How Weather Affects Retail
Few businesses actually realise how instrumental the weather is in shaping consumer spending habits. The typically unreliable British weather is the second largest influence on the public’s spending patterns after the state of the economy, according to the British Retail Consortium. This relationship is a complex web of interlinked variables which large retailers have only recently started to analyse and exploit to their advantage.
Supermarkets such as Tesco use sophisticated software to plot sales information for individual products against past weather data for each day of the year, spanning back several years. By cross-referencing these two data sets they can identify weather-determined patterns and trends in customer spending. For example, they know with certainty that a 4°C rise over a certain temperature will trigger a 42% increase in burger sales, whilst a particularly cold Monday will bring about a greater demand for green vegetables. To be able to predict with such accuracy one’s stock requirements for the future is the holy grail of retailing. Tesco states that their use of past weather data for managing stock has saved them £6 million per year.
Whilst Tesco is one of the retail giants, the same principles will apply to businesses of all sizes. Streamlining your operation so that the supply of your goods perfectly meets the demands of the market will result in the maximisation of profits. By using Weather2’s Business Intelligence Service (which includes Hindcast and Probability data) you can data-mine this valuable reserve of information to drastically increase the turnover for your business. With weather-influenced sales constituting 4.5% of total sales in the UK* failing to understand and anticipate demand “could be the difference between returning a profit and making a loss” explains one industry insider. With even the most subtle meteorological changes having a profound effect on the collective psyche of the consumer, that age-old adage applies to your business: “failing to prepare is preparing to fail”.
*Source: Ian michaelwaite, Netweather.tv, 2011
For more information on our range of business services: http://www.myweather2.com/business/
Tags: Business, Business Intelligence, Consumer Spending, Retail, Weather
