In the UK the weather is often erratic and unpredictable. Whether you are a producer, packer, transporter, retailer or customer, it can have a dramatic effect.
Producers can be affected by unfavourable weather that can impact on crop production, for example, and therefore supply. Transporters can be affected by severe weather hindering the transport of stock. As a customer, it can affect our mood and requirements (‘demand’), which in turn influences our shopping habits. Furthermore, severe flooding and extreme weather conditions hinder retail spending when people are unable to leave their homes.
But changeable weather also severely impacts on retailers, creating both opportunities and risks. Retailers can suffer financially if stocks are too low, or conversely too high. For example, hot weather sees a rise in demand for items such as bbq food, ice cream etc, and decrease in demand for so-called ‘hearty’ foodstuffs. Similarly, demand for umbrellas increases during periods of heavy or persistent rainfall, whilst demand for gloves and scarves increases during coldsnaps.
Understanding the impact different weather events have on the retail market in conjunction with weather forecasts can therefore have a huge impact on profit margins. In fact, weather is estimated to cost the fashion industry £700 million, with prolonged periods of bad weather having the worst impact.
Weather effective sales account for around 4.5% of overall sales, a number that could determine a profit or a loss. With the complicated effect of weather on retail sales, it means distinct goods are affected at diverse times of year. Seasonality plays a large part in this. Shoppers want weather that is appropriate to the season, which in turn enables retailers to predict trends.
Tesco, for example, use a system that cross checks an accumulation of 5 years’ worth of data with information about every product in every store, every day of the week. This allows them to accurately predict what people want, allowing them to appropriately stock their stores. Their system is so specific it can even indicate the temperature at which sales of burgers will go up.
Retail profit margins depend on juggling many thousands of product lines across hundreds of outlets. From produce availability and transport logistics to consumer demand patterns and short-term spikes, planning for and managing the effects of weather is a very real concern in all aspects of retail.
Case Study: The Met Office & M&S
The Met Office works with M&S to apply weather and climate science to help producers and retailers plan for demand:
Many other weather service providers also work with retailers to provide weather information to help plan for changing demands.