More Companies Use Weather to Forecast Sales
March 17 -- With many shoppers around the country snowed in or hit by otherwise erratic weather this winter, retailers ranging from Target to Tupperware have been registering disappointing sales.
But short of being clairvoyant, there has traditionally been little companies could do to plan for weather's vagaries. And that's bad news for the bottom line. Weather affects around $3 trillion in private industry alone, estimates John Dutton, professor emeritus of meteorology at Pennsylvania State University.
Now, however, enterprises have sprung up to help companies dip into weather data for predicting consumer behavior and managing weather risk. Among the newer ventures working the weather are Weather Ventures, formed by Dutton, the Wayne, Pa.-based Planalytics and Billerica, Mass.-based WSI Corporation.
"If you could forecast today that next winter is going to be colder than normal in Chicago, the economic impact of even that kind of forecast is staggering," says Keith Seitter, deputy executive director of the Boston-based American Meteorological Society, or AMS.
Stormy Weather or Sunny Sales?
While the weather firms' methods and philosophies of forecasting differ, experts agree that with improved forecasting methods, more business will use weather more often as a tool to help improve their planning.
"This is an area we think is going to be growing dramatically," says AMS' Seitter.
For example, knowing when and where inclement weather is going to strike can help companies move inventory to where more consumers will be more willing to buy them.
One firm, Planalytics, founded in 1995, helps businesses do exactly that. In recent years, the firm's clientele has grown to include consumer products and retail companies like Gillette's Duracell batteries, Home Depot and Wal-Mart.
"Our forecasts go out about 12 to 15 months. But none of our clients ever see a weather forecast," says company president and chief executive Frederic Fox. "What they see is the impact that weather has on specific business."