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Inside Retail & MetraWeather

How accurate weather predictions can boost retailer’s profits

Second behind economic conditions, the weather is the biggest driver of consumer demand for products, according to the British Retail Consortium. So, what if there was a way to predict demand for goods based on accurate long-term weather forecasting and past patterns? 

Well, there is. MetraWeather, the international arm of New Zealand-based Met-Service, provides businesses with evidence-based information for decision-making on staffing, stock levels, energy consumption and a raft of other considerations. 

After working alongside UK grocery chains Tesco, Waitrose and Morrisons for the last decade, MetraWeather is expanding its retail services within Australia.  

“Weather forecasting has improved significantly over the past 40 years as computing power has improved,” explains Alex Zadnik, Business Development Manager Australia, at MetraWeather. “A five-day weather forecast today is as accurate as a one-day weather forecast was 40 years ago and as accurate as a three-day weather forecast 20 years ago.”

Meteorologists and analysts can now look back at the weather’s impact on a company’s past sales patterns, and also use current and historic data to predict how the weather will impact forward sales. 

“MetraWeather offers quantitative information. For example, if we know the weather forecast shows temperatures to be five degrees above average for the week, we can use analysis of past sales patterns to estimate the impact of the spike in temperature on sales of goods in certain categories.

“We can help retailers reduce costs, increase revenue and boost profitability.”

Using weather insights and forecast services provides an affordable competitive advantage to retailers, by supporting evidence-based business decisions for data, operations, distribution, marketing, and finance teams. 

It allows retailers and suppliers to:

  • Better match supply and demand for weather-sensitive product lines.
  • Reduce inventory-holding costs and wastage of perishable items.
  • More accurately forecast future inventory requirements.
  • Capture extra sales during high-demand periods. 
  • Manage stock-movement decisions.
  • Improve sales forecasts based on daily, weekly, and monthly forecast data.
  • Anticipate challenges to supply chain operations due to weather events. 

“We’re looking to make people more aware of what can be done with the weather, to demonstrate how the continual improvements in weather forecasting and analytics allow retailers and their suppliers to gain a competitive advantage and better meet demand,” says Zadnik.

“Due to our relationships with those large UK retailers, for example, during the first hot weekend leading into summer, we saw tremendous spikes in categories including barbecue products and alcoholic beverages.” 

At Waitrose that weekend, sparkling wine sales rose 21 per cent, Pimm’s sales by 55 per cent and Aperol by 70 per cent. Sales of some children’s products went up by 35 per cent and gardening products by 17 per cent.

In Australia, MetraWeather provides weather data to watering, gardening and lighting provider Holman Industries, a supplier to Bunnings. During the bushfire crisis in 2019, sales of hoses through Bunnings doubled, and there were spikes during times of water restrictions. 

“There are numerous examples of where having accurate forecasts and past weather information allows retailers to capture and cater to spikes in demand.”

Partnering with MetraWeather for weather observation and forecast services helped Reckitt develop business tools to support its commercial strategies for insecticide products in the Australian FMCG market. 

“We can inform our customers with the confidence of our seasonal predictions and swiftly react to climate changes based on four-week forecasts,” said Stephen Lee, a Business Analyst at Reckitt.

For a Bunnings client, MetraWeather runs in-house analytics, comparing real sales data with historic weather data, while developing predictive models based on new weather forecasts. The company discovered upwards of 90 per cent variability in week-to-week sales was driven purely by weather parameters. 

Clients can also use MetraWeather’s location-based Forecast Information Analysis tools to make sales forecasts as frequently as daily. Longer-term forecasting developed by qualified meteorologists can develop projections up to six months out, which helps marketing teams plan and schedule marketing activity and finance teams make more accurate turnover predictions. 

MetraWeather has also conducted studies for shopping-centre operators to measure the impact of weather on footfall which can help management and tenants adjust staffing rosters. 

In Australia, MetraWeather currently works more with suppliers than retailers, but in New Zealand it already partners with one of the nation’s larger chains. Southeast Asia is also a focus for the business’ expansion, with services planned for retailers in the Philippines, Thailand and Indonesia.

MetraWeather offers weather-driven analytics studies for key product lines, observations, and highly accurate forecasts (14-day, four-week, and six-month outlooks), along with expert meteorological briefings and a web-based retail weather portal with regional and local sales forecasts and comparison tools. For further information, contact Alex Zadnik, Meteorologist and Analytics Expert at MetraWeather: Email: alex.zadnik@metraweather.com or Tel: +61 439 767 557.