How does hot weather affect people's buying patterns?
Intense heat like the kind expected in southern Ontario today has a way of slowing the human body down, but it has an energizing effect on retail sales.
"It varies from commodity to commodity, but it definitely impacts retail in a big way," says Wendy Evans, president of Evans and Company Consultants.
When the weather gets oppressive, people turn first to consumable items like sunglasses, bathing suits, lawn and garden equipment and beer.
Hot weather is "a need driver versus a want driver," says Ryan Baumgartner, director of client services for Planalytics, a U.S-based consultancy that does statistical analysis on seasonal weather patterns to help companies figure out their inventories.
"Things like ice, bottled water, sports drinks — those are all need-based. When the extremely hot weather hits, the demand spikes," says Baumgartner.
Another thing that happens when the mercury rises is that people seek out air-conditioned spaces. Large retailers like Indigo, for example, offer a chilly respite from the sweltering heat, but that doesn’t necessarily mean customers spend more money there.
"You do get people who say, ‘Oh yeah, I should go in and make that purchase that I’ve been meaning to, and today’s the right day to do it, because it’s so hot outside,’" says Heather Forrest, assistant customer experience manager at the Chapters bookstore outlet in Toronto’s entertainment district.
"And then you get people who sort of look at magazines and hang out with their friends."
Movie theatres are another popular destination for cool seekers. Michael Langdon, director of communications for Cineplex Entertainment, notes that year-to-date box office for Canada is up eight per cent from 2011, but says it’s difficult to discern whether that’s the result of hot weather or a hot movie season.
Nonetheless, "we definitely see a bump in attendance in extreme weather, and especially extreme heat," Langdon says.
Perhaps the most comprehensive study of the impact of heat on sales is a 2000 report prepared by Martha Starr-McCluer for the U.S. Federal Reserve Board. Entitled The Effect of Weather on Retail Sales, the report confirmed that "unusual weather has a modest but significant role in explaining monthly sales fluctuations."
She concluded that while hot weather has the effect of shifting demand for certain goods, the monthly effects "largely wash out at a quarterly frequency."
Canada experienced an unseasonably warm spring this year, with temperatures in March reaching as high as 25°C. For retailers, when the season starts early, it can "move your sales curve forward," says Baumgartner.
One-time purchases, such as lawn and garden equipment, which would typically be bought in April, May or June, are being snapped up sooner. Planalytics reports that as a result of the warmest March in North America in 50 years, demand for lawn mowers and barbeques that month was up 47 per cent and 38 per cent, respectively.
Tony Laguardia, associate vice-president of backyard living and seasonal products at Canadian Tire, reports that the retailer has seen a "notable increase" in sales of things like fans and air conditioners, camping supplies, pool products and barbeques this year.
But Baumgartner says that a sustained blast of stifling weather will actually drive people back inside, and sales of outdoor gear suffers as a result.
"When it gets too hot, there’s a threshold, where demand goes down," he says.
Eating into later sales
Another product category that thrives during an extended summer season is fashion. Retailers typically roll out their summer collections well before consumers can comfortably wear the clothes outside, but if the weather is already warm, it will ignite sales, says Wendy Evans.
If the summer stays warmer longer, she says, retailers can put off marking the clothing down, thus improving their margins. They can also bring in more inventory, which typically means increasing their sales units over the previous year.
The only downside to an expanded summer buying season, Evans says, is that "back-to-school sales suffer."
It appears that a blast of hot weather will spur many people to reach for their wallets, but the cost of merely keeping yourself cool can in many instances constrain spending.
"When we have a heat spell like this, it can drive utility costs up pretty significantly," says Doug Stephens, president and founder of the Toronto-based consultancy Retail Prophet.
"For a lot of people, if you go from a month where you’re expecting a $100 air-conditioning bill to receiving a $300 air-conditioning bill, that can be a pretty debilitating surprise."