As the effects of climate change begin to take hold, some businesses are looking for ways to navigate the uncertainty of volatile weather events and the impact on their bottom lines.
In 2020, the U.S. had a record 22 climate disasters with losses exceeding $1 billion each, according to the National Oceanic and Atmospheric Administration.
It’s important to take weather volatility into account, advises Bill Kirk, CEO of Weather Trends International in Bethlehem, Pennsylvania. The company helps businesses take a proactive approach to weather events and make smart decisions about inventory, advertising and sales.
“I think the first step is just, let’s get the next year or two right and learn to adapt to these things,” he said.
Kirk spoke to “Marketplace” host Amy Scott about how the weather affects consumer behavior. The following is an edited transcript of their conversation.
Bill Kirk: We call it the “power of 1 degree.” So, every degree colder, there’s about a 5% increase in coat sales. Every degree colder, there’s about a 7% increase in mousetrap sales. Now, what are we going to buy still because it is so hot, you know, this September versus last year? Allergy. This is an epic allergy-asthma period. This is typically the peak anyway, but last year was cold and rainy, so it kind of suppressed our allergy-asthma suffering. This year, you’re up probably 11% to 33%. Bug sprays — the bugs are still active because it’s hot, so they’re up 55%. So, it’s that change, is very important year on year.
Amy Scott: And how do you help businesses prepare for those sometimes large and unexpected shifts? I mean, you say you’re offering predictions up to a year out?
Kirk: Yes. I’m a meteorologist by degree from Rutgers. We have a whole team of meteorologists, but we’re more statisticians and physicists, but statistics and climate cycles are very stable, so they’re a much better way to predict temperature, rainfall, snowfall. We do it by week, a year out, 32 million spots on Earth, but then correlate it back to seasonal sales. Now, if you can get that right, we can project those sales, and that’s what we do for our Fortune 500 clients. So, it’s helping companies with that inventory, right? I heard an ad the other day talking about back-to-school hoodies and coats. Are you kidding me? It’s 80 degrees. You know, last year was good, this year is not good.
Scott: Yeah, schools are closing earlier in Baltimore because they don’t have [air conditioning]. You mentioned several pretty large businesses. What about small businesses that may not have the budget for, you know, weather analytics? Are there things they can do to be more proactive?
Kirk: They have to understand it, right? Here in Bethlehem, Pennsylvania, with COVID, we all put out those outdoor seating, outside restaurants that are literally in the parking lot, or they’re on the side of the street. So, if it’s 90 degrees on a hot summer day here — and that’s hot for us — you’re not sitting outside on the asphalt, you know, even though it’s outdoor seating. You’re just not doing that.
Scott: You know, for businesses that rely on a lot of foot traffic, that foot traffic can really disappear in extreme weather, and I wonder how you help those businesses think about how to keep business going when people aren’t out there walking around.
Kirk: A good example is that we have a Rita’s Italian Ice, right? So, they’re an outdoor venue. You’ve got to stand in line outside. So if it’s really rainy, these Italian ice shops, their sales just plummet. But what they did once with us was give a price incentive: Buy one, get one free. Guess what? You have a whole lot of people now that’ll stand under an umbrella and get a free ice for the family, right? You’ve convinced me to do something that I’m not inclined to do, but you’ve got to be proactive with that plan in advance.
Scott: What are some other ways that weather affects consumer behavior, not just what we buy, but how we shop?
Kirk: Well, that’s interesting. So in the summertime, if it’s a beautiful weekend, you’re gonna go to the beach, the lake, the park. You’re gonna enjoy the outdoor weather. That’s what we do as humans, right? But what if it’s cold and rainy all weekend? You’re stuck inside. What do you do inside? You’re probably on your computer, you’re probably on TV, you’re shopping. So typically, we found that really stormy weather — cold, rainy, snowy, the worse it is — overall web traffic and consumer traffic is higher. You’re more likely to see an ad, you’re more likely to do some shopping if the weather’s really bad, almost any time of year.
Scott: With climate change continuing to cause larger- and larger-scale disasters over the years, and people, you know, finally seeming to accept that climate change is real, do you see businesses making more investments in this kind of technology to plan ahead and to adapt?
Kirk: You know, even if it’s 1 degree hotter over 100 years, right, according to the models, it may be more extreme, may be more volatile, like we saw. You know, last year [was] one of the coldest Septembers in eight years. This year [was] one of the hottest. The changes can be huge, so you have to get creative in understanding that, and I think the first step is just, let’s get the next year or two right, you know, and learn to adapt to these things.
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