The Impact of Weather on Retail Sales in Spring 2009 and the 2009 Hurricane Season Forecast

PaulE.WalshManagingPrincipalG2WeatherIntelligence,LLC

©Copyright2009AllRightsReserved,G2WeatherIntelligence,LLC

HelpingcompaniesmakemoremoneybysystemaBcallyplanningfortheinfluenceofweatheronconsumersandbusiness

G2WeatherIntelligenceLLC

©2008G2WeatherIntelligence,LLC.AllRightsReserved©Copyright2009AllRightsReserved,G2WeatherIntelligence,LLC

Weather’sImpactonConsumers•  Weatherisafundamentalyet

oHenoverlookeddriverofconsumerdemand

–  ParBcularlyduringthehighmarginspringtransiBonseason

•  Resultsinunexpectedupside/downsidevolaBlityinsame‐storesalesresults

•  EasiertomeasureandpredictthanalmostanyotherinfluenceonconsumeracBvity


RetailSegmentExposureinSpring

•  Off‐the‐MallSpecialtyRetail

•  Mall‐basedSpecialtyRetail•  HomeCenters•  MassMerchants/ClubStores•  DepartmentStores

•  Restaurants/C‐Stores©Copyright2009AllRightsReserved,G2WeatherIntelligence,LLC

RetailSegmentExposureinSpring

•  ConsideraBons

–  MerchandiseAssortment

–  Geography–  Fiscalcalendar–  Priormonth–  ExecuBonskills


HighImpactWeatherParameters•  Temperature

–  Primary“strategic”demandindicator–  Departuresfromnormalandprioryeararekey–  ImpactslargepopulaBoncentersandgeographies–  Correlatesstronglytosalesofseasonalmerchandise–  Predictableatseasonal(yearahead)Bmescales

•  PrecipitaBon/Snow–  Weekend,dayBmeeventsthebiggestimpact–  Traffichindranceprimarily–  Highimpactbutnotaswidespreadastheimpactoftemperature–  ImpacZuleventsarenotaspredictableatlongerrangeBmescales

•  Hurricanes–  Trafficanddemandgenerator–  BiggestandmostwidespreadimpacttheresultofhurricanepredicBonsvicelandfall–  MediacoverageaheadofstormsresultsinanetplusforHomeCenters(HD/LOW),

Mass(WMT),andgrocers;resultsinanetnegaBveformall‐basedretailers


WeatherInfluenceMarchSales•  Exampleoftheinfluence

oftemperatureonretailsales

•  OldNavysamestoresaleschangecomparedtothechangeinanaBonallyweightedCoolingDegreeIndex(weathersource:NOAA)

•  Increasedcoolingdemandcorrelatestoincreaseddemandforspringapparel

–  ~40%correlaBon


WeatherInfluenceonAprilSales

•  ExampleoftheinfluenceoftemperatureonretailsalesinApril

•  NaBonaltemperaturechangeagainsttheaveragecompstoresalesofabasketof53retailers(source:GlobalHunterSecuriBesandNOAA)


March2009(asof3/18)CourtesyofAccuWeather


April2009ForecastCourtesyofAccuWeather


May2009ForecastCourtesyofAccuWeather






2009IniBalHurricaneOutlookConsensus

Consensusoutlookfromallprivateforecasters:

• Belowthe10‐yearaverageand2008

• Abovethelongtermaverage


SummaryExpectaBon

•  Generallyfavorableweatheragainstaverydifficult2008springseason

•  Beferphysicalclimateoverlappinganimprovingconsumerenvironment

–  ObamaSBmulus(intangibleandtangiblebenefits)

–  Loweryear‐over‐yeargasprices–  Pentupdemandfollowingthespendingslowdownduringthe“cold”winterof2008/9

•  WeatheranetposiBveinSpring2009–  StarsalignedforstrongerthanexpectedretailsalesthroughMay2009


PaulWalsh,G2WeatherIntelligenceLLC

[email protected]

Direct:+1.917.463.4238Mobile:+1.610.246.0623Blog/Website:www.G2Weather.com

“Changingthewaybusinessthinksabouttheweather”


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The Impact of Weather on Retail Sales in Spring 2009 and the 2009 Hurricane Season Forecast