The Impact of Weather on Consumer Demand

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Brief overview of the impact of weather on consumer demand and retail sales

Brief overview of the impact of weather on consumer demand and retail sales

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  • 1. Weather and Consumer Demand Overview
  • 2. Our Mission We help companies make more money by systematically planning for the influence of weather on consumers and business © Copyright 2009 All Rights Reserved, G2 Weather Intelligence, LLC
  • 3. Weather and Consumers •  Weather is a fundamental yet often overlooked driver of consumer demand •  Results in unexpected upside/downside volatility in same-store sales results −  Particularly during the high margin spring transition season •  Easier to measure and predict than almost any other influence on consumer activity © Copyright 2009 All Rights Reserved, G2 Weather Intelligence, LLC
  • 4. Retail Sectors Impacted •  Off-the-Mall Specialty Retail •  Mass Merchants/Club Stores •  Mall-based Specialty Retail •  Department Stores •  Home Centers •  Restaurants/C-Stores © Copyright 2009 All Rights Reserved, G2 Weather Intelligence, LLC
  • 5. Weather Considerations •  Weather impact on consumer behavior a factor of: −  Merchandise Assortment −  Market/Geography −  Demographics −  Spending power −  Fiscal calendar −  Prior month © Copyright 2009 All Rights Reserved, G2 Weather Intelligence, LLC
  • 6. Weather and Consumers •  Temperature –  Primary “strategic” demand indicator –  Departures from normal and prior year are key –  Impacts large population centers and geographies –  Correlates strongly to sales of seasonal merchandise –  Predictable at seasonal (year ahead) time scales •  Precipitation/Snow –  Weekend, daytime events the biggest impact –  Traffic hindrance primarily –  High impact but not as widespread as the impact of temperature –  Impactful events are not as predictable at longer range time scales © Copyright 2009 All Rights Reserved, G2 Weather Intelligence, LLC
  • 7. Weather and Consumers •  Hurricanes –  Traffic and demand generator –  Biggest and most widespread impact the result of hurricane predictions vice landfall –  Media coverage ahead of storms results in a net plus for Home Centers (HD/ LOW), Mass (WMT), and grocers; results in a net negative for mall-based retailers © Copyright 2009 All Rights Reserved, G2 Weather Intelligence, LLC
  • 8. Weather Impact on March Sales •  Example of the influence of temperature on retail sales •  Old Navy same store sales change compared to the change in a nationally weighted Cooling Degree Index (weather source: NOAA) •  Increased cooling demand correlates to increased demand for spring apparel –  ~40% correlation © Copyright 2009 All Rights Reserved, G2 Weather Intelligence, LLC
  • 9. Weather Impact on April Sales •  Example of the influence of temperature on retail sales in April •  National temperature change against the average comp store sales of a basket of 53 retailers (source: Global Hunter Securities and NOAA) © Copyright 2009 All Rights Reserved, G2 Weather Intelligence, LLC
  • 10. Contact Information Paul Walsh, Managing Principal –  Email: Paul.Walsh@g2weather.com –  Direct: +1.917.463.4238 –  Mobile: +1.610.246.0623 © Copyright 2009 All Rights Reserved, G2 Weather Intelligence, LLC