OPERATIONS

Hurricane Season Forecast Stirs Planning for Retailers

BY Beth Padera

Retailers know that weather can have a negative impact on in-store sales. In 2017 devastating floods in Texas not only damaged some H-E-B stores, but led to significant financial loss caused by delayed shipments after the storm had passed. More recently, in March 2018, London suffered an unusually big snow storm that hit quarterly sales for Ocado stores hard, losing tens of thousands of orders.

Luckily, tragic disruptions to business are not the full story. Although extreme weather events get the headlines, everyday weather fluctuations must be taken into account by retailers looking to optimize operations because current and anticipated weather can be used to forecast shopping behavior with incredible accuracy. The key to planning around consumer sentiment impacted by the weather is to understand weather in local context. What feels cold in Phoenix, will be different than what feels cold in Juno, Alaska. Similarly, how consumers react to a hurricane warning will be different in the interior cities of Florida, than it will be on the island of Puerto Rico which is still recovering from 2017 storms.

The weather impacts just about every aspect of our lives. It impacts what we buy, where we go, and even how we feel. In fact, research shows that 30% of consumer-buying patterns are influenced by weather conditions.  Smart retailers build a weather strategy that leverages the prediction power forecasts have on shopping.

Hurricane season which runs June 1 – Nov. 30 is the perfect opportunity to explore weather strategy in action. The 2017 Atlantic hurricane season was historic in its widespread devastation and might have retailers ready to battle damaging winds once again. Due to cooler tropical Atlantic temperatures and a trend away from La Nina conditions, retailers and consumers alike, will be relieved to know that early predictions from The Weather Company, an IBM Business, expect 2018 to reflect a more average hurricane season.

Yet, even a normal season will have a big impact on business. With 13 named storms, six hurricanes and two major hurricanes expected, retailers are smart to up their weather game. And there is no time to waste. We’ve already seen the first named storm of the season with Subtropical Storm Alberto hitting the mainland U.S. over Memorial Day Weekend.

Retailers who understand and tap into the enormity of weather influence during hurricane season will drive higher campaign conversion rates, improve customer satisfaction and grow revenue by using hyper-local short term (one to three day), weekly and seasonal forecasts across the following four key areas of the business:

1. Use contextual messaging to drive purchases
By understanding the forecast at each location, retailers can maximize store traffic during good weather bursts, and decrease the negative impact of bad weather by redirecting activity online. Keep in mind that during extreme weather events consumers are focused on safety and comfort. They are less likely to respond to promotional messages that require them to think outside of their immediate need. As such, temporarily replacing local advertising messages, mobile app notifications and email touches with messages and images that help shoppers address their top of mind need, the pending extreme weather event.

2. Stock inventory to maximize sales
Modern hurricane forecasts are remarkably accurate and with widespread distribution of alerts, stores can anticipate when they will be flooded with shoppers looking to prepare. Retailers should be prepared to stock up on certain obvious storm essentials that are likely to sell out – bottled water, batteries, and flashlights.

However, the most effective retailers go beyond the obvious and use analytics to evaluate sales trends from previous hurricanes and find correlations between weather products at specific locations. For one retailer, they uncovered that strawberry Pop Tarts are a huge pre-storm seller. Armed with this knowledge stores can better anticipate customer demands and coordinate with suppliers and other store locations to ensure sufficient inventory.

3. Optimize staff levels
Like inventory management, setting staff levels correctly is a tricky balance. Overstaffing wastes resources, understaffing leads to subpar customer experiences and lost sales. In some cases, big losses. In 2014, Walmart reported $3 billion in losses due to understocked shelves. Lucky for store managers, the local weather forecast is a good predictor of foot traffic and can be used to find just the right balance.

4. Create a consistent customer experience
The weather impacts how a shopper is feeling and what they purchase at a given moment, but it also impacts their loyalty over time as they evaluate a stores effectiveness at adjusting to weather fluctuations. The key is to ensure quality engagements with every forecast. For example, make it easy to find top of mind items, and have a proactive communications plan in the event of staff or inventory disruptions.

While we explored hurricanes in this article it’s important to recognize that weather fluctuations of all kinds can be leveraged to reach peak efficiency – snow, heavy rain, even unusually hot days will impact consumer behavior. Is your store ready?

Beth Padera, retail offering manager for The Weather Company, an IBM Business.

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Peapod settles into new home

BY Antoinette Alexander

Online grocer Peapod, an Ahold Delhaize USA company, officially opened its new Chicago headquarters this week.

All of Peapod’s corporate employees have transferred from Peapod’s former headquarters in Skokie, Illinois, to the new space in Chicago. Peapod first announced the planned relocation this past fall.

“Chicago has always been our home and we’re thrilled to be able to move into the heart of this great city, allowing us to fuel our continued growth and attract the very best talent,” said Walt Lentz, president of Peapod. “I would like to thank all of our hardworking employees for making this a smooth transition, both internally and ensuring there was no disruption to our loyal customers. Our Chicago doors are now open and we look forward to becoming a larger part of the Chicago community.”

This spring Peapod launched a city-wide advertising campaign to remind Chicagoans not just of the convenience Peapod offers, but also the budget-friendly accessibility of the service. The campaign also highlights Peapod’s alcohol delivery service and popular products like meal kits and local “made in Chicago” favorites. “The Grocery Store at Your Front Door” campaign is an out-of-home blitz that includes transit station takeovers at Clark and Lake, branded buses and trains, billboards and more.

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Retailers and ATM networks launch coalition to promote card payment security

BY Marianne Wilson

Retailers and financial service companies have joined together to help guide the nation toward a faster and more secure payments system.

The National Retail Federation, other retail groups and two of the nation’s best-known ATM networks have formed a new coalition, called Secure Payments Partnership, designed to improve the security of the U.S. electronic payments system ranging from credit and debit cards to emerging technology.

“The payments system has to keep pace with rapidly evolving technology and the needs of consumers and commerce,” NRF senior VP and general counsel Stephanie Martz said. “The U.S. payments infrastructure should be the strongest, most innovative and most secure in the world, but we won’t get there unless we change the way we make security decisions.”

Initial members of the new coalition include NRF, the Food Marketing Institute, the National Association of Convenience Stores, the National Grocers Association, First Data’s Star Network and the Shazam network. The coalition marks the first time that companies from the financial services industry have joined retailers’ efforts to improve payments security.

According to NRF, the United States currently lags behind the rest of the world in card payment security, largely because Visa and MasterCard control security standards without sufficient input from competing card networks, merchants, consumers and financial institutions. NRF and SPP believe all parties involved in the payments system must work together to achieve successful payment security, increase transparency and limit fraud.

The group will emphasize several priority areas, including stronger user authentication, open standards setting, payment security innovation and network routing competition. The coalition will also focus on consumer expectations for security, convenience and flexibility in payment options, especially as technology evolves.

In recent years, many new technologies have been introduced to increase security including mobile payments, biometrics (such as fingerprints, facial recognition and iris scanning), the use of artificial intelligence, geolocation and IP verification.

 

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