"Everyone talks about the weather, but no one can do anything about it..." was a familiar old saying... that isn't exactly true any more. Since weather is a major factor in shopping behavior, today's retailers are doing something about it. They're looking at historic weather data found within big data to predict future demand and sales, make optimal pricing decisions, and set up maximal interactions with customers.
Imagine, based on the weather, having your supply fine-tuned and ready for however many sales you might make that day? Imagine setting the ideal price at which you will make the most sales and generate the most profit at that particular time? "This scientific approach gives retailers the power to plan and price with confidence," says Dr. Shai Geva, Co-founder and CTO of Upstream Commerce Retail Intelligence Company.
"Weather is one of the largest swing factors for economic and business performance," adds Maia Sisk of The Weather Company (an IBM Company), in the webinar, "Own The Weather, Retail and CPG Use Cases."
A few statistics from the Weather Company webinar give retailers a clue to the importance of customer shopping behavior and retailer planning:
* 60% of shoppers change their behavior when it's raining or hot.
* A 1 degree F drop in (cold) temperatures equals a 2 to 3 percent decrease in apparel sales.
* 60 to 70 percent of expenses are attributed to supply chain costs (heavily weather-impacted).
"The food and drinks, pharmaceutical, and fashion industries are most heavily affected by the (weather) phenomenon... with identifiable trigger points," says article in Weather Unlocked: "How Weather Affects Consumer Behaviour and Purchase Decisions."
"For instance, if temperatures reach over 18 (C.) degrees in the UK, supermarkets know that there will be a 22% increase in fizzy drinks, 20% increase in juices, and 90% increase in garden furniture. Likewise, a 1 degree F drop in temperature in the US can lead to a huge increase in sales of soup, porridge, and lip care products."
And, while customer behavior obviously affects sales, sales affect supply readiness, availability and price. Competitive price tracking and monitoring is also providing more opportunities to focus on specific population targets, practice individual targeting and personalization, provide added value, reward customers for good behavior, increase customer loyalty, and improve the development of the next generation of products and services.
Today's retailers are proactive about the weather and many other competitive aspects of business. They're keeping the rain away -- with more effectively managed supply chains, better merchandising and promotions -- and, of course, selling maximum product at optimal prices. There's no question that databased pricing strategies help retailers make better pricing decisions, and, ultimately, greatest profit.
Worth a look:
The New Science of Retailing: How Analytics are Transforming the Supply Chain and Improving Performance (2010). Book about utilizing technology and data analysis to get at the real solutions to retail problems and planning. (By Marshall Fisher, UPS Professor of Operations and Information Management at the Wharton School of the University of Pennsylvania and Ananth Raman UPS Foundation Professor of Business Administration at the Harvard Business School).
Harvard Business Review Online Forum, The Future of Retail: "Don't Trust Your Gut With Assortment Planning". Analyzing hard data to help retailers improve revenues and profits. (By Marshall Fisher, UPS Professor of Operations and Information Management at the Wharton School of the University of Pennsylvania researching with Ramnath Vaidyanathan of McGill University).