Retailers Turning to Weather Strategies In Changing Climate

With events causing $1 billion or more in damages now happening about every three weeks, up significantly from once every three months in the 1980s, the frequency of costly natural disasters in the United States has risen, according to the National Oceanic and Atmospheric Administration.

As companies work to comprehend and respond to the effects of changing weather patterns on consumer behavior, this increasing trend has led to increased demand for weather-driven retail analytics.

One company which uses advanced computer models to assess the weather’s impact on retail sales responded to this demand is Planalytics.  The company’s executive vice president of partnerships, Evan Gold, told that Planalytics is on track to provide clients with double the number of weather-related models in 2024 compared to the previous year, marking a ninefold increase since 2019. In consumer activity driven by weather changes, these models help retailers adjust to fluctuations.

Head of Metronomes, Stefan Bornemann, mentions that weather often influences foot traffic and sales, a trend that could grow as extreme weather incidents become more frequent. Data from analytics experts show how sales for certain products shift with temperature changes. For instance, seeing a 7% increase in sales per degree drop in temperature while Starbucks’ coffee sales reportedly rose by 2% per degree cooler—although Starbucks declined to comment Horse blankets.

One strategy retailer is increasingly using to mitigate the impacts of fluctuating demand is dynamic pricing. Retailers can introduce early markdowns in a slow season rather than resorting to steep discounts later by adjusting prices based on predicted sales patterns. Informed by weather data, this proactive approach enables businesses to accommodate inventory and protect profits.

Retailers should move past blaming poor earnings on the weather, a rationale that Wall Street finds embarrassing according to Kirk, an industry expert, explaining that it signals a lack of business control “Wall Street hates that excuse,” he said. Enhancing their resistance in a rapidly changing climate, embracing data-driven solutions enables retailers to proactively manage the challenges posed by increasing temperatures and shifting consumer demand.

Source: (Reuters)