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.

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