Using Weather Data to Boost Holiday Retail Prep

The holiday shopping season can be the bow on your retail year … or the coal in your stocking if you fail to plan properly for consumer demand. Weather affects everything in your retail operation, from shipping to buyer behavior, and understanding how to manage these effects is key to your seasonal success.

Shelves of unwanted goods and unanticipated buyer traffic levels can ruin any retail business plan. Getting an accurate weather forecast ahead of time gives you the opportunity to better prepare in the present for the business outcome your future is most likely to hold.

Data Reliability: Forecast vs. Comparison

Many retail businesses rely on last year’s data to set expectations for this year’s sales, yet weather patterns can render these comparisons less than accurate. Long-term and seasonal forecasts are better indicators of future retail behavior patterns because they're more relevant, leveraging forecasted weather variances rather than relying on previous years’ sales numbers, which can represent very different weather conditions year-to-year.

Just in the past two years, weather deviations from the norm have heavily influenced shopper behavior. Abnormally mild temperatures pervaded 2015, the warmest on record; and 2016 presented a frigid holiday season, one of the coldest in the last decade. When weather was unsuitably warm in 2015, consumers bought fewer items and retailers were forced to take steep markdowns.

However, those retailers that planned for another mild winter in 2016 missed the mark. Frigid temps across the Northeast and Midwest — 20-30 degrees below average — were experienced at the core of the holiday season and drove shoppers toward cold-weather gear that wasn’t in stock. Knowing how to manage your sales projections to adjust for weather’s impact can lead to more accurate decisions and allow you to better meet customer expectations in the face of any weather trend.

Operational Insights to Boost Retail Performance

The insights that can be driven by weather data go beyond getting boots on the ground to meet existing demand. A well-targeted promotion influenced by local weather conditions can entice a consumer to come into the store. Once inside your retail locations, shoppers can be targeted with products based on a combination of factors including the weather, local trends and personal preferences.

Stark winter conditions may call for winter coats or swimsuits based on your customer's tendency toward travel. A sweatshirt can be just as enticing to shoppers in the summer as the shoulder seasons based on attitudes and local norms. Preparing your stores to create incremental opportunity is key to boosting sales.

To help you make sense of these data points, there are companies that can help correlate shopper behavior to weather data. This type of insight can help you deliver the right campaign for forecasted conditions locally and prepare your operational playbooks for supply chain management, product demand, pricing and inventory. With tools like operations dashboards, retailers can have a view of live weather conditions from radar and satellites, road forecasts, live traffic feeds, and crowd-sourced traffic conditions that allow operations managers to better plan for conditions both before and as they happen. From one source, retail operations can be managed and optimized to impact business profitability, both through capturing demand and preparing for weather-related disruption.

Present and Future Planning for Weather Conditions

Weather forecasts turned into relevant business decisions based on when, where and how much consumers will shop can make or break the retail holiday season, with buyers reacting to conditions in real time to determine profits on a daily basis. But it’s more than just a temperature gauge for money spent; weather can affect business decisions at all levels.

Seasonal and subseasonal forecasts can also provide an understanding of how weather trends will affect consumer behavior well ahead of time, giving you the insight into long-range forecasted conditions so that long-term planning can be made with confidence. Wouldn’t you rather have known in the summer of 2016 that cold temperatures would boost demand for cold-weather products in the holiday shopping season? You could have ordered from vendors early and been able to better hit the mark without making last-minute adjustments to avoid stockouts or large markdowns after the season passed. It’s never too early to start thinking about 2018!

Prepare ahead of time for your holiday retail needs with expert weather data and insights. The advance notice of potential weather conditions is what you need to help better plan, manage, and create shopping opportunities for yourself and your customers.

Maia Sisk is the director of offerings, location and new markets at The Weather Company, an IBM Business.