Economists are looking at everything from the cost of living and inflation to interest rates and stock market performance to predict holiday spending this year, but missing from recent forecasts is a variable that many retailers have been anticipating for months: the weather.
On average, 3.4% of retail sales are directly impacted by the weather, according to a National Retail Federation analysis extrapolating data from the American Meteorological Society. This totals about $1 trillion of global retail sales per year, so the financial stakes are high for retailers trying to properly allocate products in line with weather-driven demand.
But until recently, retailers’ use of weather data wasn’t very precise, Don Coash, senior account executive and meteorologist at Accuweather, told Retail Brew. Many would simply look at what happened during the previous year and base their purchasing decisions off those sales trends. For example, if winter came early last year and a retailer didn’t have enough snow shovels to meet demand, this year it will make sure to buy more snow shovels earlier.
“The problem with weather is it’s almost never the same year over year,” he said. “So they’re always chasing their tail and pulling it forward this year because of what happened last year.”
Accuweather provides weather data and forecasting services to half of the Fortune 500 companies and multiple retailers, including Burlington and Lowe’s, and Coash said many of its clients are now using advanced AI and machine learning algorithms to measure more precisely how weather affects metrics such as foot traffic and sales.
Keep reading here.—AV
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