The Cold Weather Effect: Raising Profits When Temperatures Drop

Business.com / Sales / Last Modified: February 22, 2017

Weather events and trends have clearly become factors in retail decisions and profits. Here's how to harness the power of weather for sales.

Weather forecasting is now a $3 billion business.

Why? Because forecasters can “sell” information to subscriber businesses who want to be informed of both short and long-term weather information, in order to plan their marketing, advertising, and inventory strategies.

It might be a huge storm coming, arctic cold, heat and humidity, heat and dry conditions, sunshine or clouds – all of these things impact how people shop. And retailers who can stay “ahead of the game” will enjoy solid sales while those who do not will lose out.

Researchers have tracked consumer behavior during weather conditions and changes, and now know that a change in temperature as tiny as one degree, or the difference between sun and clouds will affect purchasing behavior.

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A Few Examples:

  • Both small and larger weather events will impact consumer purchases.
  • Sears was able to determine that after 4 straight nights of severe cold, batteries that were 5 or more years old would die. Using predictors in their various locations, they then began a marketing campaign on the 3rd day of such a temperature trend to advertise special sales on batteries.
  • Sports car dealers now know that a temperature of 75ᴼ with sun will increase their sales of convertible models. Likewise, SUV dealers know that sales of 4-wheel drive vehicles will climb with the first large snowstorm of the winter.
  • In the fall, when temperatures, dip below 70ᴼ, sales of mousetraps rise, as consumers prepare for the inevitable migration of mice into warmer places for the winter.

The Impact of Cold Weather on Consumer Purchasing Behavior

There has been a great deal of research on consumer behavior, much of which revolves around the strong emotional factors in making purchases. This research has been around for a long time. Newer research, however, adds the factor of weather, some of which is emotional as well. For example, a cloudy, dreary week may cause some consumers to buy in order to enhance their moods; likewise, a sunny warm stretch of weather puts consumers in a good mood, and they are likely to go out to brick and mortar stores and shop.

Cold weather, however, has its own unique impact on purchasing behavior. And even the type of cold weather has an influence.

1. Staying Indoors

Cold, dreary, gray patterns of weather tend to keep consumers indoors. However, they do have access to their devices, and online shopping during these cold, unseemly times spikes. Part of this may be emotional, of course, but the other factor is that shoppers have the time indoors to explore online purchases of things that they have intended to buy anyway.

If a retailer is privy to these weather conditions in specific locales, then sending out emails to that targeted geographical demographic that advertise specials and discounts is a great way to take advantage of what research says they are doing on those days.

2. Early Winter Shelf Stocking

An early winter event, such as a snowstorm in October, has an immediate impact of consumers thinking about the holidays to come. Retailers who have the information that an early winter is on hand will begin to stock their shelves and their online inventories with popular holiday gift items earlier than normal.

3. Cold, Cloudy or Rainy/Snowy Days

Increase online purchases by 12 percent in areas of furniture, clothing and wholesale items.

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4. Forecasting Models for Inventory

Retailers who use weather forecasting models can plan for their cold weather sales, in terms of inventory. Planning for weather trends can prevent profit loss. Likewise, those who do not may suffer.

Case in point – Abbadabba’s shoe store chain in Atlanta, Georgia. This retailer focuses on rain weather-related boots, rather than snow-related footwear – given that Atlanta is pretty south. But, still, winter weather is an occasional occurrence, and so the retailer does stock snow boots as well. Here is what happened the past three winters:

  • The winter of 2013 was pretty mild. So was the winter of 2012. Sales of snow boots were almost non-existent, and there was a lot of inventory left over.
  • For the winter of 2014, the chain stocked a smaller than normal inventory of snow boots. Enter two major winter storms that not only closed the store for two days (no sales at all), but, even when it re-opened, it could not meet customer demand, because of its low inventory. Kristen Dellaporta, the CFO, had this to say when interviewed by the New York Times. “Last year we had boots and no winter, this year we had winter but no boots. We all need to start buying The Farmer’s Almanac I guess.”

5. Short-Term Cold Weather Forecasts

Informing major retailers of short-term cold weather events has become a big business. It started with the Weather Channel reaching out to retailers.

For a subscription fee, retailers can sign up to receive weather event forecasts, so that they could plan their short-term marketing and advertising campaigns. Rather than having to seek out the information, it is delivered to them on a daily basis. Then retailers can publish their pre-planned ads with those magic marketing words to influence their consumer markets.

6. Targeted Advertising

The other opportunity for retailers to use weather channels to advantage is this: They can place targeted advertising on those channels to be published when weather conditions are right for their products or services.

Consumers check the Weather Channel via their mobile devices for daily forecasts. When the weather forecast includes high humidity, for example, a pre-paid add for Pantene high-humidity hair products will also appear. Talk about targeting your market!

7. Competition for the Weather Channel

While the Weather Channel was the first to move into this market, as many as 300 other companies are now in this business – ergo the $3 billion nature of this industry today. Not only do they provide short-term weather alerts, they provide businesses with long-term forecasting, as much as 6 months in advance, so that inventory decisions can be made.

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Weather events and trends have clearly become factors in retail decisions and profits. The wise consumer-based retailer will use the ever-improving weather predictors that technology now provides to their advantage. These may be an improvement over The Farmers Almanac.

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