How the Weather Affects Retail Sales

The exploration of weather's influence on sales reveals that inclement weather often influences retail sales negatively. Yet, while bad weather can create some grim profit reports, retailers can predict some of these trends using long-range weather data along with sales by month across several years, and reduce profit loss even when the weather is undesirable.

Weather influences retail sales in a number of ways. Inclement weather keeps foot traffic away from brick-and-mortar stores driving customers to online retailers, which can reduce sales as much as 10 percent. Bad weather also prevents traveling and closes stores. Blizzards can shut down a whole region, making it impossible for customers to get groceries and other necessities, much less shop for optional items like furniture and jewelry.

Not all retail stores are negatively affected by bad weather. Retail pharmacies, for example, sell necessities such as prescription and over-the-counter drugs, and the resulting sales are stronger than other retail segments. While it seems counterintuitive that people would shop for optional items during bad weather, highly popular clothing stores and those that cater to teens can experience growth during a bad winter, at least more than other stores. Sales are partially dependent on what customers consider a necessity. The fact that inclement weather's influence does not reduce sales across the board suggests that retailers can plan effective strategies to cope with weather.

Managers can monetize these trends in weather by paying attention to when customers tend to buy certain items in response to weather and then stock stores accordingly. Sears did this by noticing that older automobile batteries tend to die after a few days of below-zero weather. Following such a spate of weather, Sears advertised its batteries. A second way to monetize weather's influence in the retail sector is to make staffing decisions based on weather reports, calling in fewer employees during bad weather when fewer customers are expected to shop.

Making money from thoughtful decisions about the weather's influence and the resulting sales can be bolstered by data analysis. Relevant data can inclue long-range average temperature in bad weather months and other weather data, sales during those months, and correlational analysis between these factors. While large companies have in-house analysts, tools exist on the web that allow people without specialized statistical training to plan effectively around weather events and save costs.

The weather's influence can drive profits up or down, depending on how carefully retailers plan their strategy for handling bad months. With data analysis tools, retailers can make staffing, stocking and advertising responsive to the special realities of bad weather months. These strategies may not directly increase profits but they may effectively reduce loss, saving the company from financial hardship.

(Photo courtesy of Maggie Smith / freedigitalphotos.net)