Weather Impacts on Retail

Part
01
of three
Part
01

Weather Impacts on Retail - General

People are generally more open to marketing messages and more willing to shop in sunny weather. However, between online and brick-and-mortar environments, people are more likely to shop online in cold, cloudy, windy, rainy and snowy weather.

RESEARCH STRATEGY

In our endeavor to find out how different weather conditions impact a consumer's decision to drive to a store and buy a product versus purchasing it online, we began by exploring a wide variety of marketing resources. Since we were looking to create an in-depth analysis on this topic, we started by examining marketing resources such as Merkle, AMP Agency and MuteSix, in an attempt to find relevant case studies.

As none of the papers in question addressed the issue, we turned our attention to business and marketing publications, looking for articles and reports written on the topic of weather-driven consumer behavior as it relates to online vs. brick-and-mortar retailers. This strategy proved to be successful as we came across many essays, reports and other publications that quoted scientific research conducted by universities around the world. We restricted the geographic scope of our project to the United States and sought to identify only scientific studies that analyzed the habits of U.S. buyers. However, despite our best efforts to outline the consumer behaviors that characterize this group alone, we found that researchers who looked into the correlation between weather phenomena and buying behaviors observed similar trends for the Chinese, British, and Canadian groups.

For the US, we were able to find an analysis which focused on the buying habits of people living in Seattle, and we started with that since it was the closest to our geographic scope. Nevertheless, we still made sure to go through the other studies mentioned above. We sought to find out whether the conclusions that the researchers arrived at by studying the buying behavior of the Chinese would be consistent for other countries. By comparing the results produced by different studies, conducted on culturally diverse groups, we wanted to see whether consumers' responses to weather conditions could be universal and thus see whether these results could be used to describe US consumers as well.

We found that the correlation between certain weather phenomena and certain moods seemed the same throughout different cultures. Regarding specific aspects such as how they relate to online purchase behaviors, it isn't the culture that determines such actions, since climate characterizes a region. As different areas in the United States have different weather, people who live in sunny areas may have different online purchase behaviors on a rainy day compared to people who are accustomed to rainy weather. Since the weather in the United States is not uniform, we found it safe to include studies made on other cultures living in regions characterized by different weather. We encouraged this thought because as far as we could see, marketers and business analysts working with businesses based in the United States also found these studies useful in creating business strategies, even though the researchers had conducted them on culturally different groups, located in other parts of the world.
Furthermore, even though we sought the most recent studies, we also decided to include papers that exceed the 2-year limit, and because the e-commerce sector has been evolving quickly in recent times, we did not go beyond that limit with studies that contained e-commerce specific data. However, regarding studies that tackle the issue of how weather affects people's mood, we decided to include them regardless of the publication date. Since the correlation between mood and weather phenomena appears to be consistent throughout different cultures, this indicates that it is characterized by universality. Therefore, we assumed that changes in how weather phenomena and mood correlate only occur very rarely in history. As a final note, some of these studies include data about retail, wholesale, and grocery stores.

RELATIONSHIP BETWEEN WEATHER AND MOOD

Weather is known to influence attitudes, which in turn has an impact on buying behavior. For example, exposure to natural light is known to elevate the mood by stimulating serotonin production in the brain. A Canadian study concluded that people who are in a better mood tend to spend more. On a sunny day, people are willing to pay 37% more for green tea and 56% more for a gym membership. In another study, Weather FX concluded that, in autumn, below average wind speed is linked to increased ice cream consumption. Cloudy weather causes buyers to spend more on alcohol, tobacco products, and coffee.

It appears that the correlations between weather and moods are universal; higher temperatures help people who suffer from depression by elevating their mood, while windy weather or lack of sun tends to impact depressed people negatively. Generally, heat and rain increase aggression and suicide peaks in spring and early summer for both the Northern and Southern hemispheres.

People respond differently to weather based on their personality and based on the climate they live in; people in Seattle and people in Miami will react differently to sunny weather, as the first is accustomed to rainy weather, while the latter is more familiar with hotter environments. People are more influenced by marketing messages in warm weather, especially around 75-77 degrees. Warmth, comfort, trust and a feeling of contentment are all related, and this is why people trust advertising more in summer months.

In the summer, consumers are more open to suggestions and are more likely to conform to the trends that are popular with their groups. Poor weather on the other hand typically decreases brick-and-mortar sales.
Humidity and precipitation can contribute to a negative mood and result in a lack of willingness for people to leave their houses and shops. Sunlight can have a positive effect on people's openness to shop outside their homes, regardless of temperature, humidity, snowfall, and sunshine (primarily). These weather phenomena have the most impact on people's willingness to leave their houses and engage in retail shopping.

A study behind a paywall analyzes the biggest European online fashion retailer; although it does not provide specific numbers in the abstract, it mentions that sunshine, temperature, and rain have a significant impact on daily online sales.

RAIN/STORM

People in Seattle prefer to shop online on rainy days, and cold or rainy days generally see a 12% increase in online traffic for clothing, home, furniture, and wholesale retailers compared to warm and sunny days which favor brick-and-mortar sales. However, response to mobile ads is slowest in rainy weather.

SNOW AND WIND

Generally speaking, cold weather will lead to an increase in online sales, but for regions where people are used to cold weather, the increase in online sales will not be as significant as it would be for those who live in warmer areas.
Wind, snow, ice, and low temperatures will increase online shopping, as people would rather stay indoors. They are prone to making impulsive purchases and even pay more on certain items.

SUNSHINE

In the generally rainy weather of Seattle, people prefer to shop in a brick-and-mortar location on a sunny day. Online orders are fewer on sunny days, particularly for home and furniture products, and clothing. Nonetheless, people are more responsive to mobile advertising on clear sunny days.

WINDY AND CLOUDY DAYS

People who tend to have a change in mood on windy and clouded days will likely avoid leaving the house but rather engage in online shopping to elevate their mood. They respond slower to mobile ads in this type of weather.


Part
02
of three
Part
02

Weather Impacts on Retail - Indoor Home Improvement

Amidst comprehensive research from credible online resources, we were unable to find the ways in which different weather conditions impact a consumer’s decision to drive to a home improvement store and purchase an indoor home improvement product, as opposed to buying the same product online. However, we have found relevant information and compiled it under Useful Insights section.

Methodology

Our research started by looking for pre-compiled analysis, case studies and data in the United States on the relation between weather and shopping behaviors at Home Improvement retail stores vs online shopping, particularly for Indoor products. We searched through renown industry and market databases, and business news channels, like Home Improvement Research Institute, Fortune and Internet Retailing, Forbes, Money, and CNBC among others. We found relevant information that mostly focused on Home Depot and Lowe's latest financial results and the impact on their outdoor and indoor sales based on the winter weather and the hurricanes. However, this did not provide the full information that we desired.

Next, we attempted to broaden our search criteria by looking for global statistics and analysis from the past ten years. We found data on how rainy weather increases furniture shopping by 12% and other weather conditions affecting people in United States shopping patterns. All the data found has been included as useful insights.

Our last attempt was to create a table to compare weather by month, then compare each company's monthly revenue from their indoor products in the US. This would give us an idea of the months when sales are projected to increase or decrease in the indoor segment and how the weather is expected to be. Unfortunately, we found that all the annual reports of the companies presented their sales numbers quarterly and not monthly.
The revenues were focusing on global and not the US only. The indoor and outdoor segments were not defined in the quarterly revenues either. We have included all the useful information found in our research under useful insights section.

Useful insights

Depending on the season and need, for example, during holidays, people would still go out to buy regardless of the weather conditions. Weather impact on sales is not only determined by one factor but also impacted by the location, season, month, and sector.

RETAIL STORES

1. Rain/storm

  • Home Depot stated that besides the effect from the winter weather, they were also affected negatively in sales during the hurricane season.
  • Furniture shopping increases by 12% during the rainy and cloudy season.
  • During spring, outdoor products sales are particularly affected negatively.

2. Snow

  • Robert Niblock, Lowe's CEO, stated that while the strong snowy winter affected their outdoor items sales negatively, their indoor products sales maintained a solid performance.
  • During snowy season, the Home Depot sales were affected negatively due to an increase in expenses leading to the reduction of the profit margin.

3. Sunshine

4. Cloudy

  • Cloudy weather can motivate people to buy more to lift their mood.

ONLINE SHOPPING


Part
03
of three
Part
03

Weather Impacts on Retail - Outdoor Home Improvement

Our research has gathered information that proves that consumer behavior in purchasing outdoor home-improvement products shifts with changes in seasons and weather. There is an increase in demand during warmer weather. During the cold and wet seasons, the general demand significantly reduces and customers prefer purchasing online. The research details for the various seasons are as follows.

EFFECT OF WEATHER ON CONSUMER DECISION

COLD WEATHER

Cold weather hinders outdoor activities. As temperatures fall, customers prefer to stay indoors and shop online. There is a general reduction in consumption of outdoor improvement products. In this season, most people transact via mobile devices such as laptops and smartphones.

RAIN/STORM

During rainy seasons, consumers have a lower tendency to purchase outdoor equipment, whether it be online or offline. In 2013, there were a series of wet weekends over the summer whereby B&Q, an outdoor-product company, reported that they fell shy of their projected profits by 30 million Euros. In 2017, Home Depot hit 5.2% revenue growth instead of the projected 5.5% as bad weather delayed construction projects. In the US, about 2.3% of retail sales are susceptible to wet weather. As such, 60% of consumers, 12.5% of offline shoppers, and 16% of supermarket shoppers opt to make purchases online. Therefore, across geographies, wet weather affects the demand for outdoor improvement products.

CLOUDY

During cloudy weather, there is an increase of 10% to 12% in sales. During spring, garden center and assorted products increase in both online and offline sales.

SNOW/WINTER

In early snowstorms, US consumers stock their houses to keep them warm. There is a significant reduction in both online and offline purchase of outdoor items. Home improvement products such as gardening equipment registered both low demand and sales from both Home Depot and Lowe's. However, the individual items that saw an increase in this season are snow boots and skiing equipment via online purchase.

SUNSHINE /SPRING

Purchase intent for outdoor home improvement products increases during sunny days. Likewise, the perceived value of goods also increases. Brick and mortar shops generate higher sales as compared to online retailers. Fine warm weather is conducive for outdoor activities and encourages customers to go shop. As sales peak, the popular purchases from Home Depot include BBQ equipment and pools.

Additional findings

In 2017, the US home improvement industry grew by 34%, representing $21 billion while e-commerce for such products grew by two folds. Online traffic for outdoor e-commerce websites for Amazon, Moosejaw and Backcountry increased by 38% in 2015 with 11% conversion rate.

Conclusion

Purchasing behavior depends on weather patterns. During unfavorable weather, online sales surpass offline sales. Retailers consider weather forecasts and seasonal changes when running promotions, advertising, and marketing. Changes in seasons and weather patterns determine the items bought and the purchase method used. In the US, weather changes affecting consumer behavior accounts for 3.4% deviation of the total GDP.

Sources
Sources

From Part 03
Quotes
  • "Of course, there has always been a close connection between the weather and consumer spending, with good and bad weather driving sales of certain items from BBQs and outdoor furniture to winter coats"
Quotes
  • "It has long been common knowledge among retailers that the weather has a pronounced effect on sales. Both seasonal changes, as well as daily and weekly fluctuations in weather shape demand for consumer goods and services. These fluctuations not only shape what products are being sold – but also the sales channels used to make the purchase"
  • "For bricks and mortar retailers, fine weather promotes business – more people are out on the high street, which in turn translates into elevated sales. "
  • "Last year Tradedoubler released data showing that during periods of sunny weather, online sales decreased. They reasoned that when the weather is nice, consumers are more likely to be outdoors, and less likely to shop online. The graph below shows the inverse relationship between sunshine hours and online sale"
  • ""
Quotes
  • "There has been much written about the disruptive effects of extreme weather events on the retail sector. Certainly severe storms, floods, and blizzards – as well as prolonged periods of unseasonably hot and dry weather can have a seismic impact on trade."
  • "However, this is only half of the story. Commonplace, daily variations in the weather are equally potent drivers of consumer demand, availability of supply, and ultimately retail profits. "
  • "In the USA for example, 1/3 of all business activity has some form of weather sensitivity, with weather accounting for a swing factor of 3.4% of the total GDP. That's several hundred billion dollars."
  • "Because retailers report sales quarterly, a bout of unseasonable weather over just two or three consecutive weekends can significantly diminish the quarterly sales figures. For example, following a string of wet weekends over the summer of 2013, B&Q announced a £30m shortfall below first-half projected profits. The unseasonably wet weather inhibited demand for outdoor products such as barbecues and gardening hardware"
  • "Recent research into the US retail sector’s susceptibility to weather variability showed that 2.3% of sales are weather-sensitive."
Quotes
  • "Online sales are clearly affected by weather trends and events. And when it comes to profits, it outpaces offline sales, as customers tend to purchase online when the weather is not particularly favorable"
  • "Many factors affect how people plan their shopping, and the weather condition is one of those factors. If retailers can harness the power of ''weather forecasts'' they will be able to attain huge sales. And during this holiday season, the cold weather, which spurs people to stay indoors, can boost online sales remarkably. The purchasing behavior of consumers changes when the weather conditions and the temperature changes, even if it is just one degree."
Quotes
  • "U.S. online sales of home improvement products increased 34 percent in 2017, reaching nearly $20 billion, according to e-commerce insights from The NPD Group’s Checkout consumer receipt mining service. Double-digit growth was prevalent across all major home improvement category segments last year – everything from plumbing and hardware to outdoor living and decor."
  • "The home improvement industry is realizing the impact of the ease that e-commerce brings to the consumer shopping experience"
Quotes
  • "Like its rival Home Depot (NYSE: HD) did a week before, Lowe's (NYSE: LOW) just announced first-quarter earnings results that were hurt by a soft start to the critical spring selling season. "
  • "The home improvement retailer suffered from a more significant slowdown than its larger peer as winter weather depressed demand for seasonal outdoor products. Yet management still affirmed its full-year forecast."
  • ""
Quotes
  • "A rare stumble in the fourth quarter put Home Depot's revenue growth just a tad shy of management's upgraded targets, with comparable-store sales gains landing at 5.2% rather than 5.5%. The company blamed a string of wet-weather events that delayed construction projects for the late-year shortfall."
Quotes
  • "-commerce accounted for 6.0% of the total retail market worldwide in 2014 or $1.3 trillion. By 2018, that share is projected to increase to approximately 8.8%.7 Some outdoor retailers are enjoying a period of exceptional growth in digital commerce"
  • "Impact of Unusually Warm Weather Shifts in weather impacts consumer buying decisions. Typically the anticipation of winter and winter holidays compels consumers to purchase outdoor snow and winter equipment to prepare for the seasonal shift. "
  • "Consequently, outdoor retailers and wholesalers adjust inventories to prepare for forecasted demand. The uncommonly warm weather in late 2015 affected large regions of the Unites States (primarily the Northeast) and negatively impacted sales of cold weather equipment as consumers adjusted their expectations regarding necessary winter items."