Market intelligence: weather forecasts help move groceries

It's going to be 27 degrees (C) in Ottawa today, with the chance of rain. An alert retailer would know to move the umbrella stand to the front of the store, to display the ice cream bars more prominently, and to highlight the selection of iced drinks. In department stores fans will likely move quickly, as might raincoats - but not those leftover winter parkas.

In Britain, the Met Office is working with the British Retail Council to tailor its forecasting services to meet the needs of retailers.

Iris, an interactive web-based weather solution, is designed to serve the needs of retailers and the whole retail supply chain. The programme gives weather information up to 10 days in advance. Its users can incorporate their own thresholds to highlight when consumer demand is likely to increase or decrease for their particular products.

Another weather sensitivity analysis (WSA) service from the Met Office is designed to integrate with companies' sales forecasts. This can lead to improvements in demand predictions and, in turn, better on-shelf availability and less wastage.

The Met Office claims Safeway has achieved an annual benefit equating to £4.8m from its weather services. One ice-cream promotion by the supermarket sold as much of the promoted brand in one week as it usually does in an entire year.

"It is very much about the timing of promotional ability," says [the BRC spokesman]. "It is also about the timing of information, so if it is going to be a wet weekend and a low footfall is expected, a retailer could hold off on advertising."

Some retailers point out that seasonal items like fans or sweaters are hard to speed through the supply chain in response to weather forecasts, but grocery stores see a real need:

Tesco buyers use long-range forecasts to adjust stock levels. Before the snowy spell earlier this year, it stocked up on soup, vegetables and tinned products. "The important thing for us is that we have the right products in-store," says a spokesman. "The weather charts are of huge importance to the business," says the spokesman. "It's no good having lots of lettuce in a cold snap, but in a hot spell, salads and strawberries are in demand."

Full story in In-Store Marketing (sub. req.)

Case study on how Safeway grocery stores in Britain use weather forecasting. (.pdf)