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Retailers can’t control the weather, but they can profit from it. Here’s how

By Ed Higdon. Posted in Action

June 02, 2014

Dozens of factors can impact the success of a retailer’s product line – pricing, marketing campaigns, trends and the local economy, to name just a few. But a recent study involving one retailer found that the biggest factor that impacted its sales was something it couldn’t control: the weather.

True story: With America still recovering from the 2009 recession, one of the country’s largest retailers teamed up with a leading data analytics company to investigate why sales in one division were not as high as it hoped.

They launched a thorough study that took into account internal information such as the products being sold, their prices and the extent to which the products were being advertised through various media. They also studied external factors, including economic indicators such as housing indexes, gas prices, competitive sets and consumer confidence.

But the study found that the No. 1 factor in predicting sales was the weather. The data showed that on spring days when temperatures were unusually warm, sales of new spring and summer clothes went up. However, on unusually cool spring days, featured spring and summer clothing did not sell well, as more customers were inclined to purchase winter clothing off the clearance racks.

So what does this study mean for retailers? Should they not even bother with innovative marketing strategies if the No. 1 factor affecting sales is something they can’t even control?

No. On the contrary, this story suggests that weather forecasts are another important tool that can give retailers the power to project sales with some certainty. There are services today that can make fairly accurate weather predictions six to 12 weeks ahead of time. Retailers can cater their product marketing and intensity based on those forecasts. Then if they are expecting a pleasant, warm spring, they know that advertising spring and summer clothing is a good investment. If unusually cool weather is predicted for a given week, the retailer knows it is a good time to promote a clearance sale on winter items.

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Smart retailers are already doing this. If you have ever received an email advertisement from a company showcasing snowblowers on the day before a major storm is predicted, you have been targeted by a business that thinks about how weather impacts spending.

For retailers in some areas, planning sales around weather is already a way of life. Anyone who is familiar with the outlet malls along the beaches in the Florida Panhandle has probably observed that the busiest days occur when it’s raining (because no one wants to go to the beach on those days.) Meanwhile, people who work in most other outlet centers that are primarily outdoors, such as the ones outside Atlanta, usually pray there won’t be rain, as that can make it more inconvenient for their customers to get out and about.

Retailers have long known that weather significantly impacts their business, but would you have guessed it was the most important factor? The news was very helpful, as the retailer now has another piece of information to guide how and when it launches sales. Insights like this can have a big impact on a company’s bottom line, and it’s another example of why working with a data analytics company can take the guesswork out of marketing.