Keeping a Weather Eye on Business : Forecasting Company Helps Retailers Attain Sunny Sales
“Everybody talks about the weather, but nobody does anything about it.”
--Editorial, Hartford Courant, 1897
“You can’t control the weather, but you can control how it affects your business.”
--Motto, Strategic Weather Services, 1993
The forecast is clear--even if the skies are not.
Faced with a growing need to plan their inventories much further in advance, more retailers will try to reduce the uncertainties associated with the daily mystery known as weather by seeking long-range meteorological projections, some retail industry analysts predict.
Strategic Weather Services, a Wayne, Pa., company with a weather laboratory in Palm Springs, is poised to take advantage of retailers’ desires to do something about the weather. The firm provides “weather-adjusted sales forecasts” to retailers seeking information on likely atmospheric conditions up to 15 months in advance.
The company actually advises companies on long-range inventory matters based on its forecasts--urging clients, for example, to stock more rainwear when heavy storms are expected. Although some retailers are skeptical, the notion of incorporating long-range weather forecasts into business planning is gaining ground.
The National Retail Federation invited Strategic Weather Services to make a presentation at the federation’s annual conference in New York earlier this month.
“I think this will be a wave of the future,” said Robert Kahn, a retail analyst based in suburban San Francisco and publisher of the influential Retailing Today newsletter. “Long-range weather forecasting will become more important because major retail companies are growing larger and larger and they are making their purchasing and inventory decisions further and further in advance.”
Some of the nation’s largest retailers make purchasing decisions and marketing and advertising plans a year in advance. This sometimes limits their flexibility to make sudden major changes in their inventory plans.
And although weather can be a factor in determining demand for certain items or the size of shopping turnouts, retailers usually have no more information than the five- to seven-day forecast provided by the National Weather Service, Kahn said. As a result, retailers can be surprised by unforeseen weather patterns and be left high-and-dry or all wet.
Kahn, for example, cited the experience of his wife, who recently visited a major department store in the San Francisco Bay Area to purchase boots. “The salesperson told her the store had not ordered boots because they had ordered boots the previous year and weren’t able to sell many,” Kahn said.
Kahn said the store also decided not to order boots because the retailer--like many other merchants--reviews the weather patterns of the previous season before making inventory decisions about the next season. In this case, the retailer did not make accurate assumptions about the winter of 1993, Kahn said.
“Considering all the rain we’ve had in California--they lost out on the possibility of major (boot) sales,” Kahn said.
The hundreds of retail executives who attended the National Retail Federation’s annual convention in New York City were well aware of the commercial hazards Mother Nature can create. David Wachs, chief executive of Charming Shoppes, a retailer of women’s apparel with headquarters in suburban Philadelphia and more than 1,200 stores in 42 states, decided to purchase long-range weather-adjusted sales forecasts from Strategic Weather Services.
“Weather has a dramatic impact on how much merchandise to buy and stock, when to place it on the shelves, and where the product will sell quickly with the least markdown,” Wachs said at a convention forum titled “Weather: The Next Retailing Frontier.”
“Weather is a constant topic of debate, speculation, worry and curiosity. Weather has a direct impact on a large number of product categories, as well as store traffic patterns.”
Charming Shoppes, which operates under the names Fashion Bug and Fashion Bug Plus, is one of Strategic Weather Service’s 15 clients with a national retail presence. Strategic, which began to offer retail consultation early in 1992, also has 15 smaller regional clients, said Fred Fox, the company’s co-founder and president.
“Merchants want to know when the weather is going to be abnormal,” Fox said. “If seasonal temperatures are going to be normal--and there isn’t going to be an unusual amount of precipitation--we tell retailers to operate as they normally would. If we expect the weather to be unseasonably cold, hot or wet, we make suggestions on how they can adapt.”
For instance, Strategic informed one client that there would unseasonably warm temperatures in the month of May. The store responded by ordering an unusually large amount of swimwear and light summer clothing--goods it normally did not stock until June.
“As a result, the client had a 15% increase in sales, while competitors averaged only a 5% increase,” Fox said.
Fox said his company spends two to three months studying a retail client and the firm’s inventory plans. The weather projections are based on computer-analyzed studies of past weather patterns and mathematical projections of future weather trends.
“We don’t have a crystal ball and don’t claim to know the future but we can recognize enough trends to forecast (long-range) weekly weather with 71% accuracy,” Fox said.
Maintaining a long tradition, Strategic provided the incoming Clinton Administration with a weather forecast for Inauguration Day one month before the actual event. The tradition began with the inauguration of Dwight D. Eisenhower, and the firm subsequently provided Inauguration Day forecasts for Presidents Kennedy, Nixon, Johnson and Carter. All of those forecasts were provided when Strategic Weather Services was known as Irving P. Krick Associates.
Irving Krick of Pasadena, now an honorary chairman for Strategic, founded the company in 1948 and developed the company’s forecasting techniques. Krick provided the D-Day invasion weather forecast in 1944 for then-Gen. Eisenhower and the Allies during World War II as well as for other strategic strikes during that war.
Krick Associates, which had provided forecasts for agricultural projects in the United States and abroad, ceased operations after a fire wrecked company laboratories in Palm Springs in 1978. Fox, a construction engineer, and his father, Richard, a real estate developer, purchased the company in 1990 and decided to market its services to retailers.
