Although it is early in the reporting period, initial results suggest the holiday season for US retailers was reasonable but not spectacular.
As you may have heard, we have had a bit of snow. Actually it was more than a bit. It was a virtual avalanche that dumped itself all over New York and most of the North East.
Even before the first snowflake had settled, I knew it was going to be bad. The reason for my gloom was a sign even more reliable than the red alerts of the the National Weather Service: empty supermarket shelves.
It is a standing joke across most of America that as soon as the word ‘storm’ is so much as uttered, people stop what they’re doing and, with fevered zeal, go on the hunt for two items: bread and milk.
For all the online parodies (google ‘bread and milk’) this joke is actually rooted in truth. On the day before the storm hit it seemed like every person in Manhattan had decided to go shopping. Before long, Trader Joe’s was out of bread, milk, eggs and every other essential; and Whole Foods was stripped of organic carrots and kale.
It’s easy to conjure up an image of shopkeepers gleefully rubbing their hands as the shelves empty and the tills fill up, but the outcome is more complex. Sure, grocers see a spike in the days before a storm, but once it hits many go into stasis and takings tumble.
Looking at the detailed data, it’s also interesting to see how bad weather affects different products. Spend on toilet paper, for example, rises sharply before a storm, but in the weeks following consumers spend less than average: it neither wins, nor loses. In contrast, chocolate, alcohol and candy see a spike, but this is not followed by a dip: they are winners from winter weather.
For some fortunate retailers bad weather provides a double boost. Foremost among these are the home improvement players. Sales of shovels, rock salt and other winter supplies soar before a storm. And after, sales of home repair items see a healthy uplift. Last year both Home Depot and Lowes posted great quarterly numbers after a particularly bad spell of weather.
Others are less lucky. On bad snow days, restaurants and cinemas lose trade as people stay home. Bars fare a little better, especially in cities, as those who do venture outside nip in to fortify themselves against the cold, and to socialise.
Then there’s the most interesting trend of all: internet shopping. With all those people stuck at home storms must be a great thing for online retailers, right? Wrong. Our consumer tracking data indicates that the number of people shopping during Storm Jonas was around 12 percentage points below where it would normally be.
There are a number of reasons for this dip in online activity. Some households lose power, others busy themselves with clearing snow, but most simply use the time to hunker down and chill. Our consumer tracking data also showed the number of people watching Netflix, reading, playing board games, and napping increased above average as Jonas raged.
So, are storms good or bad for retail? It is hard to say for certain but taking everything into account they have a small negative impact. Even so, only the hardest of retail hearts would fail to leap at the beauty of New York blanketed in white, and at the peace which descends as the cries of ‘bread and milk’ are stifled by the falling flakes.