of Dec. 6 -12 were about 10% higher than the previous year in the U.S. According to an article found on Ad Age, the warm weather cost stores an estimated $185 million in lost sales in November alone.
But there was nothing to be done.
After all, weather is a fickle and uncontrollable factor that no forecaster can reliably predict. And that means planning for the weather’s impact on retail sales is a futile exercise. Right?
Not if you ask the National Retail Federation. According to a report collaborated with Planalytics:
” . . . Ignoring the effect of something with such a profound impact on consumers’ day-to-day lives can lead to severe miscalculations in everything from sales and inventory to markdowns and staffing levels.”
So how do retailers ensure that supply can match demand when the weather’s not playing nice? Read on for four suggestions:
“You can’t control the weather, but you can control your response to disruptive weather events by taking early action to mitigate the impact or take advantage of the opportunities,” says The Weather Company.
Retailers can make better decisions through demand planning, which is, in the words of Planalytics:
“A business function that has as its primary goal the creation of an accurate forecast of future demand for a company’s products, such that it can do an effective job of fulfilling that demand.”
According to Boston Retail Partners’ 2016 Merchandise Planning Survey, approximately 71% of retailers lack a proper demand planning process (there are many demand planning tutorials and software programs available online).
Weather is considered one of those external variables that have a huge impact on consumer demand, affecting the purchasing behavior of millions of consumers on a daily basis.
While many companies would like to incorporate the weather into their demand planning processes, it’s often viewed as ‘uncontrollable’ or too difficult to manage. The reality is that weather regularly causes chaotic changes in demand, so it should absolutely be included in the demand planning process.
By incorporating weather’s impact into demand planning, retailers can generate remarkable improvements in forecast accuracy, enabling them to “action” the weather and improve profitability through decreasing inventories, minimizing out-of-stock items, removing costs from the supply chain, etc.
When weather conditions are conducive to in-store shopping—not too cold or snowy, with good road conditions— smart retailers will encourage shoppers to get out of the comfort of their homes by sending weather-triggered email campaigns, suggests The Retail Doctor.
Some email marketing subject line examples might be:
When the weather and road conditions are bad, opt for emails that encourage customers to shop from home on your website in their pajamas.
Consider the following subject line examples:
When it comes to milder weather email tips for warmer regions, shift the email’s focus to things that make sense year-round, such as coffee, electronics, and sneakers.
These email subject lines might look like:
Weather can affect scheduling and store operations. “The key is to leverage your short-term (5-7-day) local forecast to predict foot traffic and adjust weekly schedules as needed,” says The Retail Doctor.
If the weather forecast is favorable enough for in-store shopping, request that staff members stay for a few extra hours. When the forecast predicts bad weather and poor road conditions, don’t replace staff that call in sick—there’s a pretty good chance that foot traffic will be slow.
When shoppers are few and far between, assign staff members with weather-safety tasks such as clearing the sidewalks, mopping up wet entrances, or reorganizing shelves with weather-related merchandise. If all tasks are complete, don’t let your employees hang around and play with their smartphones. Use the time for training and role-play some common selling scenarios.
It’s not hard to understand why retail sales for ice scrapers and flu relief products go up during the winter months. But less obvious weather insights from an IBM report reveal that soda sales increase during snowy or rainy winters and pasta consumption increases during cold, crisp weather as people crave feelings of comfort and escape from the elements.
This type of weather data helps retailers overcome challenges in merchandise planning and inventory optimization. They can also better predict purchase patterns, prepare for demand impacts on product strategies, and make smarter staffing and product placement decisions.
“We are moving into a new era where the data is shaping the business, says The Retail Doctor. “Many retailers are now using the power of IBM Watson Commerce and the Weather Company to proactively predict staffing, merchandising, and marketing.”
Demand forecasting is critical to the longevity of any business, advises TradeGecko.
The company goes on to say, “From reducing costs to keeping consumers happy, demand forecasting is an essential element of supply chain management, helping companies fill orders on time, avoid unnecessary inventory expenses and plan for price fluctuations.”
And while retailers may not be able to control the weather, they can control how they respond to disruptive weather occurrences by proactively taking early action that will temper the effects and help them take advantage of the opportunities.
Learn more about how to weather the weather with Dive Shop 360 software.
