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.

 

Expected Milder Spring a Godsend for Spring Product Sales

The Weather Company released their spring forecast yesterday and the news for consumer businesses is … great!

“After an extended cold period across much of the Northern U.S. during the last month, the pattern finally appears to be relenting as we head into spring,” said Dr. Todd Crawford, chief meteorologist at The Weather Company.

I wrote a post on the potential for this back in January.

Given the latest update I thought I’d re-up the message as the stars are aligning to produce a bigger than normal weather-driven boost to this year’s spring retail season.

Four Reasons the Polar Vortex will be a Boon for Spring Product Sales 

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.

For context, last April was the 13th coldest in the U.S. 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 seasonal retail products :

  • An incredibly easy weather comparison to last year.
  • Cabin fever. It’s been a late winter with a colder than normal February and first half of 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.
  • 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.
  • 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 increased impact of weather on consumers — it adds up to a very silver lining for US retail this spring.