Planalytics: The Financial Impacts of Weather Volatility

Planalytics: The Financial Impacts of Weather Volatility

Frederic Fox, CEO & Co-founder, PlanalyticsFrederic Fox, CEO & Co-founder
Retailers manage a variety of external factors that affect their business on a daily basis from economic conditions, to competitive actions and technological advances. But few companies manage one of the largest variables impacting a consumer-focused business – the weather. Weather is often top of mind when there is a big event like a snowstorm or hurricane. Although these events have a great effect, day-to-day and week-to-week variations in weather are even more impactful to retailers, like the extended period of warmth in the eastern U.S. at the end of 2015 that cost retailers more than a billion dollars in lost sales.

Weather is a primary driver of consumer shopping behavior and these effects vary greatly depending on the product being sold, location, time of year, and recent weather experiences (to name a few). No other outside variable shifts consumer buying behavior as frequently, directly, immediately, or meaningfully as the weather. From what consumers decide to wear, to what they eat, to their entertainment choices and weekend home improvement projects – Mother Nature is continually driving consumers to either very deliberately or unconsciously alter their purchasing decisions.

Weather’s influence on shoppers is also complex and nuanced. What does 64° and light rain to a retailer? The answer is different in Chicago than it is in Seattle, different in New York City versus Atlanta. The impact changes depending on if it is a day in November, April, or July, and it differs for each retail segment or type of product. There can also be gender and age variances. Planalytics, the leading provider of weather analytics for consumer-focused businesses, measures weather’s impact on retailers and consumer product companies so they can proactively plan for it and capture opportunities and mitigate risks associated with weather volatility.

Planalytics helps companies accurately assess and measure weather-driven impacts and effectively manage the never-ending variability of climate. Through its advanced cloud based weather analysis technologies, Planalytics provides enterprise wide planning and optimization solutions that corrects supply chain and inventory management errors due to weather.

Measuring weather variance and analyzing consumer data directly leads to improvement in inventory management, betterment of sales and profit margins

Planalytics allows retailers to ingest its weather driven demand analytics directly into their existing in-house planning, ERP and analytics infrastructures. Multi-year analyses of company data and corresponding weather conditions provide valuable insights into how consumers respond to the weather. Planalytics retail clients use these detailed analytics to calculate precise measurements of demand increases or decreases that occur due to changes in the weather. By using a normalized baseline for planning, Planalytics allows retailers to improve the accuracy of their business forecasts 20 percent or more for highly sensitive categories, with total company wide improvements of two to ten percent depending on their seasonality and merchandise mix. The ROI can be significant. A retailer can typically return 20 to 100 basis points worth of additional profit back to the business through inventory optimization alone (reduced inventory carrying costs and fewer lost sales).

This is just the starting point. During the selling season, retailers can optimize areas such as replenishment, marketing campaigns, pricing, store operations, and more with weather intelligence.

“Measuring weather variance and analyzing consumer data directly leads to improvement in inventory management, betterment of sales and profit margins,” says Frederic Fox, CEO and Co-Founder. “Removing weather volatility from the list of riddles in business decision making is the prime goal of Planalytics,” explains Fox.

Weather’s impact on consumer purchasing decisions is real and measurable, and no longer has to be ignored. Retailers can successfully manage this variable with great financial benefit by using weather analytics.