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Weather and Consumer Demand Overview

Our Mission

We help companies make more money by systematically planning for the influence of weather on consumers and business

© Copyright 2009 All Rights Reserved, G2 Weather Intelligence, LLC

Weather and Consumers

•  Weather is a fundamental yet often overlooked driver of consumer demand

•  Results in unexpected upside/downside volatility in same-store sales results

−  Particularly during the high margin spring transition season

•  Easier to measure and predict than almost any other influence on consumer activity


•  Off-the-Mall Specialty Retail •  Mall-based Specialty Retail •  Home Centers

Retail Sectors Impacted

•  Mass Merchants/Club Stores •  Department Stores •  Restaurants/C-Stores


Weather Considerations

•  Weather impact on consumer behavior a factor of:

−  Merchandise Assortment −  Market/Geography −  Demographics −  Spending power −  Fiscal calendar −  Prior month



•  Temperature –  Primary “strategic” demand indicator –  Departures from normal and prior year are key –  Impacts large population centers and

geographies –  Correlates strongly to sales of seasonal

merchandise –  Predictable at seasonal (year ahead) time

scales

•  Precipitation/Snow –  Weekend, daytime events the biggest impact –  Traffic hindrance primarily –  High impact but not as widespread as the

impact of temperature –  Impactful events are not as predictable at

longer range time scales



•  Hurricanes –  Traffic and demand

generator

–  Biggest and most widespread impact the result of hurricane predictions vice landfall

–  Media coverage ahead of storms results in a net plus for Home Centers (HD/LOW), Mass (WMT), and grocers; results in a net negative for mall-based retailers


Weather Impact on March Sales

•  Example of the influence of temperature on retail sales

•  Old Navy same store sales change compared to the change in a nationally weighted Cooling Degree Index (weather source: NOAA)

•  Increased cooling demand correlates to increased demand for spring apparel

–  ~40% correlation


Weather Impact on April Sales

•  Example of the influence of temperature on retail sales in April

•  National temperature change against the average comp store sales of a basket of 53 retailers (source: Global Hunter Securities and NOAA)


Contact Information

Paul Walsh, Managing Principal

–  Email: [email protected] –  Direct: +1.917.463.4238 –  Mobile: +1.610.246.0623
