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Wintry Weather Chills Sales for Some -- But Raises It For Others

Retailers, Consumer Products Marketers Blame Mother Nature For Mixed Results, But Weather Makes Convenient Excuse

By Published on . 0

Amid the cabin fever caused by the mother of all 21st century winters has been a cottage industry of excuse and explanation-making for media and marketers.

Take beer. Sales volume at bars and restaurants fell 7.4% in the four weeks ending Jan. 26, according to GuestMetrics data cited by Beer Business Daily. Editor and Publisher Harry Schumacher said, "From New York down to Atlanta and down to the Florida panhandle, nobody has gone out to dinner in a month, and it's [having] a huge impact on sales."

Beer sales are up.
Beer sales are up.

But people were drinking more at home, as beer sales at grocery stores and other off-premise retailers were up 6% for the same period, according to IRI figures cited by Beer Business Daily.

Cold weather is normally good news for Campbell Soup Co., but this season conditions have been so extreme that some soup has even frozen while in transit, forcing the marketer to destroy it, executives said on an earnings call last week. "We definitely acknowledge a benefit of cold temperatures, but we think it was offset by unfavorable weather disruptions," said CEO Denise Morrison.

In posting earnings and sales guidance below prior estimates for the quarter ended Jan. 31, Walmart Chief Financial Officer Charles Holley in part blamed the "eight named winter storms" that closed stores and kept shoppers home. He also cited cuts in Supplemental Nutrition Assistance Payments or food-stamp payments that hit harder than the retailer expected. All that was enough to wipe out positive comps from the holiday period, Mr. Holley said.

Mixed forecast
In its earnings call last week Burger King fingered severe winter weather across the U.S. for negative results so far in the new year.

The National Retail Federation reported January retail sales, excluding autos, gas and restaurants, were flat vs. December on a seasonally adjusted basis. But they actually increased 3% year over year unadjusted. The NRF topped that mixed message with a dire headline: "Severe Winter Weather Cripples Retail Sales."

"I don't think I've ever seen a year like this where weather wreaked so much havoc," said Horizon CEO Bill Koenigsberg. "Clients are a bit helpless because they can't control it."

Joe DeRugeriss, marketing director at Planalytics, which provides weather insights to businesses, said the latest storm to hit the East Coast ("Pax," as the Weather Channel digs ever deeper for names) could add "a couple billions dollars" to the $9 billion the winter weather already has cost the economy.

Shifted, not cut
But Teresa Burgan, senior global marketing communications manager at ShopperTrak, which tracks retail foot traffic, said decreases are typically "just a displacement" followed by an uptick once weather clears.

Spending in the retail sector isn't being cut so much as shifted, some say. "We are seeing more of a slight recalibration of media from some retail clients as a result of insane weather," said Diane Weeks, managing director and account lead for JC Penney at OMD. "We've had to step up efforts to give consumers a reasons to buy, like a special discount or useful reminders to prepare for cold with warm mittens." But her client isn't moving or changing its own buys. "JC Penney can't afford not to be there."

The bad weather has either hurt -- or boosted -- ad spending by packaged-goods brands, depending on when and whom you ask. One media buyer said consumer packaged-goods brands have hiked spending on TV and digital media this quarter, targeting people spending more time at home, particularly with online recipes. Yet a magazine executive said print-ad sales are slowing for the second quarter because of CPG brands stung by lower sales due to weather.

JCP is making cold-weather pitches.
JCP is making cold-weather pitches.

Overall CPG sales were up a middling 1.6% for the four weeks ended Jan. 18, according to Nielsen data from Deutsche Bank. lifted by beer but dragged lower by a relatively unusual 0.7% decline in household and personal-care.

Deutsche Bank analyst Bill Schmitz wasn't sure about any weather impact. But a weak cold and flu season this year compared to a strong one last year led to double-digit declines in some over-the-counter medications.

Some movements in the Nielsen data were easy to figure, such as a 16% drop in fertilizer as southerners gave up on an early spring, or a 21% increase in flashlight sales due to ice storms and power outages.

Others are head-scratchers, such as double-digit declines in toilet and oven cleaners and diet aids. Perhaps people are foregoing diets to fatten up for warmth and getting too bloated or depressed to clean bathrooms.

Contributing: Alexandra Bruell, Maureen Morrison, E.J. Schultz and Natalie Zmuda

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