Using the Weather to Make Money

Imagine being able to use the weather to predict the future. This may sound like the plot of a bad science-fiction film, but this is exactly what retailers and other businesses are doing. The result? The ability to target the right consumer at the right time, increase sales and make millions of pounds’ worth of savings.

The retail industry has only recently started to use meteorological data to make informed decisions based on the connection between consumer spending patterns and the weather. The astounding thing about this is not that businesses are using this data but that it has taken them so long. This is particularly surprising when you consider the obvious relationship between the two.  The British Retail Consortium has identified the weather to be the second most important factor to influence public spending. Although retailers have been slow on the uptake, those that have been analysing and using meteorological data have ended up saving millions.

These organisations mainly use the meteorological information available to them to decide what products to sell and how much of it they should stock. Arguably, retailers have been doing this for years. We can after all see that in the summer supermarkets stock more disposable barbeques and sun screen. The data which companies have now started to analyse, however, goes much further than this and looks beyond the more obvious relationships between spending and weather. Tesco, for example, use historic sales and weather data to identify the less obvious but equally valuable consumer trends. From their research they have, found that a 4°C rise in temperature will result in a 42% increase in burger sales. Similarly, a hot day on the weekend would result in a decrease in the sale of green vegetables. It is this ability to predict their stock requirements with such accuracy which has led to Tesco reducing the amount of stock they waste. This has led to savings of £100 million through good supply chain management in 2013.

The value of meteorological data to retail business goes much further than stock management. Meteorological savvy businesses are now using weather patterns to specifically target consumers through real-time advertising.  For example, Dapper, a Yahoo owned advertising firm, have used weather predictions to display ads that match the weather in particular regions. If there is a rain storm in a particular area, a user browsing the web might see an advert for a pair of rain boots from their nearest shoe store. On the other hand, someone browsing in sunnier weather may be shown flip-flops. In a world where we are exposed to massive amounts of information, better consumer targeting is becoming increasingly important.  Using the weather to provide more relevant marketing messages, in real-time, is a great way to help cut through the white noise.

That the retail sector is now better using meteorological information to its advantage is exciting. However, there is still a lot more work required to understand the true scale of potential benefits to business. Nonetheless, at a time where an in-depth understanding of consumer behaviour means the difference between success and failure, it is clear that the demand for accurate meteorological data is one which is here to stay.

by Ashish Acharya