Bad Weather Means Good Retailing

Nobody's holding out much hope for the recovery of the stock market any time soon. The holiday shopping season is looking bleak. There's no telling how the election is going to turn out, much less what effect the change in administration will have. It seems the best the retail industry can hope for in the final months of 2008 is a bad winter.

Cold weather is sweater weather, coat weather, blanket weather, hot beverage weather, and space heater weather. In fact, the U.S. Commerce Department estmates that as much as 33% of the U.S. gross domestic product is weather-driven, weather-related, and weather-sensitive. Suddenly global warming induced weather extremes don't seem like such a bad thing, from a retail perspective.

For every degree the temperature drops in October, retailers can expect same store sales to increase by about 17 basis points. That's according to Storm Exchange, Inc., a company that specializes in correlating weather conditions to business and finance. The theory certainly played out when I worked at Walt Disney World. Their record-breaking retail sales days didn't occur on the record-breaking attendance days. Rather, the best retail sales days occurred on the days when the temperature dropped. The more dramatic and the more sudden the chill, the higher the sales of long-sleeved critter wear.

Weather-related profiteering is not a new or radical concept. Salt on icy roads drives car wash sales. Umbrella displays move to the front door on rainy days. Home Depots in the southeast thrive during hurricane season.

Retailers have always capitalized on the discomfort caused by Mother Nature. They just don't always openly hope for it. But this year, retailers can take heart in knowing that, according to Storm Exchange, there is a 90% chance that sales will rise as temperatures fall in the northeast and midwest this fall. Retailers in other parts of the U.S. might not be so lucky. Perhaps they'll get a break with some other kind of natural disaster.