Sunny Times for Retail

“I went window shopping today! I bought four windows.” - Tommy Cooper

In our latest blog post we will take a closer look at the retail sector. We will examine how weather affects our shopping habits, and the crucial role that understanding the past, present and future weather can play in helping reduce risks, while increasing sales and customer satisfaction. 

The ever changing and fickle world of retail sales can be affected by a multitude of factors, from the latest fashion trends to the box office hit of the day. One of the most influential, and predictable elements of retail does not exist in the shops themselves, but surrounds them, their customers and their logistic supplies - the weather.  It has been shown that variations in weather conditions can have an overall effect on the performance of a number of economic sectors in industrialized countries by up to  35% of GDP. 

A Federal Reserve Bank of San Francisco study has shown that understanding the history of our weather can be crucial in using forecast weather predictions to their best effect. 

In this series of articles, we will look at the short and long term effects of weather and climate on the retail sector, and how having a clear understanding of both historic weather patterns as well as future forecasts can help create an element of stability in an otherwise uncertain sector.

In this blog post, we will look at some of the surprising effects of the effect of weather on consumer behavior, and their impact on both the retail and insurance industries.

How Weather Affects Shopping

An old, yet relevant example of a company adapting to weather conditions was by Walls,  a well known UK sausage and pie manufacturer, who started their business in 1786. They found that during the hot summer months in 1913, demand for their otherwise delicious products fell dramatically, forcing them to make staff redundant. To help prevent these redundancies, the grandson of the original founder decided to start selling ice cream, which proved to be incredibly successful. A century ago, the sight of an ice-cream salesperson with a custom made bicycle on streets of London was a familiar sight. The company's success continued, with many of today’s global ice-cream brands being able trace their roots back to that moment of inspiration created by the weather. 

Today, the effect of weather is no less important than a century ago, with retailers leveraging a combination of detailed historical weather data and accurate forecasts to plan their strategies.

The overall effect of weather on retail sales can be broadly divided into four broad categories:

• Creating uncomfortable conditions that may dissuade customers from shopping;

• Creating  conditions which may physically prevent people from visiting shops;

• Changing consumer habits through their psychological attitude towards the current weather conditions’ 

• Changing the relative desirability of certain product categories.

Why context matters

In the retail sector, the notion of ‘bad’ weather can often depend on the context of the weather itself. For example, a warmer than average winter day in Glasgow could mean decreased sales for an inside shopping mall, as customers would prefer to spend their time outside, enjoying the beautiful surrounding countryside. However, a hotter than average day during the summer in Tokyo could mean increased shopping mall sales, as customers would prefer to take refuge from the heat in the pleasant air-conditioned shops.  

The role that rain plays can also vary - a small amount of summer rain may encourage shoppers to pop into a nearby retail outlet for shelter, and possibly make a purchase. In contrast, torrential winter rain may encourage shoppers to simply stay at home. Also, what constitutes ‘heavy’ and ‘light’ rain can vary from place to place, and how used the local population is to brave the prevailing weather conditions to carry out their shopping.   

Retailers also need to consider the shift in sales channel that differing types of weather brings. Some weather conditions may offset reduced in-store sales with online ones (such as in the case where shoppers prefer to stay at home), whereas some may not be offsetable (such as when shoppers flock to the hills, away from online connectivity).

Even when shoppers do travel to their local retail emporiums, the actual shops that they visit can also depend on the weather. A cold, windy and wet day may favor shopping malls, whereas sunny and warm days may encourage shoppers to visit high streets.

Even the type of precipitation can affect shopper behavior - rain may have little effect on the ability for shoppers to make their purchases, however snow may stop them in their tracks. 

It is estimated that a moderately bad weather day decreases sales by about 25%, while a very bad weather day decreases sales by a hefty 40%. This may also include situations where the shops are forced to close. 

Weather Adaptation

A study by Graff Zivin and Neidell found that shoppers became accustomed to certain extreme weather types over time. With precipitation, be it in the form of rain or snow, customers would be more likely to visit shops for the same amount over time, showing that they have become accustomed to shopping in these conditions. However, shoppers have been shown not to change their resilience to extreme heat over time, as people tend to spend less time outside during extreme heat waves. 

How OpenWeather can help

Our One Call API 3.0 provides nuanced yet easy to use access to essential global weather data, short-term and long-term forecasts and aggregated historical weather data. 

The One Call API 3.0 offers access to a range of data through three endpoints:

1. Current weather conditions and forecasts:

• Minute-by-minute forecast for the next hour

• Hourly forecast spanning 48 hours

• Daily forecast covering 8 days

• Government weather alerts

2. Weather data available for any specific timestamp from a historical archive spanning over 40 years, alongside forecasts for the next 4 days.

3. Daily aggregation of weather data from a historical archive spanning over 40 years, along with forecasts extending 1.5 years ahead.

In addition, the OpenWeather Global Weather Alerts API provides global weather alerts in a consistent format for any global location.

This data can be crucial in adapting to the ever changing weather by creating special customer offers, managing building facilities (heating and air conditioning), managing logistics, marketing and staff. 

The variability of the weather, and the products that OpenWeather offer can be leveraged to attract footfall, engage customers and ultimately increase sales.  

Raindrops on storefront glass,

umbrellas bloom in aisles,

shopping in the weather's dance.

About OpenWeather:

OpenWeather provides weather data for any location on the globe using a proprietary hyperlocal forecasting model with a resolution from 500 m to 2 km, globally. More than 6,000,000 customers from logistics, agriculture, insurance, energy, retail, and many other sectors, are working with the company's weather products. The products can be easily integrated into complex IT systems and are ideal for ML analytic systems. 

OpenWeather cooperates with global meteorological agencies such as MetOffice and NOAA, and enhances its model with data from radars, weather stations and satellites. The company provides great availability of service at 99.9% for enterprise-level products. 

OpenWeather is a member of Royal Meteorological Society and an Achilles-certified supplier. OpenWeather ethical initiatives include support of educators and students, not-for-profit subscriptions for the general public to increase weather awareness, and the recent Ukrainian donation programme.

For more information on how to gain access to our OpenWeather products, please email us.