It is widely accepted the weather has a significant effect on the US economy with weather variability accounting for as much as 3.4% of the GDP and a third of economic activity impacted in some way. For the first time, The Weather Channel has looked at the effect of the British weather on UK businesses in a new report called ‘Weathernomics’.
Findings reveal the role of weather conditions on UK retail business performance is being under-estimated by UK retail commentators such as the British Retail Consortium and the ONS.
‘Weathernomics’ has identified a number of fundamental truths including: how the supply of products and services being available or sale in the right place at the right time is affected, as is shoppers’ demand for products and services.
According to the research, severe or extreme weather has less impact on retail sales than long periods of bad weather for example 10 days of 3 inch snow is much worse than 1 day of 30 inch snow.
The findings also show that business is very susceptible to seemingly small variations in weather: a seasonal temperature 1°C higher/lower than the norm can lead to a ‘disappointing’ quarter or annual result.
In the £300bn UK retail sector, the performance of retailers can be critically judged on a 1% increase/decrease in sales while US academics estimate retail sector sensitivity to weather fluctuations can equate to as much as 2.3% of the sector’s sales.
Almost 60% of consumers said weather of all kinds has an impact on their shopping habits. In the summer of 2010 the UK was awash with floods, and it washed out £3.2m of the UK economy.
Last year saw the warmest Halloween on records and Waitrose reported a 41% increase in sales of Halloween products.
Last year was also the warmest year on record and the unseasonably mild autumn was estimated to have reduced clothing sales by £700m.