In changing climate, retailers turning to weather strategies
By Nicholas P. Brown
Big-name retailers such as Walmart are increasingly using analytics to blunt the impact of one of the most unpredictable performance variables of shopping: weather.
Weather data, once used strictly for inventory planning, is now helping retailers localize advertising and decide when to discount seasonal items such as sweaters. . . .
A niche group of weather consultants — from Germany’s Meteonomiqs to U.S. firms Planalytics and Weather Trends International — is using breakthroughs such as cloud computing to process once-unimaginable amounts of data.
Demand for such data is growing amid heightened weather volatility due to climate change. The National Retail Federation, which is chaired by a Walmart executive, issued a report with Planalytics in July, recommending retailers pay more attention to weather analysis.
New weather-data tools, centered on pricing, may soon be hitting the market. Planalytics and BearingPoint, a management consultancy, are partnering to build software retailers can integrate into their analytical models for setting prices.
“Weather is something you can’t control,” BearingPoint managing consultant Ryan Orabone said at an industry workshop last month to unveil the new initiative. “But you can control the analytics. And pricing, you absolutely control.”
It is natural for a warm October, like this year’s in the U.S., to cause retailers to sweat ahead of the holidays. “It needs to get cold for our business to really perform well in Q4,” Tractor Supply, CEO Hal Lawton said last month on a quarterly call.
The company, which uses weather analytics, sells cold-weather products like heating pellets and outerwear.
Weather analytics can help companies like Tractor Supply decide whether to discount winter items, said Planalytics CEO Fred Fox, whose clients include Dick’s Sporting Goods and Ross Stores. . . .
RISING TEMPS, RISING DEMAND
About every three weeks in the U.S., a natural disaster causes $1 billion or more in damages, according to the U.S. National Oceanic and Atmospheric Administration, up from once every three months in the 1980s.
Planalytics, which uses computer models to help retailers understand how weather affects sales, is on pace to provide clients with twice as many models in 2024 as it did last year, said Evan Gold, the company’s executive vice president of partnerships. Since 2019, that figure has shot up ninefold. . . .