weather impact on april 2009 consumer demand and the outlook for 2009
DESCRIPTION
April 2009: Post facto analysis of the influence of weather on consumer demand/retail sales May 2009: forecast of the expected impact of weather on consumer demand/retail salesTRANSCRIPT
Influence of Weather on April 2009 Consumer Demand and the May 2009 Outlook
April 2009 Summary Analysis
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• In April 2009 weather had a mixed impact on consumer demand trends and retail sales
• Specialty Apparel/Department Store Retailers: weather a marginal net negative. Cold weather prior to the Easter holiday negatively impacted demand for holiday and spring apparel. Uber-buy-now consumer holding out to purchase seasonal merchandise until the weather is truly seasonal -- this would have exacerbated the negative impact on spring apparel during pre-Easter sales period. Warm/hot weather late in the month a positive but offset by the unfavorable weather environment prior to the Easter holiday.
• Home Centers and Mass Merchants: weather a net positive. Cold weather prior to Easter less of an impact on this sector and likely more than offset by the extreme warmth during Week 3 and 4. Demand for relatively inelastic outdoor/lawn and garden products VERY strong during the second half of the month. Also, summer-like weather during this period likely robbed mall-based retailers of crucial traffic, particularly during the weekend of the 24th across the east and northeast.
April 2009 Temperature Compared to Normal Map Source: NOAA
Weather Impact on April Sales Temperature a Key Ingredient
• Example of the influence of temperature on retail sales in April
• National temperature change against the average comp store sales of a basket of 53 retailers (source: Global Hunter Securities and NOAA)
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April 2009 Compared to April 2008 Similar Monthly Patterns
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Temperature Compared to Normal Map Source: NOAA
Temperature Compared to Normal Map Source: NOAA
April 2008 April 2009
April 2009 Weekly Temperatures Cold Easter Week; Hot the Last Week
April Week 1 Easter Week Weekending 4/11/09 ICSC Chain Store Sales Change from 2008: -.4%
April Week 2 Weekending 4/18/09 ICSC Chain Store Sales Change from 2008: -.1%
April Week 3 Weekending 4/25/09 ICSC Chain Store Sales Change from 2008: -1.7%
April Week 4 Weekending 5/2/09 ICSC Chain Store Sales Change from 2008: +.7%
Maps Indicate Temperature Compared to the 30-Year Normal (By Location) Map Source: NOAA
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April 2009 Daily Temperatures Chicago and New York City
Colder than normal early; negatively impacting Easter/Spring merchandise
3-day moving average
Late month surge in spring demand; strongly positive impact on Home Center/Mass Merchant sector sales
Colder than normal early; negatively impacting Easter/Spring merchandise
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May 2009 Outlook Weather Influence on Consumer Demand/Retail Sales
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• In May 2009 weather will have a strongly positive impact on consumer demand trends and retail sales
• Specialty Apparel/Department Store Retailers: weather a net positive. An easy comparison to very cold weather in May of 2008 combined with warmer than normal weather across a large section of the US will drive much stronger demand for spring and summer seasonal apparel. This effect will be enhanced by pent-up demand following a long stretch of cool and rainy weather in early May across most of the eastern US.
• Home Centers and Mass Merchants: weather a net positive. Same reasoning as above. Additionally, rainy weather in early May will result in continued enhanced need-based demand for lawn and garden and outdoor items across the heavily populated regions in the east and Midwest.
National Weather Service forecast through May 19th: orange colors represent high probabilities of warmer than normal temperatures.
May 2008 Comparative Environment Cold/Wet Weather + High Gas Prices Strongly Negative
At a macro-level, May sales are typically highly correlated to warmer and drier than normal conditions.
In 2008, colder and wetter than normal weather, combined with high (and getting higher) gas prices resulted in a very challenging sales environment.
For May 2009, the comparison results in a much improved environment for spring sales (even considering the economic headwinds) and bodes well for potential upside surprise in retail sales – particularly given the outlook for warmer than normal temperatures through the middle of the month.
Map sources: weather maps, www.ncdc.noaa.gov ; historical gas prices, www.gasbuddy.com
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May 2008
Early May 2009
Questions/Contact Information
Paul Walsh, Managing Principal
– Email: [email protected] – Direct: +1.917.463.4238 – Mobile: +1.610.246.0623
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