How does weather impact your sales? It’s a question we all like to answer. We’re end of June and summer has started and the weather has been kind to us ever since. In Belgium this led to increased sales of swimming pools and all sorts of attributes you’d wish for when the temperature is rising. This resulted for one of Belgium’s major retailers in an increase of their sales by 200% of their swimming pools compared to the previous year.
Being able to capture the impact of weather on your sales can be instrumental to help you manage stock levels, and indicate unwanted and unsold seasonal inventory. Weather has a seasonal pattern, but it isn’t always predictably the same. An early summer, a mild winter, a sudden tropical storm… it can disturb normal seasonal patterns. This can lead to overstocking, which leads to increased working capital and obsolete items. Understocking, causes customers to look for other vendors, with lost sales as a result.
Knowing how and with what effect certain weather situations or temperatures will have on your sales, would help planning your demand tremendously. This information can help you recover quickly from fast acting weather patterns and prepare appropriately for more atypical climate issues, such as a milder winter than usual or an earlier than usual summer.
So it’s easy to say that you can’t control the weather, but you can control your response to disruptive weather events by taking early action to temper the impact or take advantage of the opportunities. Having a good process in place based on the right more advanced predictive analytics enables you to make weather scenarios based on weather history.
3 steps to get you started
- Know your business: This might seem logical, but logic often gets lost when you are busy doing operational tasks. When you make sales forecasts it is important to understand the drivers of your business. Is your company selling seasonal sensitive products like beverages or swimming pools? Then you’d better be aware what happens when the temperature starts rising and what effect it will have on your icecreams or on the demand for refreshing beers.
- Identify business drivers: Knowing your business helps you better understand your historical sales pattern. Was a drop in sales due to weather impact or rather by let’s say a drop in the oil price or both? When you know what is driving your business you’ll make better sense of past sales. Apart from the usual suspects, what underlying macro-economic drivers are influencing your business?
- Dig into the details: Following an intensive analysis of your sales, let’s start to take a look at specific weather information being daily temperature and so on. Is your sales peaking when temperature reaches a certain figure? Imagine that you’re selling swimming pools and the demand for your product increases when you reach 25°C. This enables you to take this information into account and this will help you build scenarios.
Interested to learn more on this topic? View our on demand webinar: “The Impact of Weather on Your Sales”