Don't blame it on the weather, man!

Tuesday 07 August 2018

Article

If meteorologists are to be believed, the current global heatwave is due to last until October, and the effects of climate change will mean the great summer bake-off of 2018 becomes a regular weather fixture.

If retail statisticians are to be believed, warm weather stimulates food sales, but is painfully damaging to anything that doesn't complement a BBQ.

So where does that leave non-food retailers? Is there a winning response to the growing volatility of summer trading?

As context, the impact of warm weather needs to be kept in perspective. Total non-food sales are down 1% in July [according to the British Retail Consortium]. People are still shopping, and for every retailer bemoaning the sun for taking the heat out of their sales, there is another that is claiming it has benefitted them. In other words, extreme weather clearly places additional pressure on sales, but in many instance, the heat is bringing to the surface more fundamental issues in retailer offers.

Against this backdrop, the most sophisticated retailers will be building flexibility into their models and proactive in their response to trading conditions through the trading year, not just over the summer. 

The 5 things we would urge retailers to think about are:

1. Be clear on the fast response marketing actions to drive sales, and where dialling up (or down) activity helps smooth seasonal demand and retain customer lifetime value. Focus more aggressively on actions that drive footfall.
2. Ensure that the range development and management process is as flexible as possible. Identifying the most seasonally volatile lines, enhancing analytics around demand forecasting and building flexibility into 'in season' supply to limit stock exposure. Retailers also need to ensure they retain as much flexibility in seasonal calendar as possible. Launching Autumn-Winter ranges on the hottest day on record in Europe will impact performance.
3. Be more sophisticated  and confident at managing 'in flight'. Building the flexibility to manage store merchandising and layout, promotional activity and pricing to target activity where it has most impact. 
4. Draw on the full breadth of available channels. Understanding the varying importance of 3rd party and digital channels during times of high street footfall pressure, striking the right balance between breadth of customer touch points and maintaining discipline and control over the customer proposition.
5. View colleagues as a critical driver of conversion. Thinking carefully about how to train and incentivise store teams to "step-up" during periods of tougher trading to capture sales from store visitors.

For those retailers that embrace the challenge, there is no reason why long, hot summers can't leave a warm trading feeling.