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Merchandising for Climate Change: 4 Steps To Forecast Success

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By: Jenn McMillen |

Posted on July 21, 2023

Weather is Hurting Retail Sales. These 4 Tips Can Help

Lots of retailers have incorporated green practices to reduce their carbon footprints, but how do they forecast inventories in the face of increasing catastrophic weather events? Already in 2023, retailers have reported changes in shopper spending due to weather. Here are four Earth-friendly tips.

If the retail industry doesn’t think Mother Earth wants to have a word, it only has to put its ear to the ground.

The consequences of epic weather events, including record-breaking droughts, floods and temperature fluctuations, are being recorded in shopper traffic and retail sales. And isn’t it ironic. The retail industry is a key contributor to global emissions; the apparel industry alone generates nearly 10% of global greenhouse gases, the European Parliament reports.

Now all that methane and carbon is polluting retail performances:

  • Home Depot said cooler temperatures and wetter weather in parts of the western U.S., including California, had contributed to its biggest sales miss in more than 20 years – $1 billion, according to CNBC. The retailer had reported revenue of $37.3 billion in the first quarter, when analysts expected $38.3 billion.
  • Sam’s Club this spring noted slower sales of patio sets, in part because shoppers are waiting later into the season to buy them, CEO Kathryn McLay said on a May investor’s call: “We also saw kind of cooler weather, which kind of changed the shape of how people are buying.” Walmart, Sam’s parent company, also saw softer sales in seasonal lawn and garden products, due to “unseasonably cooler spring weather.”
  • Fast-fashion chains, such as Zara, are especially vulnerable to unpredictable weather because of their fast-turning inventories. With seasons no longer clearly defined, consumers are making unexpected fashion choices – winter coats one day, T-shirts the next. Retailers in Europe, where torrential rains and droughts are becoming seasonal events, are striving to adjust, EuroNews reports.
  • Supply chains also are affected. Due to “exceptional” droughts in Texas 2022, 70% of all cotton fields in key regions failed, according to The Texas Tribune. Monsoons in Pakistan last summer affected 40% of  the country’s annual cotton yield, Vogue Business reports. And in August, China shut down factories due to a record-setting drought that halted economic activity, states the New York Times.

Even Good Weather Can Disrupt Inventory

The effects of weather unpredictability go both ways. Unusually warm weather in January was credited with influencing higher-than-expected retail sales that month – 3.2%, according to CNN. But by March, U.S. retail sales declined by 1%, more than twice the 0.4% decline predicted (per USA Today).

These unexpected fluctuations, too, disrupt inventory and sales management – think out-of-stocks that cause customer frustration.

Sustaining Sales: 4 Guidelines For Retailers

A lot of retailers have adopted practices to reduce their own carbon footprints – a critical first step to improving weather-related fluctuations. Stores, including Walmart, Home Depot, CVS Health and Gap, have appointed chief sustainability officers, for example.

Many of these companies have big-picture ambitions, such as halving food waste. Here are a few more tactical steps retailers can take, day-by-day, to better prepare for weather events.

Climate-change your analytics – Weather repeats itself from one year to the next just 15% of the time, the National Retail Federation reports, so retailers should not use last year’s weather to predict this year’s demand. Rather, they should incorporate weather forecasting data into their merchandising and marketing insights, to calculate the predicted effects of weather-driven demand. Analytics can, for example, isolate the extent to which a category’s sales volatility is weather-related (jewelry – weirdly – is much more susceptible to weather in January, when consumers use gift cards, NRF reports). This information can help retailers adjust not only inventories, but staff schedules.

Stop thinking of inventory as seasonal – When its 82 degrees in March and 40 degrees in May, consumers are likely keeping their winter clothes in the front of the closet longer and putting thoughts of swimsuits in the back drawers of their minds. Retailers can work with Mother Nature and invest in the tech that enables them to balance stock across stores. Some artificial intelligence software can achieve this by suggesting inter-store transfers before region-specific weather events occur – from overstocked northern locations to unseasonably cool southern locations within the fulfillment chain, for example (the retail predictive analytics firms Retalon and Snowflake are among providers).

Your supply chain should act as an umbrella – Just 11% of suppliers in the U.S., China and Taiwan are prepared for climate-related disruptions, according to a 2022 report in Supply Management. Retailers can require that their top suppliers map out their supply chains to show how well their lower-level fulfillers will come through during a weather event. Data technologies can further enable distributors to prepare for weather disruptions by using digital replicas to model various climate scenarios and outcomes. Lastly, retailers should lean on these partners to be better Earth stewards themselves; supply chains generate nearly 60% of global carbon emissions, Accenture reports.

Use loyalty data to add wind to retail sales – Retailers can put their loyalty member insights to work by reviewing year-ago seasonal purchases and sending incentives to members to purchase weather-sensitive categories earlier. The data can inform both what members tend to buy annually, such as summer sandals, and less-frequent items, like outdoor furniture. The boating supply and equipment store West Marine, for example, uses geographic data generated from its loyalty program to target product offerings to members at varying times, regardless of month. This is because members in Florida are more likely to be saltwater boaters, so their season starts earlier than someone in say, Michigan, who is more likely to be a freshwater boater and has to wait for snow to melt and lakes to unfreeze before boating season can begin.

Speak Mother Earth’s Language, And She’ll Speak Yours

Catastrophic weather events are becoming as seasonal as farmer’s markets and snow skiing. The sooner the factors of these events, including how to cope with the aftermath, are entered into retail’s operational lexicon, the better prepared the industry will be to serve its customers. Consumers are, after all, also scrambling to find the goods they need in response to weather shifts.

The Earth is roaring. As anyone who’s lost a home after ignoring hurricane warnings will tell you, it pays to listen.

This article originally appeared in Forbes.

Forbes.com retail contributor Jenn McMillen is nationally renowned as the architect of GameStop’s PowerUp Rewards, and is Founder and Chief Accelerant of Incendio, a firm that builds and fixes marketing, consumer engagement, loyalty and CRM programs. Incendio provides a nimble, flexible and technology-agnostic approach without the big-agency cost structure and is a trusted partner of some of the biggest brands in the U.S.