Brief overview of the impact of weather on consumer demand and retail sales

1. Weather and Consumer Demand Overview

2. Our Mission
We help companies make more
money by systematically planning for
the influence of weather on consumers
and business
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3. 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
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4. Retail Sectors Impacted
• Off-the-Mall Specialty Retail • Mass Merchants/Club Stores
• Mall-based Specialty Retail • Department Stores
• Home Centers • Restaurants/C-Stores
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5. Weather Considerations
• Weather impact on consumer
behavior a factor of:
− Merchandise Assortment
− Market/Geography
− Demographics
− Spending power
− Fiscal calendar
− Prior month
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6. Weather and Consumers
• 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
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7. Weather and Consumers
• 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
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8. 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
© Copyright 2009 All Rights Reserved, G2 Weather Intelligence, LLC

9. 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)
© Copyright 2009 All Rights Reserved, G2 Weather Intelligence, LLC

10. Contact Information
Paul Walsh, Managing Principal
– Email: Paul.Walsh@g2weather.com
– Direct: +1.917.463.4238
– Mobile: +1.610.246.0623
© Copyright 2009 All Rights Reserved, G2 Weather Intelligence, LLC