Weathering Promotions

A hurricane can wreak retail havoc any day of the week. But when the she-devil Hurricane Irene struck on one of the biggest back-to-school shopping weekends of the year she cost retailers an estimated $1.3 billion in revenues in just two days. The success of the 2011 back-to-school shopping season was already questionable due to high gas and food prices, a volatile stock market and rising unemployment figures. But when consumers have to spend a considerable amount of money on emergency supplies, the lack of disposable income can hurt supplier and retailer sales.

While none of us can predict the severity of weather systems, we certainly can do our best to adjust our inventories and prepare our retailers so they can meet the needs of consumers in the likelihood of predicted weather events such as blizzards, floods or hurricanes. To move forward (and prepare for future weather events) you have to look backward.

For example, what does your POS data tell you about the shopping habits of people prior to blizzards in recent years? And what does the data tell you about their preferences after the event? Did you have to discount prices in order to get shoppers to return to the store? Did you ever regain those sales “lost” by store closings, instocks or transporation issues with post-storm increases in shopping? Does the data indicate that the sales “lost” during the weather event are recovered shortly thereafter? Do consumers take care of their emergency needs then return to matters at hand and make the necessary back-to-school shopping? What inventory buildup was particularly onerous and can you adjust in advance of the next storm? What instocks occurred and can you take steps to ensure that those items are on the shelf and in the cart the next time? What items seemed to sail right off the shelves prior to the weather event?  And don’t forget to look at online sales. Power outages can effectively shut down your e-sales.

Also, take note of specifically when those weather events occured. Did they take place during a planned promotion? If so, how did the weather affect that promotion? Did the event take place during a holiday, the middle of the week, the end of a paycheck cycle? By familiarizing yourself with consumer spending patterns based on the day of the week (paycheck cycle), the time of the year (back-to-school) or a particular day/days of the month (holiday), you can then review how the weather event affected typical spending patterns in those time periods. This will help you prepare in advance for the next weather event. When a impending storm looms, note when it is predicted to strike and reference past POS data representative of a similar time period.

Be aware of where the storms hit and how that affects sales. Examining chain data won’t get you far when it comes to assessing how weather systems affect sales. Regional data is certainly key — after all, blizzards aren’t a regular occurrence in Florida, nor to hurricanes strike Wisconsin. Create store groups based on region — this will help you identify trends specific to those regions and monitor how weather systems affect those regions. Be certain to look at the demographics of those regions as well, to ascertain consumer preferences for specific items.

Also, dive deeper. Not only can you create regional groups of store data, but you can examine the specific data of stores within that group to ensure you take into consideration local demographics.

With all that data in hand — get creative. Examine what emergency supplies you can make available — but also look at secondary supplies or “feel good” purchases.  For example, prior to the arrival of a blizzard it may not be surprising to see an increase in the demand for shovels, batteries or candles, but do you see an increase in hot chocolate sales and board games and does this provide you with an opportunity to cross promote? Did consumers stock up primarily on non-perishables or did they indulge and purchase some perishable treats as well? “Comfort” purchases can go a long way for the consumer trapped inside during a hurricane, flood or blizzard. What promotional “kits” can you provide your retailer based on changes in the weather?  

Even the yearly change in the weather can be a source of inspiration. Think of the thousands of snowbirds who migrate from the Midwest to the warmer southern climes of the South. What does that demographic prefer during the spring and summer months in the Midwest? Take note, and then be certain to stock up on those items in your southern locations once the Midwestern winter hits.

Have fun with the unpredictable nature of Mother Nature — and use it to your advantage while providing retailers and consumers alike with the “necessaries” and “comfort” items that help them weather storms.