Unseasonal weather can have an enormous impact on UK retail, in fact just as much as extreme weather events.
Weather patterns are changing. More periods of abnormal weather, such as long periods of hot, cold or wet weather, and an increase in the frequency of severe weather, such as heat waves, snow storms or flooding, are taking place. The impact of short spells of extreme weather can have a very different effect on the performance of UK retail businesses relative to long periods of unusually warm or cold temperature i.e. 10 days of three inches of snow is much worse than one day of 30 inches of snow – something often ignored by industry commentators.
So why is the impact of weather ignored in the UK? As an economic variable, weather fluctuates too much and is too unpredictable in the medium-to-long term to be built into most economic models. The marginal impact of extreme events is also seen as being difficult to measure and separate from other economic influences.
How does the impact of weather feature in this ever-changing retail landscape?
When it’s raining or cold, it can be easier to shop online, in your local shopping centre or at a nearby largely covered and super convenient retail park; when it’s warm, a stroll down the high street may be a more tempting prospect.
Almost 60% of shoppers change their shopping patterns depending on the forecast. When raining, a third of shoppers shop less, while one in eight shop more – but in covered shopping centres rather than high streets. And 16% of shoppers say they switch to online with it rains.
In large part, the success of shopping centres and the annual double-digit growth of online shopping can be attributed to the relative comfort a shopping centre or home rather than the often wet and windy high street and the equally challenging journey there and back.
Retail CEOs need to take note
Retail CEOs live or die by their results; so often we see sales or profits rise or fall by a very small percentage points.
Yet CEOs rarely acknowledge the importance of weather on their results. Back in October 2014, John Lewis Managing Director, Andy Street, said “weather has a greater effect (on sales) than economic numbers, we’ve known that forever.” A view not shared by all, with others believing that “weather is for wimps” and a cover for unexpected financials.
Weather rarely features in the analysis of retail performance too. The British Retail Consortium (BRC) never comments publicly on the impact of weather on retail sales and retail analysts are more comfortable explaining fluctuations in demand using more traditional and easily-forecast factors such as wage price inflation, lower fuel prices and personal borrowing.
Yet, retailers often report sales growth or decline on a quarterly bases, a mere 13 weeks, and the impact of two or three consecutive wet weekends can have a huge impact on performance of some products or certain types of retailers.
How can retailers address the issues and remain profitable?
- Just like news, weather is now 24/7 enabling short notice decisions on media buying helping companies tailor activity or tackle weather based trading challenges. The explosion in digital advertising is particularly beneficial in tweaking content last minute: emails, search engine, social media, online display and mobile advertising are all particularly adept at targeting key customer segments with new messages at short notice.
- More and more brands are developing weather marketing strategies in order to manage factors beyond their control. The concept of using historical and forecast weather data combined and analytics is producing results.
- Even the most minor changes in weather can affect consumer buying habits, so brands that are able to adapt their commercial message in real-time and at a hyper-local level will remain ahead of the game.
Rain, hail or shine we love a challenge at The Market, whilst we can’t guarantee the sunshine we will brighten your days and help you meet your forecasts! Okay, enough weather puns; you can find out more about what we do and how we do it by visiting http://themarketcreative.com/who-we-are/.