The Mother of all Mother’s Days?

For retailers it certainly could be and there are 25 billion reasons why — but the weather ain’t one.

According to the National Retail Federation this year is expected to deliver the highest consumer spending to date.

WASHINGTON – Mother’s Day spending is expected to total a record $25 billion this year, up from $23.1 billion in 2018, according to the annual survey released today by the National Retail Federation. A total 84 percent of U.S. adults are expected to celebrate in honor of their mothers and other women in their lives.

With consumer sentiment at record highs and unemployment at record lows there’s really only one thing that could disrupt this sunny outlook.

The Weather

Mother’s Day is ranked as the third largest retail holiday of the year in the U.S (behind the Christmas holidays and back-to-school) and is, arguably, one of the most weather impacted holidays as well.

The fact that it’s a “day” means that an ill-timed storm or cold weather (as we’re seeing in real time) can have a dramatic and, in many cases, non-recoverable impact on sales and profits.

There isn’t much room for do-overs.

The Reverse Bath Tub

This is my new favorite weather–impact-on-retail-spending term as related by Home Depot during their Q1 earnings call last year.

I referenced this in a post I authored last month — it refers to the effect that weather has on driving the timing of sales of seasonal items from one week or month to the next.

It results in significant sales and margin volatility that can have a material impact on monthly and quarterly sales.

This year demand for seasonal products sloshed forward (see what I did there?) into April and out of May leaving a pretty challenging comp environment for retail sales in May and into June.

Cooler, Wetter, Weaker

While it may be a great Mother’s Day for retail overall  — as noted by the NRF — it likely won’t be great for all categories.

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Cooler, wetter weather will put a damper on demand for seasonal products

For example and perspective, my colleague Dr Mike Haydock is expecting about a 2% decrease in women’s apparel sales in May.

While he doesn’t publish a specific prediction for lawn & garden sales it’s pretty intuitive to expect a corresponding decrease there as well.

That’s bad news for the month of May (and Q2) from a retail fiscal calendar perspective.

But the good news is that the sales that pulled (sloshed?) forward into April were likely much stronger than last year and likely delivered higher margins.

So there’s that.

 

Why this Year’s Hurricane Season Could Have an Increased Impact on Consumers

That isn’t to say there will be more or less total storms (read on for that) but the overall impact on consumers is increasing and this year will likely be no exception.

Just like with global temperatures, the impact of hurricanes on U.S. consumers increases every year, but unlike the temperature (and sea level rise) this isn’t directly related to the changing climate.

The 6 Reasons

The biggest impact from a consumer and retail perspective doesn’t come from the hurricane so much as it does from the forecast of the hurricane.

Here’s why —

Forecast accuracy — hurricane forecasts are really accurate. Amazingly accurate. In fact, five-day hurricane forecasts are more accurate today then two-day forecasts 25 years ago.

The forecast factor — snide comments aside (I’ve heard all of them, believe me) the forecasts are so accurate that the vast majority of us rely on them — almost on instinct — to prepare for the onset of a storm.

Mobile phones— the combination of accurate forecasts, lots of lead-time and the fact the vast majority of consumers in the U.S. are getting the forecast delivered to them daily means more people are connected and effected. Not just in the direct path, but within the entire so-called “cone of uncertainty” — or what I call the “cone of certainty” as it relates to the impact on the people that are looking at the forecast.

Social media — Yes, everybody does talk about the weather. But now that discussion is amplified exponentially via social media. It seems like every storm threat grows larger, impacts more people and threatens Armageddon. Few live up to the billing (thankfully!) but from a consumer demand perspective it’s the message that matters.

Increased Exposures — There’s more of us with more stuff living in areas that are directly impacted by storms. Which means the impact of a storm forecast (due to more accurate forecasts and the forecast factor effect of mobile / social) has risen dramatically.

See: The Rising Costs of Hurricanes

Source: https://www.wsj.com/articles/the-rising-costs-of-hurricanes-1538222400

Recent history — we’ve experienced extremely high impact storms for the past couple of years and the memory of those (and the resulting B-roll) puts an exclamation point on every storm threat further fueling the pre-storm retail surge.

The 2019 Hurricane Forecast

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My colleagues at The Weather Company released their 2019 hurricane forecast this morning.

The prediction in terms of numbers is for a relatively average season with a bias towards more hurricanes this year.

Here’s a link to the full article by Jon Erdman and Brian Donegan:

2019 Hurricane Season Expected to be Slightly Above Average

A couple of very important points regarding the forecast:

– in terms of absolute numbers it will likely be relatively accurate;

– in terms of where the 7 hurricanes and 3 major hurricanes will go there’s no telling at this point.

Even if the season ends up with only half the number predicted and if the storm path is such that half of those hit (either directly or indirectly) the U.S. mainland the impact on consumer demand would be significant.

Americans Think Weather is Growing More Severe … But Most are Not Prepared

The Weather Company fielded a survey that was recently released and the results are supportive of the increased impact of storm forecasts.

While three quarters of all Americans think weather is getting more severe, less than half are prepared for it.

Combine that with the factors I noted above and it’s clear how the impact of these type of storms on consumers are amplified. It’s where the forecast factor creates the pucker factor.

You can read the whole report here:

74% of Americans Surveyed Think Weather is Growing More Severe; Less than Half are Prepared for an Emergency

Retailers Use Data and Weather Forecasts to Create Resiliency

Retailers understand very well the impact of hurricanes and tropical storms on their businesses and are getting increasingly sophisticated in the way they plan for these kind of events.

For example, using analytics to understand the historical impact of storms on buying patterns and then using predictive models and storm forecasts they can anticipate with great precision exactly what they need to have in stock ahead of a storm threat.

Additionally, most (if not all) large retail companies operate so-called war rooms where they manage the business in the face of these kind of events.

Their goal is to ensure the safety of their customers and staff and they move heaven and earth to have enough products in stock (before and after the storm) to meet the demand and support their customers.

I discussed this on The Weather Channel last year — you can watch the short video below.

My Sunday Tweet Storm: Bad Weather Means Bad Restaurant Reviews

I started my weekly Weather Means Business Tweet Storm series two weeks ago and as predicted it’s morphed into more of a bi-weekly-ish effort.

Even that may be overly ambitious.

Never-the-less, there’s been some really interesting weather / business impact stories and studies over the last week that I’m excited to share.

Here are some of my favorites  —

Bad weather leads to bad restaurant reviews 

Bad weather has a fundamental impact on both  what we do and how we feel. It’s a universal truth that has both economic and social impacts.

Turns out the impact of the funk brought on by rainy weather has a measurable impact on the snark (and, presumably) tip level of diners at restaurants.

You can get a copy of the full study at the link here — It’s raining complaints! How weather factors drive consumer comments and word-of-mouth — or you can watch the short video below.

Fascinating study!

The Reverse Bath Tub 

Retail sales in both the US and western Europe will be facing strong weather-driven headwinds in May as colder temperatures will be slamming the brakes on demand for all things spring.

Apparel and Lawn & Garden categories and seasonable consumables (think BBQ’s and beer) will be particularly hard hit.  This will negatively impact home centers,  mass merchants, specialty apparel and department stores — essentially all of retail.

Making this worse will be the incredibly difficult comparison to last year’s record warm weather in both the US (warmest in 124 years) and the UK (warmest on record)

It’s a case of Mother Nature playing hard ball — and below the belt.

For more on what I call “the reverse bath tub effect” read my post from last month — Did the Bomb Cyclone Blow up Spring Retail Sales?

The Sport Performance Summit Atlanta

This tweet references an interesting and very timely topic:  using weather data and analytics to optimize performance —  in sport and  business.

It’s timely in that I’m going to be speaking about this topic at The Sport Performance Summit Atlanta at Mercedes Benz Stadium next month.

I’m particularly excited to be sharing the same stage as the Commandant of the Marine Corps and the GM of the Atlanta Falcons.

Introducing The Forecast Factor Blog

Prior to IBM acquiring The Weather Company one of the part-time roles I played was as an on-air (and I use this term loosely) “expert” on The Weather Channel and weather.com.

You may remember me from such Weather Channel segments as The Forecast Factor with Paul Walsh or The Business Barometer with Paul Walsh.

Or maybe not. Or probably not. Or almost certainly not.

Never-the-less — I’m that guy.

And as part of the gig I spent nearly every Sunday morning at 07:20 and 09:20 eastern time doing a live segment, via Skype on The Weather Channel’s AMHQ Weekend show.

What no one saw was the fact I was almost certainly not wearing long pants when I was doing the interviews and my poor wife was trying to sleep in the next room.

After a couple of years (and being acquired by IBM) my friends at The Weather Channel decided to go in a different direction and I no longer needed to wake up every Sunday at 6 AM to re-boot my computer and do sound checks and put on a shirt and tie (but not pants!).

It was nice to have that time back, but, I’d gotten used to the routine and it was a helpful exercise to frame out interesting and consumable weather and consumer related stories that I could use as part of my current day job.

I decided shortly after stopping doing the segments that it might be a good idea to continue creating and sharing this content on my own using the technology at hand.

It’s taken me the better part of a year, but here it is.

Introducing The Forecast Factor blog, a labor of love where I can “unite my avocation and vocation” (see below) and where I’ll be sharing my thoughts and observations on the impact of weather on consumers and business.

This is my personal site and so, as the managing editor, I may choose to include off-topic (and possibly off-color) subjects periodically.benjismile

I will most certainly include photos of my assistant editor, Benji.

If you’re interested in getting updates you can subscribe HERE at the bottom of the page.

 

Two Tramps in Mud Time

But yield who will to their separation,
My object in living is to unite
My avocation and my vocation
As my two eyes make one in sight.
Only where love and need are one,
And the work is play for mortal stakes,
Is the deed ever really done
For Heaven and the future’s sakes.