Climate Change a “Massively Huge”​ Private Sector Opportunity​

Climate change represents a profound risk to the global economy.

In fact, for perspective, President Trump’s administration assessed that in the U.S. alone the economy “could lose hundreds of billions of dollars — or in the worst-case scenario, more than 10% of its GDP — by the end of the century.”

A sobering assessment indeed, but also a compelling call to action.

As Sun Tzu is quoted as saying, “in the midst of chaos, there is also opportunity.” What was true in 500 BC is equally true today, and while the risks are real and profound, the opportunities for the private sector are equally real and profound.

I was speaking with a colleague on this topic last week and he noted that the opportunity for business to create value from sustainability is ” … massively huge.”

I think he was correct.

In fact, I believe climate change represents a profound opportunity for global businesses to do really well while doing good.

“Lead, follow, or the get the hell out of the way” – Lt Gen George S. Patton

I started my career (back before electricity) as a weather forecaster in the U.S. Air Force and Army — it’s where I learned my chops as both a meteorologist and operations analyst.

In the military weather information is used by warfighters to create strategies and execute tactics. It’s a force multiplier that, when used correctly (using analytics and integrated into the planning process) creates tactical surprise on the battlefield.

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And of course in the literal fog of war to proactively leverage this kind of intelligence requires the ability to operate in conditions that are profoundly risky with outcomes that are profoundly uncertain.

In many ways, everything I learned about creating resilience and operational sustainability I learned as the Chief, Weather Operations of the 101st Airborne Division — it was quite literally forged on the battlefield.

Since joining the private sector twenty years ago I’ve been focused on helping global businesses — primarily in the consumer and financial services sector — leverage weather (and by default, climate) “intelligence” in much the same way.

It’s been a long slog in a space that has to date been relatively nascent, but the trend lines are changing — fast!

If you can make it here …

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The acquisition of The Weather Company by IBM in 2015, was, I believe, a transformative moment in the applied enterprise use of weather and climate information.

It was validation of the “massively huge” opportunity and it has helped to catalyze investment and innovation in the development of sustainable technologies and services.

Climate City Expo

Of course, as the applied use of weather and climate information becomes mainstreamed, amazing new organizations like the Collider in Asheville, North Carolina are being launched as platforms to propel the growth.

I’m looking forward to speaking more on this topic at the Collider’s (very cool!) Climate City Expo business event in Asheville on April 2d and 3rd.

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Here’s a snap shot of some of what will be discussed:

  • “For an issue as pervasive and wicked as climate change, scalable technology holds unique promise as a way to rapidly disseminate intelligence and tools needed to inform and guide action on the ground. How is climate tech changing the landscape of climate adaptation and resilience? What new opportunities are arising due to emerging technologies, and where do we still need new innovation and investment?”

If you’re coming to the event, I look forward to seeing you!

If you aren’t able to come, watch this space. I plan to follow-up with a blog post and, possibly, a video of my keynote.

Record February UK Warmth: Retail Boon or Fool’s Spring?

I’m in London this week for a great week of meetings with clients and colleagues.

Unfortunately I missed the record-breaking February “winter heatwave” and it’s now appropriately and seasonally grey and wet.

See — February could be warmest on record despite cold start

On the bright side it’s significantly milder than what I just left behind on the east coast of the US.

See — Winter Storm Scott Spreading Snow From Plains and Midwest to the Northeast Through Early Monday

U.K. Spring Weather Outlook

According to my colleagues at the The Weather Company forecast office in Birmingham the balance of spring is looking to be relatively mild in the UK but with the potential for wetter then normal conditions.

That means days with fine weather separated by periods of gloom and despair.

A typical British spring.

On the face of it this all sounds beneficial for spring retail. A strong early boost to spring buying, a late Easter and relatively normal weather expected for the balance of the season.

What could go wrong?

A Beast of a Comparison

In late February and early March of 2018 the so-called Beast from the East was pounding Britain with wind, snow and bitter cold and UK retailers suffered their worst quarter in a year — sales dropped 1.2%.

See — ‘Beast from the East’ responsible for biggest drop in UK retail sales in a year

Following the extreme cold and snow an early Easter combined with an extended period of warm weather led to a rebound in UK retail sales that continued through the summer.

See: U.K. Retail Sales Rebound on Warm Weather, Discounts

The net result was a spring retail sales boon with the “beastly” weather happening during a relatively low volume period for spring merchandise and the weather-driven demand rebound happening at exactly the right time.

The stars were aligned.

Fool’s Spring?

On the face of it the late February and March comparison will be a comp lay-up for retail this year — although the impact is always more complex than what’s apparent at face value.

For example — Waitrose and Partners reported that total sales for the week ending Feb 23rd were down (4.3%) compared to the equivalent week due to shoppers stocking up last year for the anticipated ‘Beast from the East’.

Here’s the thing about the weather impact on consumers — on the one hand it’s as obvious as the nose on your face, but in fact the impact is profound, pervasive and mostly underestimated.

As my colleague Claire Willlams, IBM’s U.K. Leader of Retail, AI and Analytics points out:

“Weather has a direct impact not only on the obvious like burgers and salads, but think about it – it impacts how customers feel which impacts their purchasing decisions, their choice of channel, in store manner – it’s everywhere”

On the whole though, the early onset of record warmth no doubt has driven sharp like-for-like sales increases for all manner of seasonal products as well as footfall into high street stores.

Headwinds ahead

But what Mother Nature gives she also takes away — the comparison for the balance of spring and summer will be particularly difficult (beastly?).

This year’s weather-driven demand conditions will likely result in a pull-back in sales when compared to last year as we move deeper into the Spring.

Even with a later Easter holiday and relatively normal British weather, the tail wind that last year’s fine spring and summer weather brought will likely be a head wind this year.

“Know the enemy, know yourself; your victory will never be endangered. Know the ground, know the weather; your victory will then be total.” — Sun Tzu

Just Add Weather

As I’ve noted in previous posts, while the impact of the weather is increasing, retailers are also increasingly leveraging the data in creative ways to quite literally turn opportunity into risk.

See: Weather Data is Transforming Consumer Demand Planning

Marks & Spencer is a great example of how this is working. According to Ricky Mompalao, Head of Forecasting for Ambient Foods:

“Marks & Spencer uses weather data to help predict the level of demand we can expect for items across our UK stores. We use this information to plan our stock and, at the same time, minimise waste. To help us get this right, we’re looking at weather forecasts weeks in advance, with a level of confidence that means we can better prepare our stores.”

For more on how the retailers are leveraging weather data see our white paper, recently published by the IBM Institute for Business Value —

You can download it here: Just Add Weather

Executive Summary:

Don’t blame it on the rainWhy do so many executives get a shiver in their bones just thinking about the weather? It’s likely because weather often has a largely negative impact on business. Yet according to our recent research, that’s not true for all organizations. Many companies are turning weather data into a competitive advantage by leveraging insights to reduce costs and increase revenues. Just how are leading organizations successfully benefiting from weather insights to improve their bottom lines? Stop wondering if a hard rain’s going to fall and learn how to put weather to work for your organization.

Weather Data is Transforming Consumer Demand Planning

“It’s tough to make predictions, especially about the future.” — Yogi Berra

For retailers and CPG companies, predicting what consumers will be needing and wanting, months into the future, is an exercise fraught with uncertainty and risk.

Complicating this is the realty that about one-third of consumer products and services (representing revenues of approximately $3 trillion in the US) have some degree of weather and climate variability.

Complicating this even further is the reality that the impact of weather on consumer behavior is increasing.

The combination of a changing climate and consumers that are more connected, more demanding and with more retail choices means that the effect of the weather (and the weather forecast!) on consumer demand is increasing.

This uncertainty is creating increased risk.

It’s also creating opportunity.

As I noted in a previous post, retailers have historically viewed weather as an uncontrollable and therefore unmanageable risk factor — what Wall Street analysts call the “weather excuse.”

That paradigm is now rapidly being turned on its head — rather than a risk, leveraging digital insights mined from weather data is creating opportunities to better serve customers, capture market share and delight shareholders.

An example of how this works is in demand planning — we know from benchmarking analysis done by colleagues at the IBM Institute of Business Value that a 1% increase in demand forecast accuracy yields $10M in revenue for every $1B in sales.

We also know, from work we’re doing with retailers in the US and Europe, that including weather forecast data in demand forecasts for seasonal product categories increases forecast accuracy 20% or more.

See: Just add Weather

When you do the math it’s clear that the value from integrating weather into demand forecasts is far beyond table stakes — in fact, combining weather information with other external variables will be literally transforming how consumer businesses are serving their customers.

And it’s happening now.

I’m looking forward to discussing this at the Climate City Expo on April 2d in Asheville next month.

CCX: Business

“Ensuring humanity’s future in a changing climate presents unique challenges and opportunities to drive innovation. CCx: Business is a cross-industry conference that convenes business executives, entrepreneurs, climate scientists, investors, and many more to explore solutions at the leading edge of climate resilience.”

If you’re coming to the event let me know. Would love to see you there.

If you’re not, here’s a short video that will give you a sneak peak of what I’ll be discussing.

Four Reasons the Polar Vortex will be a Boon for Spring Retail

As widely predicted the dreaded polar vortex is back and it has “seized the Midwest with the coldest weather in a generation.”

These kind of events — if they persist for weeks — can have huge negative impacts on consumer spending and economic activity.

For context, check out this article by Andrew Freedman on the 2014 Polar Vortex event:

“Frigid Winter Takes a Toll on the Economy

But the impact of short spells of bitterly cold weather, in the winter, typically don’t have a major long term impact on consumer demand and retail.

Why? Seasonality. It’s supposed to be cold in winter and retailers and consumer packaged goods companies generally plan for January and February to be, well, wintery.

Where the impact of colder than normal and extreme weather gets dicey for consumer businesses is when it persists for long periods into times where it’s supposed to be getting warmer (i.e. spring). It’s what happened last year.

See: Q1 / 18’s Big Retail Chill

The extreme and life-threatening cold we’re currently experiencing will certainly have a major short -term impact.

But the key here is short-term.

By this weekend and into next week the forecast is calling for an incredible warm up.

For example the temperature in Chicago is expected to increase 63 degrees (-22F to +41F) between tomorrow and next Monday (2/4).

Even with a continuation of these kind of volatile spells of extreme cold across the eastern half of the country in February, the negative impact on retail is likely to be minimal for the reasons noted above.

On the contrary, a cold late winter this year will likely contribute to strong and high margin early spring sales.

4 Reasons for a Retail Silver Lining this Spring

For most retailers in the U.S. the fiscal year starts in February with the spring quarter spanning February through April.

Along with the third quarter (August – October) the spring quarter is the most exposed to weather volatility and hits to profits.

Again, for context, last April was the 13th coldest in the US in 124 years of history.

That coincided with a very early Easter (week 5 March) and it had the effect of essentially kiboshing the normal first quarter Easter sales stimulus.

So there’s four key reasons the late winter polar vortex this year will likely be a boon for spring retail:

  1. An incredibly easy weather comparison to last year.
  2. Cabin fever. There’s still a lot of winter to come and the predictions are continuing to call for periods of very cold weather right into March. When the weather breaks consumers will be breaking out, and spending. It happens every year and it will likely happen 3 or 4 weeks earlier this year.
  3. A later Easter means a longer pre-holiday selling period with weather conditions that will be much milder than last year. More time to shop due to the earlier break to spring weather means more money in the cash register.
  4. The weather impact is greater than ever due to the combined effect of better forecasting, mobile access to more accurate forecasts, and the synergistic impact of social media (weather is nearly always a number one topic on social — it even trumps sex).

When you combine all four elements — easy comp, earlier break, later easter and the weather “forecast factor” — it’s adds up to a very silver lining for US retail this spring.

Weather a Hot Topic at the National Retail Federation Big Show

Had the opportunity to chat with my friend and former colleague (and self-described weather geek), CNBC Senior Economic Analyst Steve Liesman at the National Retail Federation Big Show last week in New York.

He’d just finished interviewing former Chairman of the Federal Reserve Janet Yellen and Kara Swisher, Host of the Recode Decode Podcast.

The topic of the panel?

Impact at scale: Leading in prosperous yet uncertain economic times

While the discussion wasn’t directly related to weather and climate, the spirit of the title at least was relevant to the uncertainty consumer businesses face every day as it relates to the volatility in consumer demand that is created by the weather and, by proxy, the climate.

See: “Climate is just a thousand little weather’s

An alternative title could have been framed as: “Impact at scale: Leading in prosperous yet uncertain climatic times.”

The combination of a changing climate and consumers that are more connected, more demanding and with more retail choices means that the effect of the weather (and the weather forecast!) on consumer demand is increasing.

The uncertainty is creating increased risk … but also increased opportunity.

See: Just add weather

As someone who’s been at the bleeding edge of the topic of weather integration into retail systems, I was very encouraged at the NRF show to see weather data integrated across nearly all IBM’s consumer offerings — from commerce and marketing to supply chain and block chain.

Weather data is now also showing up in SAP and JDA integration’s and the topic of managing consumer weather risk is no longer a curiosity — it’s becoming, dare I say it, mainstream.

See: The Effects of Weather on Corporate Earnings are Gathering Forc

Historically retailers have viewed weather as an uncontrollable and therefore unmanageable risk factor — what Wall Street analysts call the “weather excuse.”

That paradigm is now rapidly being turned on it’s head — rather than a risk, leveraging digital insights mined from weather data is creating opportunities to better serve customers, capture market share and delight shareholders.

It’s how the best retailers and consumer packaged goods companies and quick serve restaurants are, indeed, prospering in uncertain times.

To quote Sun Tzu (because, why not?) —

“Know the enemy, know yourself; your victory will never be endangered. Know the ground, know the weather; your victory will then be total.”

If you’d like to follow me or connect I can be found here on Twitter and here on LinkedIn.

Weather On the Money

A favorite part of my gig with IBM Services is that I get to travel around the world visiting clients and colleagues spreading the gospel of weather analytics integration.

One downside though: having a global role means that I’m often either somewhere, going somewhere or coming back from somewhere (often in a middle seat).

But this is a small trade-off to an awesome job. No complaints.

This weekend I’ll be traveling to Europe for a week of client meetings and won’t be available to do my regular Sunday appearance on The Weather Channel.

For this week I thought I’d re-post a video and accompanying article from an appearance I did earlier this year on CNBC On the Money (formerly the Wall Journal Report) with Becky Quick.

  • Quick side note: I’ve been doing periodic appearances on CNBC for at least the past 15 years and have known Becky the whole time. She reminded me the last time I appeared with her that I gave her a weather forecast for her wedding — I was right. For the record I’ll never do a wedding forecast again. Far too risky and I’m quitting while ahead.

You can read the article and watch the video via the link below.

Winter’s chill can take a big bite out of businesses, here’s how they cope

As the U.S. East Coast recovers from a weather system that dumped several inches of snow across the region earlier this week, bone-chilling temperatures are expected to drive the mercury to record lows this weekend.

Meanwhile, the big freeze that’s gripped much of the country is having another chilling effect—one that costs money.

“The entire Eastern half of the country is frozen right now, and with that the economy sort of slows down ,” Paul Walsh, a business weather analyst and meteorologist told CNBC’s “On the Money” in an interview.

“It doesn’t grind to a complete halt, but you can imagine that people are not out,” Walsh explained. “They’re not doing, or spending the same kind of money on the same kinds of things.” That aspect is important, given that businesses normally see brisk traffic immediately following the holiday season.

“People are basically hunkered down in their homes and not ‘out and about,” Walsh added. “If it happens for an extended period of time, it can have a direct impact on the ebb and flow of economic activity. It impacts the entire economy.”

The unusually cold weather has even impacted the normally balmy South. This week, it was so cold in Orlando, Florida that water theme parks—including Disney’s Typhoon Lagoon and Sea World’s Aquatica—closed amid temperatures hitting the 40’s.

“They’re going to be losing a lot of revenue in the times they’re shut down,” Walsh told CNBC, meaning that spending at places “like restaurants and travel, a lot of those are lost forever.”

Walsh, who is director of weather strategy at IBM Global Business Services, describes his niche as the “intersection of weather and consumer behavior.” IBM sells weather data directly to business clients, including major airlines and retailers.

“We now have the capability to not only predict the weather, but also to be able to sense how it’s going to impact consumers,” he said.

And weather means big money, particularly in the wake of a brutal hurricane season that saw catastrophic storms batter Texas, Florida and the Caribbean. The unpredictable nature of storm season means businesses have to find ways to calculate the associated risks.

“The interesting thing that’s happening now is that more and more companies are able to take the weather data, and use analytics and even use artificial intelligence and define from that data how the weather is likely going to be impacting what you and I are going to be needing,” Walsh said.

The next step is that data is being “pulled into retailers’ replenishment and forecasting systems,” he added. That information is then used to help select inventory, by estimating and anticipating future consumer buying demand.

“Retailers have been using weather data forever, but they’ve not really been doing it in a way that’s integrated and built into systems,” Walsh said. “That’s changing now in a really, really big way.”

On the Money airs on CNBC Saturdays at 5:30 am ET, or check listings for air times in local markets.