stop raining on my parade: the sales implications of weather

Stop Raining on my ParadeT H E S A L E S I M P L I C AT I O N S O F W E AT H E RDavid McDermott, Performance Director, 7thingsmediaReena Rai, Client Services Director, 7thingsmedia16th October 2012

@7thingsmedia @A4Uexpo#A4UIT1

Contents

• Session objectives

• Why the session– Impact of weather

• The study– Overview– Results

• Initial insights• Product weather patterns• Events• North / South

• How can we use this data?

• What can we do?

• Summary @7thingsmedia @A4Uexpo#A4UIT1

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LONDON | NEW YORK

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Recent award success

Performance Marketing Awards, May 2012• Best Agency: 7thingsmedia

The Drum Awards, May 2012• Marketer of the Year: Chris Bishop

The DADI Awards, Nov 2012• Shortlisted for:

- Digital Team of the Year- Best use of PPC- Best use of Affiliate

Marketing Industry Network, Nov 2012• Shortlisted for:

- Best Digital Agency- Best Retail Strategy

“...the judges showered 7thingsmedia with praise because of their impressive multichannel strategic approach and the strength of the agency’s development within the industry.”

Stop Raining on my Parade


Objectives

Research 3 years worth of sales data across a number of clients within the retail sector

Combine sales data with corresponding weather data across the UK’s major cities

Find any correlations between weather patterns and sales data

Look at how accurate forecasting is within weather patterns

Discuss whether there is any validity at adapting online merchandising to weather patterns

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Weather is just the weather, right?

This year...


We talk of a offline correlation


But what about online?

The study

• 3 years worth of sales data across retail clients totalling millions

• 15 major city weather maps correlated with events (Rain, Snow, Sun,

Wind etc)

• Multiple data sets correlated and trended out


Study caveats

• Researched and removed anomalies

• Built algorithm to score data set and to ensure that data skews were minimised

• Data set was fashion and predominantly ladies clothing

The questions we then posed

How does the weather impact (positive/negative) to online sales?

What weather system impacts peak sales?

Do certain products sell better/worse at certain temperatures or events?

Is there a North /South divide?

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The results

Initial insights

SalesRevenue

28th of November 2010?


Initial insights

• Average mean temperature had risen by 3 °C s in the 3 years

• Mean temperature across the cities was 13 °C

• 15 °C seemed to be the lowest frequency

• Average highest temperature was 17 °C


Initial insights

SalesRevenue

Rain


Initial insights

• The higher the temperature rises the less we tend to buy• Our optimal ‘buying range’ was between 16 °C to 19 °C


However...

• The higher the temperature the more we are likely to spend!


Optimal product weather patterns?

Optimal for casual skirts

• But can we also workout at which weather pattern works best at which temperature?

19 °C


Optimal for jeans

11 °C and raining


Optimal for swimwear

• 2 different optimal temperatures and weather patterns

21 °C and raining

25 °C


Do events get effected?

Bank holidays

Easter holidays and May day:• Sales in 2011 decreased by over 50% when the Easter Bank

Holiday temperature rose by over 140%• The temperature then decreased 60% in 2012 which saw and

increase of over 150%!


The Royal Wedding affect..

Week after Royal Wedding:• 2010 corresponding dates were over 120% higher with a 20% lower

temperature

• 2012 corresponding dates were over 200% higher with a 15% lower temperature

• Where was the Royal bounce?


Is there a North/South divide?

City revenue by temperature• Lowest comparable temperature (-4 °C ) the people in Manchester and

Glasgow spent more than London

• However, when the temperature rose by 1 °C Londoners spent more than Glasgow and Manchester put together

• Optimal temperature for Manchester seems to be 13 °C whilst the optimal temperature for London is 17 °C

…at - 6 °C Manchester spent more on going out dresses than they did on coats and scarfs!


How can we use this information?

Predicting the weather

• Accuracy for 1 to 2 days is high from 75% to 90% (MET Office)

• Once you start forecasting over 3 days the accuracy can be anywhere close to 50%


But we work in Ecommerce• The offline world will

merchandise a shop front based on the weather

• If we know:– What product sells at what

temperature – In which location– In a given set of events– That it is 80% likely to

happen

• Why do we not merchandise a website based on the weather when technology is there to change instantly?


Your typical trading plan

Granular

Plans

Targets /

KPIs to

each chann

el

Activity

measured

against

targets

React &

tweak plans where requir

ed

Reflection & Learning fed into next

quarter

plans

SeasonalityPromotional

StrategySpend in Market

Competitor Strategy

Ecommerce Trading Plan


What can we do?


Weather algorithm


What can we do?

• Social communication:– Twitter updates– Facebook offers

• Email – Network – Personal

• Open trading plans based on seasonal products

• Product related incentives


So what?

Know when people will buy before they do and strategically time your advertising and promotions to increase year-over-year sales

• 1° COLDER = +2% increase in SOUP sales• 1° HOTTER = +1.2% increase in BEER or SOFT DRINKS sales• 1° COLDER = +4% increase in CHILDREN’S APPAREL sales• 1° HOTTER = +10% increase in SUN CARE products sales• 1° COLDER = + 25% increase in MOUSE TRAP sales• 1° HOTTER = +24% increase in AIR CONDITIONER sales

Source: Weather Trends International @7thingsmedia @A4Uexpo#A4UIT1

Summary

The weather affects online sales as well as offline

Products have an optimal temperature and weather pattern for sales revenue

Temperature fluctuations can dramatically affect bank holidays

5 day forecasting is effectively 50% accurate but provides information on the likely temperature and weather pattern

Online is perfectly placed to react and change short term digital strategies and longer term product focuses

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fin.connect: David McDermottPerformance [email protected]@7thingsmedia

Confidential InformationThis document is the property of 7thingsmedia LTD. and is strictly confidential. It contains information intended only for the person(s) and or Company to whom it is addressed. All information contained herein will be treated as confidential material with no less care than afforded by your own company’s confidential material.

All service and product names mentioned in this document may be trademarks or registered trademarks of their respective companies and are hereby acknowledged.

Copyright © 2012 7thingsmedia LTD.

Thank you to:- Our clients- Met Office- Coremetrics, Google - Weather Trends Int.- Kenneth Yau,

7thingsmedia

Whitepaper expected:

NOV 2011 to receive your copy email:

[email protected]

stop raining on my parade: the sales implications of weather

Documents

weather accuracy

corresponding weather

c manchester

weather system

weather whentechnology

lower temperature

c londoners

swimwear21 c