October 10, 2007
The Weather Calls for Rocky Retailing
Witnessing a Green Bay Packers’ night game in October where temperatures were in the eighties might be enough for even those skeptical about global warming (climate change for those who prefer the term) to question if something isn’t literally up with the weather.
According to a report by The New York Times, a growing number of fashion designers are concerned about the unpredictable weather and its impact on their business.
Beppe Modenese, the founder of Milan Fashion Week, said less distinct weather changes between the seasons has led him to the conclusion that the “whole fashion system will have to change… You can’t have everyone showing four times a year to present the same thing.
“People are not prepared to invest in these clothes that, from one season to the other, use the same fabrics at the same weight,” he said. “The fashion system must adapt to the reality that there is no strong difference between summer and winter anymore.”
Discussion questions: Just how much of an impact does weather have on apparel and other channels of retailing? Do retailers today need to be in the weather business to succeed?
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Mark is right that there are credible long-range forecasters available to help retailers. However, weather is too unpredictable on a short-term basis (80 degrees yesterday, 40 degrees today in Wisconsin) to use it as an excuse for merchandising results or decisions. Over the long run, “fall weather” does seem to be starting later than in the past. Without arguing the merits of global warming as a cause, retailers should rethink their tendency to “push the seasons” too early and to run out of appropriate “wear-now” goods too soon.
The weather issues that affect sales have much more to do with merchants “jumping the gun” on seasons than with noticeable global weather changes. Having also had experiences similar to Anne’s, I have often wondered when an enterprising merchant will bring out a stunning new batch of swimsuits and shorts and sandals and golf clothes in August–and heavily advertise them–just when their competitors have finished summer markdowns and are serving up corduroy and wool.
From a fashion standpoint, there is no question that weather plays an important role in how clothes are designed. Some materials will need to be year-round wear simply because the weather patterns have changed, as have travel. Many people think nothing of traveling between climates on a weekly basis as we continuously become a more transient society.
With respect to the question about whether retailers should become weather experts or not, there is no question that weather plays an important role in weather sales. Yet I always find it interesting that retailers use weather as an excuse when same store sales results are poor. If the weather is too cold, retailers claim that people refuse to go out and shop in the cold. If weather is too warm, retailers complain that warm weather hurt sales of winter wear. Too much snow, retailers complain that people won’t drive in the snow. Too little snow, people won’t buy snow removal products.
Retailers use weather as an excuse for slow sales, but the fact is you can’t control your weather, but you can control your marketing.
The core question asked was whether retailers, specifically apparel retailers, should include weather in their merchandising tactics toolkit. Well, yes, as a global concept, that would seem to make some sense. However, it’s important to really understand where those tactics can be implemented. It is impossible to include short term weather fluctuations or off-model season change in merchandise assortment planning. Styles and quantities are committed too well in advance of when this data would be available. The only choice might be to withhold shipment of heavier or lighter weight apparel given a seasonal variation, but this is unlikely given the horror of unfilled racks and empty floors. Inappropriate weather apparel racks at least have the benefit of letting the consumer know where to find your wonderful assortment if and when the weather does change.
Pricing and promotion are the two areas in which retailers can become more weather tactical. In some organizations, promotional activity is planned and committed to so far in advance that this too is impossible. Those organizations need to streamline their processes and get more flexible. Period. Pricing is almost instantly available, and can be communicated via any number of marketing vehicles, most of which have significant flexibility.
The most appropriate use of weather data I’ve seen was at an electronics retailer outside the US. This retailer operated dynamically flexible planograms and automated store replenishment of weather related items with forecast temperature variables. Distribution center inventory with rapid replenishment systems and processes made this possible, as well as an almost Wal-Mart-like supply chain efficiency. The net impact was having air conditioners, fans, heaters and the like where they would be in the highest demand. The math incorporating weather as part of a multi-variate regression program for replenishment is beyond me. It did, however, work.
No doubt the weather has pushed back the fall buying season for consumers. With inventory clogging up the stores, it means sale signs will go up earlier and this puts Christmas shopping margins in jeopardy.
Tracking year-to-year weather patterns is no doubt a good strategy for many retailers–especially in apparel. However, let’s also see some rule of reason here. Change the corporate buying cycle and stop trying to push winter clothes into the stores in August.
This is not a new issue. This is not related to global warming (though this is a real issue in 100,000 other ways). This is about channel conflicts between designers, manufacturers and retailers and each has a different opinion (and stake) in when goods arrive in stores and when those goods are paid for (yes it is about the money!). If all got together in terms of when it would be best for customers to present new seasons in stores it would work better for all. Also, there are new high-tech fabrics that adjust to climate changes as well as green fashions that address environmental problems and perceived (and real) changes in the seasons.
Weather data is single-handedly the most overlooked third party data source for our clients to use alongside POS data. Temperature and precipitation variances projected out eleven to twelve months ahead of time by savvy weather data companies allow store-level forecasts to be drastically modified in a proactive mode versus excuse-filled reactionary mode. Algorithms used today for market, zip code, and block group census geographies will astonish you when you really start to research firms focusing on this underappreciated data source. It is amazing that a one degree variance in temperature can add 60,000 additional units of orange juice sales for a small chain…or trigger up to 2% fluctuations in store KWH energy per week. Demand planning and forecasting are incomplete if your items affected by the weather are leaving out these variables in lift equations.
Bill is correct. There are sources available to help companies better predict weather patterns. With the proper data model design, companies can integrate weather zones into their analytical applications and therefore make more accurate forecasts and predictions. Clothing companies are not the only companies that analyze their products against weather zones. It’s nothing new. The reason may or may not be global warming, but either way, there are always ways to better understand your business.
I agree wholeheartedly with Bill that many retailers fail to plan for weather. As a result, they are leaving incremental profits on the table. For example, since convenience stores tend to have very little room for inventory, the day before a snowstorm is not enough time to get a shipment of snow shovels and rock salt. As a result, customers trek to Wal-Mart of the nearest supermarket. If they had weather projections even just 20 days in advance, they could reap the rewards of their planning by marketing shovels and rock salt out near the fuel pumps or just inside the front door. In addition to a portion of customers that will buy the items as a planned purchase, there will also be a good portion of customers will make impulse purchases as the weather turns. It also sets the store up to be a destination for these types of purchases in the future.
Interesting discussion today but I always find it amusing that the global warming discussion always comes up when it’s unusually hot. Some of the research actually suggests we’ll get colder due to Global Warming but that’s a topic for another day. The chatter on this topic is always higher during these hot periods (remember the December Cherry Blossom’s blooming–Winter was never coming but it did). Interesting that the chatter was a lot less when we had the coldest February 2007 in 18 years or the coldest/snowiest April in a decade. Just last year we had the coldest Fall in 10 years with September ranking as the 31st coldest in 113 years and October the 29th coldest on record here in the U.S. and remember the October blizzard that hit Buffalo this week last year with a record 22.6″ of snow? Or what about last November when snow flurries were reported all the way to Central Florida or those freezes in April that hit the Deep South citrus crops?
Even in the UK where Global Warming has been a very hot topic, the skepticism has become increasingly political as now many are questioning the facts in “Inconvenient Truth” and no longer encourage it as an educational source on the topic for school kids. A recent survey found a great deal of skepticism in the UK after the Met Office forecast a scorching hot/dry Summer and it ended up being rather cool and the wettest in 94 years–can’t get next month right but we’re certain on 100 years from now. No one’s talking about the record 84-year freezes that hit Argentina this Winter (Jun-Jul for us in the Northern Hemisphere).
What about the bust (second year in a row) we’ve had here again in the U.S. with another weak hurricane season? And if you truly believe all the statistics that are thrown around–be suspect–as just this year the National Hurricane Center has named 13 tropical systems (keep in mind they had forecast a very active season so it’s in their best interest to call anything that moves counter clockwise a storm) but at least 6 of those so called storms lasted less than 24 hours as a named system and one originated in Canada (didn’t know tropical systems could come out of Canada–but Subtropical Storm Andrea set new meteorological rules as to what we can call a “TROPICAL” Storm).
Just recently there was a study that said we are having more tornadoes due to Global Warming…hmmm…in 2004 we had 868 tornadoes during the Summer and then in 2005 we had 710 and then 2006 398 and this year…yup just 357–well below average. This tornado study of course came out in the middle of an unusually active February-March 2007 with media coverage but not much on that in the media now that the core season was exceptionally quiet?
Has anyone ever heard of the 32-year PDO cycle that very like peaked last year, just like it did back in the early 1940s? When it is in a positive phase as it was from the 1970s to last year, a warm cycle is very common. I think we had 30 years of rather cool weather in the 40s-60s when it was in a negative phase as it’s entering now. We are at a tipping point in time and year’s from now we’ll look back at this period and wonder what the heck we’re we all thinking! In the early 1900s, a well educated patent office executive said, “I think we’ve invented everything that can be invented.” If you buy into all the global warming hysteria and media coverage on the topic–you might look just as silly 10 years from now but then again, we’ll find something else to blame the “unusual” weather on.
Every well-run retailer should keep careful weather records to compare sales trends by category. There’s no doubt that markdown timing and open to buy budgets need to be weather forecast adjusted. Several weather services consult with retail clients, helping them to adjust their inventory planning and pricing by category, according to long range weather forecasts, generally several months in advance. These services tend to retain the same clients for years, so it’s clear that their value is well established.
I agree fashion is in need of an overhaul based on weather. Many retailers could just simply improve operations by actually merchandising stores to suit weather trends in their areas.
Case in point. I was in a new Kohl’s the other day in South Carolina. We were attempting to buy clothes due to a luggage malfunction with the airline. The store had only ONE style, ONE color of men’s shorts for golf. There we absolutely no swimsuits in the store.
When we inquired about this, the manager said “it’s fall and this is a new store.” Temperature was 90, forecast for the fall was warmer than normal, which is pretty warm anyway.
The store was pretty empty, even though it was “Grand Opening” week. Most shoppers were browsing and walking out empty-handed, since the store looked like it was merchandised by someone in Wisconsin.
Fall may mean the beginning of the school year, but stocking up on corduroy or wool clothes may not be a good choice. Better not put the summer clothes away. Fabrics and styles need to adapt to changing weather patterns to generate additional sales. Choosing the right styles is difficult enough; choosing the right weight of fabric and colors are now important as well.
From my perspective, the issue is one of assortment planning and inventory management. The trend for quite some time has been Buy Now. Customers want to be able to wear tonight or tomorrow what they bought today. If it’s 80 degrees in October In Green Bay, that’s going to be a problem that few retailers can adjust to. But here are several merchandising strategies to think about.
1. The first two months of a selling season typically are heavy clearance periods for prior season goods. I believe strongly in taking whatever medicine is necessary to move through those clearance goods so they are not unduly impinging sales of fresh, full-margin goods. And the fresh goods must be seasonally timely. Your not going to accomplish much with heavier outerwear in August, or instance.
2. Flow merchandise receipts in as close to the time of sale as possible. as you progress through the season, this allows each delivery of fresh merchandise to be as seasonally timely as possible. Retailers still bring in too much seasonal apparel too early, which doesn’t turn over, and clogs the sales floor for later arrivals, and leads to excessive markdowns.
3. It’s tempting to try to maximize sales of late season apparel, like winter outerwear or summer swimwear, but the risks are pretty significant. If the weather is unseasonably warm in December, or cold in June, which seems to happen as often as not, a retailer is likely to be left looking at a sea of markdowns. Better, in my judgment, to be conservative in planning these sales, and chase increases in less weather-sensitive categories.
Very interesting topic and some excellent conversation. Let’s take this topic to another level–who is providing real, actionable, weather trigger information to retailers that drives sales? What companies are working with retailers, especially the marketing department, to drive sales that is triggered by weather events? What retail companies are using email and paid search to target customer advertising that drives incremental profits?
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Mark is right that there are credible long-range forecasters available to help retailers. However, weather is too unpredictable on a short-term basis (80 degrees yesterday, 40 degrees today in Wisconsin) to use it as an excuse for merchandising results or decisions. Over the long run, “fall weather” does seem to be starting later than in the past. Without arguing the merits of global warming as a cause, retailers should rethink their tendency to “push the seasons” too early and to run out of appropriate “wear-now” goods too soon.
The weather issues that affect sales have much more to do with merchants “jumping the gun” on seasons than with noticeable global weather changes. Having also had experiences similar to Anne’s, I have often wondered when an enterprising merchant will bring out a stunning new batch of swimsuits and shorts and sandals and golf clothes in August–and heavily advertise them–just when their competitors have finished summer markdowns and are serving up corduroy and wool.
From a fashion standpoint, there is no question that weather plays an important role in how clothes are designed. Some materials will need to be year-round wear simply because the weather patterns have changed, as have travel. Many people think nothing of traveling between climates on a weekly basis as we continuously become a more transient society.
With respect to the question about whether retailers should become weather experts or not, there is no question that weather plays an important role in weather sales. Yet I always find it interesting that retailers use weather as an excuse when same store sales results are poor. If the weather is too cold, retailers claim that people refuse to go out and shop in the cold. If weather is too warm, retailers complain that warm weather hurt sales of winter wear. Too much snow, retailers complain that people won’t drive in the snow. Too little snow, people won’t buy snow removal products.
Retailers use weather as an excuse for slow sales, but the fact is you can’t control your weather, but you can control your marketing.
The core question asked was whether retailers, specifically apparel retailers, should include weather in their merchandising tactics toolkit. Well, yes, as a global concept, that would seem to make some sense. However, it’s important to really understand where those tactics can be implemented. It is impossible to include short term weather fluctuations or off-model season change in merchandise assortment planning. Styles and quantities are committed too well in advance of when this data would be available. The only choice might be to withhold shipment of heavier or lighter weight apparel given a seasonal variation, but this is unlikely given the horror of unfilled racks and empty floors. Inappropriate weather apparel racks at least have the benefit of letting the consumer know where to find your wonderful assortment if and when the weather does change.
Pricing and promotion are the two areas in which retailers can become more weather tactical. In some organizations, promotional activity is planned and committed to so far in advance that this too is impossible. Those organizations need to streamline their processes and get more flexible. Period. Pricing is almost instantly available, and can be communicated via any number of marketing vehicles, most of which have significant flexibility.
The most appropriate use of weather data I’ve seen was at an electronics retailer outside the US. This retailer operated dynamically flexible planograms and automated store replenishment of weather related items with forecast temperature variables. Distribution center inventory with rapid replenishment systems and processes made this possible, as well as an almost Wal-Mart-like supply chain efficiency. The net impact was having air conditioners, fans, heaters and the like where they would be in the highest demand. The math incorporating weather as part of a multi-variate regression program for replenishment is beyond me. It did, however, work.
No doubt the weather has pushed back the fall buying season for consumers. With inventory clogging up the stores, it means sale signs will go up earlier and this puts Christmas shopping margins in jeopardy.
Tracking year-to-year weather patterns is no doubt a good strategy for many retailers–especially in apparel. However, let’s also see some rule of reason here. Change the corporate buying cycle and stop trying to push winter clothes into the stores in August.
This is not a new issue. This is not related to global warming (though this is a real issue in 100,000 other ways). This is about channel conflicts between designers, manufacturers and retailers and each has a different opinion (and stake) in when goods arrive in stores and when those goods are paid for (yes it is about the money!). If all got together in terms of when it would be best for customers to present new seasons in stores it would work better for all. Also, there are new high-tech fabrics that adjust to climate changes as well as green fashions that address environmental problems and perceived (and real) changes in the seasons.
Weather data is single-handedly the most overlooked third party data source for our clients to use alongside POS data. Temperature and precipitation variances projected out eleven to twelve months ahead of time by savvy weather data companies allow store-level forecasts to be drastically modified in a proactive mode versus excuse-filled reactionary mode. Algorithms used today for market, zip code, and block group census geographies will astonish you when you really start to research firms focusing on this underappreciated data source. It is amazing that a one degree variance in temperature can add 60,000 additional units of orange juice sales for a small chain…or trigger up to 2% fluctuations in store KWH energy per week. Demand planning and forecasting are incomplete if your items affected by the weather are leaving out these variables in lift equations.
Bill is correct. There are sources available to help companies better predict weather patterns. With the proper data model design, companies can integrate weather zones into their analytical applications and therefore make more accurate forecasts and predictions. Clothing companies are not the only companies that analyze their products against weather zones. It’s nothing new. The reason may or may not be global warming, but either way, there are always ways to better understand your business.
I agree wholeheartedly with Bill that many retailers fail to plan for weather. As a result, they are leaving incremental profits on the table. For example, since convenience stores tend to have very little room for inventory, the day before a snowstorm is not enough time to get a shipment of snow shovels and rock salt. As a result, customers trek to Wal-Mart of the nearest supermarket. If they had weather projections even just 20 days in advance, they could reap the rewards of their planning by marketing shovels and rock salt out near the fuel pumps or just inside the front door. In addition to a portion of customers that will buy the items as a planned purchase, there will also be a good portion of customers will make impulse purchases as the weather turns. It also sets the store up to be a destination for these types of purchases in the future.
Interesting discussion today but I always find it amusing that the global warming discussion always comes up when it’s unusually hot. Some of the research actually suggests we’ll get colder due to Global Warming but that’s a topic for another day. The chatter on this topic is always higher during these hot periods (remember the December Cherry Blossom’s blooming–Winter was never coming but it did). Interesting that the chatter was a lot less when we had the coldest February 2007 in 18 years or the coldest/snowiest April in a decade. Just last year we had the coldest Fall in 10 years with September ranking as the 31st coldest in 113 years and October the 29th coldest on record here in the U.S. and remember the October blizzard that hit Buffalo this week last year with a record 22.6″ of snow? Or what about last November when snow flurries were reported all the way to Central Florida or those freezes in April that hit the Deep South citrus crops?
Even in the UK where Global Warming has been a very hot topic, the skepticism has become increasingly political as now many are questioning the facts in “Inconvenient Truth” and no longer encourage it as an educational source on the topic for school kids. A recent survey found a great deal of skepticism in the UK after the Met Office forecast a scorching hot/dry Summer and it ended up being rather cool and the wettest in 94 years–can’t get next month right but we’re certain on 100 years from now. No one’s talking about the record 84-year freezes that hit Argentina this Winter (Jun-Jul for us in the Northern Hemisphere).
What about the bust (second year in a row) we’ve had here again in the U.S. with another weak hurricane season? And if you truly believe all the statistics that are thrown around–be suspect–as just this year the National Hurricane Center has named 13 tropical systems (keep in mind they had forecast a very active season so it’s in their best interest to call anything that moves counter clockwise a storm) but at least 6 of those so called storms lasted less than 24 hours as a named system and one originated in Canada (didn’t know tropical systems could come out of Canada–but Subtropical Storm Andrea set new meteorological rules as to what we can call a “TROPICAL” Storm).
Just recently there was a study that said we are having more tornadoes due to Global Warming…hmmm…in 2004 we had 868 tornadoes during the Summer and then in 2005 we had 710 and then 2006 398 and this year…yup just 357–well below average. This tornado study of course came out in the middle of an unusually active February-March 2007 with media coverage but not much on that in the media now that the core season was exceptionally quiet?
Has anyone ever heard of the 32-year PDO cycle that very like peaked last year, just like it did back in the early 1940s? When it is in a positive phase as it was from the 1970s to last year, a warm cycle is very common. I think we had 30 years of rather cool weather in the 40s-60s when it was in a negative phase as it’s entering now. We are at a tipping point in time and year’s from now we’ll look back at this period and wonder what the heck we’re we all thinking! In the early 1900s, a well educated patent office executive said, “I think we’ve invented everything that can be invented.” If you buy into all the global warming hysteria and media coverage on the topic–you might look just as silly 10 years from now but then again, we’ll find something else to blame the “unusual” weather on.
Every well-run retailer should keep careful weather records to compare sales trends by category. There’s no doubt that markdown timing and open to buy budgets need to be weather forecast adjusted. Several weather services consult with retail clients, helping them to adjust their inventory planning and pricing by category, according to long range weather forecasts, generally several months in advance. These services tend to retain the same clients for years, so it’s clear that their value is well established.
I agree fashion is in need of an overhaul based on weather. Many retailers could just simply improve operations by actually merchandising stores to suit weather trends in their areas.
Case in point. I was in a new Kohl’s the other day in South Carolina. We were attempting to buy clothes due to a luggage malfunction with the airline. The store had only ONE style, ONE color of men’s shorts for golf. There we absolutely no swimsuits in the store.
When we inquired about this, the manager said “it’s fall and this is a new store.” Temperature was 90, forecast for the fall was warmer than normal, which is pretty warm anyway.
The store was pretty empty, even though it was “Grand Opening” week. Most shoppers were browsing and walking out empty-handed, since the store looked like it was merchandised by someone in Wisconsin.
Fall may mean the beginning of the school year, but stocking up on corduroy or wool clothes may not be a good choice. Better not put the summer clothes away. Fabrics and styles need to adapt to changing weather patterns to generate additional sales. Choosing the right styles is difficult enough; choosing the right weight of fabric and colors are now important as well.
From my perspective, the issue is one of assortment planning and inventory management. The trend for quite some time has been Buy Now. Customers want to be able to wear tonight or tomorrow what they bought today. If it’s 80 degrees in October In Green Bay, that’s going to be a problem that few retailers can adjust to. But here are several merchandising strategies to think about.
1. The first two months of a selling season typically are heavy clearance periods for prior season goods. I believe strongly in taking whatever medicine is necessary to move through those clearance goods so they are not unduly impinging sales of fresh, full-margin goods. And the fresh goods must be seasonally timely. Your not going to accomplish much with heavier outerwear in August, or instance.
2. Flow merchandise receipts in as close to the time of sale as possible. as you progress through the season, this allows each delivery of fresh merchandise to be as seasonally timely as possible. Retailers still bring in too much seasonal apparel too early, which doesn’t turn over, and clogs the sales floor for later arrivals, and leads to excessive markdowns.
3. It’s tempting to try to maximize sales of late season apparel, like winter outerwear or summer swimwear, but the risks are pretty significant. If the weather is unseasonably warm in December, or cold in June, which seems to happen as often as not, a retailer is likely to be left looking at a sea of markdowns. Better, in my judgment, to be conservative in planning these sales, and chase increases in less weather-sensitive categories.
Very interesting topic and some excellent conversation. Let’s take this topic to another level–who is providing real, actionable, weather trigger information to retailers that drives sales? What companies are working with retailers, especially the marketing department, to drive sales that is triggered by weather events? What retail companies are using email and paid search to target customer advertising that drives incremental profits?