Undeniable external factors influencing sales are not exempt from control in this context.
In the ever-evolving world of retail, understanding consumer behaviour is key to success. One factor that has long been overlooked is the impact of weather on purchasing decisions. However, this is changing, with more and more retailers turning to weather-driven demand analytics to gain a competitive edge.
Weather-driven demand analytics can provide valuable insights for the coming days, weeks, and even months. By analysing enterprise-wide weather impacts, these tools can identify when, where, and how much a shopper's "climate" influences their purchases and a company's performance.
Operationalizing weather analytics is not only possible, but profitable. The financial gains can be captured almost immediately, as these analytics optimise inventories and drive financial benefits. Meteorological forecasts, fed into weather-driven demand models, play a crucial role in this optimisation process.
One of the key advantages of weather-driven demand analytics is their ability to reveal weather-to-purchasing relationships. These relationships can be developed from multiple years of product-level sales data, providing retailers with a clear understanding of how the weather affects demand.
Ignoring weather-based sales impacts can lead to increased demand forecasting error. Today's near-term weather outlooks are reliable enough for retail business needs, making it crucial for retailers to take weather conditions into account when planning their strategies.
Leading retailers, such as Walmart, Target, The Home Depot, and Lowe's, have already embraced this approach. By using Planalytics' predictive weather-driven sales analytics, they have achieved up to 6% annual profit increases through improved inventory management and digital marketing effectiveness.
With these analytics, retailers can precisely calculate how the weather affected demand. Deweatherizing sales actuals and providing retailers with year-over-year plan adjustments can reduce error, with many products and time periods seeing more than a 10% reduction.
The weather may be a never-ending challenge, but for retailers, it is the one external variable they can do something about. By leveraging weather-driven demand analytics, retailers can turn this challenge into an opportunity for growth and success.
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