The document discusses how weather impacts retail supply chains. A survey of 240 supply chain managers found that weather was the third most important external factor driving consumer demand, after events/holidays and competitor activity. Weather, especially temperature, is used in short-term sales forecasting but respondents felt it could be better utilized. Those using paid weather data reported more benefits than those relying on free data, including better availability, sales forecasting, customer service and reduced waste. The document concludes that properly accounting for weather's influence on shopper behavior and demand planning is increasingly important for retailers.

1. Understanding
the role of
weather in the
supply chain
October 2015
www.metoffice.gov.uk/retail

2. While UK retail sales have been enjoying a period of
steady growth, with volumes rising for the 27th
consecutive month and growing 4% year on year, they
continue to be held back by the underperformance of the
food sector.
Retail sector growth is being hampered
Retail Economics: Retail Sales
Report - July 2015
Sales in the food
category fell by
0.1% in June 2015,
down from +0.6%
in the previous
month
Understanding the role of weather in the supply chain

3. The food sector is facing a number of unique
structural challenges which are holding back growth
in this category:
• Shopper behaviour. There has been a fragmentation of demand across
multiple channels coupled with growing customer expectations
• Retail environment. Competition has intensified amongst the major
supermarkets, with the likes of Aldi and Lidl gaining a larger slice of market
share by offering lower prices
• External factors. An increase in seasonal weather extremes, fragile economic
recovery, as well as the growing need to reduce food inventory and waste
Understanding the role of weather in the supply chain
The weather is an
essential, but often
overlooked, factor for
retailers and suppliers
looking to increase
consumer advocacy
and drive competitive
advantage.
Barbara Napiorkowska-Dickson,
Met Office
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4. Met Office report key findings
Understanding the role of weather in the supply chain
In order to better understand the impact of the weather on shopper behaviour
and supply chains, the Met Office undertook research among supply chain
managers and executives to draw out valuable insights and implications for
the role of weather in the industry.
Our research consisted of:
• An online survey responded to by over 240 senior managers and
executives, across many well-known industry organisations
• Views from retailers, suppliers and third party logistics providers, with the
majority in the food and grocery industry
• Cross-functional representation with the majority of respondents involved
in planning

5. Forecasting demand accurately is the most important
function to get right in the supply chain in order to deliver
its primary goals of great product availability for customers,
low inventory and low costs, including reduced waste.
Despite the investments and improvements in forecasting
systems, intelligence and data analysis, forecasting is
getting harder due to supply chain complexity.
Retail Economics: Retail Sales Report
- July 2015
“These are the most challenging conditions in 30 years.
Customers have never been so savvy.”
CEO of a major grocery retailer
Understanding the role of weather in the supply chain
Is forecasting demand getting harder or
easier?
Forecasting and planning are key to success

6. The weather was ranked the 3rd most important factor
external to their business that drives consumer
behaviour, for 47% of all respondents in the study.
Sales in the food
category fell by
0.1% in June 2015,
down from +0.6%
in the previous
month
Retail Economics: Retail Sales Report
- July 2015
The weather has a significant impact
Understanding the role of weather in the supply chain
What are the top three factors, external to your
business, that drive end consumer demand?
“It is not enough to consider an average
weather or temperature for the whole day. For
example, if it's sunny at lunch and rains later
you can sell 20% more sandwiches than if it
rains at lunch and may be sunny later.”
Senior supply chain manager - national retailer 47%
The weather
53%
• Events/ holidays
• Competitor activity
• The economy

7. Weather data driving end-to-end decisions
Inline with retailers’ and suppliers’ key priorities, weather forecasts
are currently used to support a broad range of decisions and
activities in the supply chain like sales forecasting, planning stock
availability and promotions, and managing deliveries/ logistics.
By far the most common application of the weather forecasts is to
the short term sales forecasts which drive so much of the upstream
planning and activities.
There is also a clear desire from supply chains to use the weather
forecasts more broadly within their businesses, particularly to drive
commercial benefits – for example through forecasting footfall and
online traffic and planning marketing campaigns.
Understanding the role of weather in the supply chain
What weather factors are taken into consideration
in your forecasts/ planning?

8. Only 16% of respondents are using a commercial weather forecast,
with 19% relying on free data.
Integration of weather data
Retailers are much more likely than suppliers to use commercial
products (27% versus 11%). They sell a wide range of products, at least
some of which are likely to be weather sensitive. Suppliers have a
narrower portfolio and, for some, their business may be less affected by
the weather.
Understanding the role of weather in the supply chain
What weather products or data do you
use in your business?
Organisations may assume that their products are not weather sensitive,
but their business most certainly is. It is too simplistic to just take a
product-facing approach – the weather will always have an impact on
their sourcing and logistic operations and their sales and marketing
activity.

9. Understanding the role of weather in the supply chain
Different weather factors in planning
The most commonly used weather factors in planning are varying
measures of temperature – maximum, average and minimum –
which have the strongest impact on consumer demand.
Extreme bad weather events, whilst also impacting consumer
demand, tend to have just as important an impact on logistics such
as supply and delivery. For example, snowfall and ice can
potentially prevent or delay the delivery of products to the
supermarkets, while one packaging supplier said that adverse sea
weather can add 5-6 days to a shipment.
The weather that retailers
care about is temperature,
sunshine hours and extreme
events. For their historical
analysis they look at average
temperature at the weekend
and they would also look
at this by UK region.
Head of planning at private label
manufacturer
“
”

10. Benefits of using weather data
Retailers
Better on shelf availability – linking back to the aforementioned
ability to predict consumer demand – was identified as the most
prominent benefit, and chosen by 81% of respondents. Better sales
forecasting (62%), less waste (57%) and better customer service
(43%) were further key benefits identified.
Suppliers
Better customer service (69%) was identified as the leading benefit
for suppliers by a significant margin. This was followed by the
ability to better forecast sales (56%). Better on shelf availability and
less waste (both 39%) were also identified.
Understanding the role of weather in the supply chain
What benefits have you received from using
weather data?
Those who paid-for weather forecasting products on average
identified a larger number of benefits to their company from
weather forecasting compared to those who relied only on free
products.

11. Satisfaction greater with paid-for data
A key outtake from the results was that those who paid for weather
forecasting products on average identified a larger number of
benefits to their company from weather forecasting compared to
those who relied only on free products.
Overall, retailers were much more satisfied than suppliers by using
weather data. There were also significantly different levels of
satisfaction between those who use free weather data and those who
use paid-for data.
Understanding the role of weather in the supply chain
What benefits have you received
from using weather data?

12. As demonstrated in the research findings, the influence of the weather on
shopper behaviour, including its impact in demand planning, is increasingly
recognised across the retail industry.
It is too simplistic to just take a product-facing approach – the weather will
always impact your sales and marketing business in some way.
Organisations get far more out of paid-for data, citing improved customer
service, better sales forecast accuracy, better on-shelf availability, lower
inventory and less waste – the key priorities of most supply chains.
Using advanced weather data is a significant opportunity for organisations to
improve supply chain and operational efficiencies for British retailers and
suppliers. We hope that these insights will drive a shift within the industry to
incorporate more weather data within demand planning.
Understanding the role of weather in the supply chain
Barbara Napiorkowska-Dickson,
Met Office
The influence of the
weather on shopper
behaviour, and the
importance of
including its impact in
demand planning, is
increasingly
recognised across the
retail industry.
Summary
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13. About DemandMet™
The Met Office is ideally placed to provide forecasts for retailers and suppliers
to help them drive efficiency across the entire supply chain. DemandMet™ is a
tailored weather forecasting service that can help improve product forecasting
and, as a result, on-shelf product availability.
The service, based on world leading weather forecasting capabilities, puts
weather into the context of the industry and focuses on interpreting how it feels
and evolves over time.
For more information, and to download the full report, visit
www.metoffice.gov.uk/retail
Understanding the role of weather in the supply chain
Questions? Comments? Great ideas? We want to hear them.
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