Warming Climate Puts the Heat on Retailers

By Campbell Phillips | 04 Sep 2013

The unseasonably warm winter period has had a negative affect on apparel sales for some major brands, while others remain blasé. We take a look at how climate change is influencing local retailers.

With new figures from the Bureau of Meteorology (BOM) showing the last year has been the hottest on record, many Australians are turning their eyes more closely to the weather. Among them, retailers are now paying close attention to the climate, as unseasonal temperatures are having noticeable impacts on consumer behaviour.

With a warmer winter period, the associated seasonal clothing ranges aren’t expected to shift with the same velocity, leaving retailers with excess stock that must be heavily discounted in order to clear. Conversely, retailers transacting via online channels may be less susceptible to changes in the weather, as they have the ability to sell to a much broader audience.

Russell Zimmerman, Executive Director of the Australian Retailers Association, has been discussing the issue with retailers across the country, and he believes many have been negatively affected by the unseasonal weather.

“The warm weather has been prompting retailers to start clearing their winter range early,” Zimmerman says. “In fact, many will have excess stock that will be increasingly hard to move.”

On the other hand, Zimmerman says an early spring and summer can also be a boon.

“Hopefully this warm weather augurs well for a strong start to the spring/summer period so retailers can begin to make up for a hard winter.”

Virtual Behaviour Mirrors Reality

Meanwhile, weather-related consumer behaviour has been just as obvious online as it is in-store, with data indicating a strong drop-off in winter clothing sales in the past two months.

Simon Szewach, CEO of retail rewards site Starthere, has been observing trends across 100,000 members and 1,200 online stores. He says the figures make the situation clear. Not only are some larger brands struggling to keep up with shifts in consumer behaviour, but almost all retailers are losing out as a result of a warm winter.

“Major fashion stores such as Asos, The Iconic, Top Shop and M&S (Marks & Spencer) are always amongst the top 20 most popular stores, but in the past two months many of these big brand stores have fallen down the rankings,” Szewach says. “This is extremely unusual, and is likely to indicate a more difficult period of trading. More specifically, the average transaction value at many fashion stores has fallen, indicating that less expensive clothing is being purchased, which runs against the trend usually seen in winter (when larger and more expensive items such as coats usually drive up basket value).

What Can be Done?

No doubt these trends imply there will be a number of retailers being negatively affected by warmer conditions. Given that BOM expects these weather patterns to become the norm (if not continue getting warmer), what techniques should fashion and apparel retailers consider to avoid getting burnt?

Follow the Weather, Not the Calendar

The most obvious thing to do is adjust the timing of seasonal ranges. If winter is warmer and shorter, ensure your inventory demand planning is geared for these conditions. Many retailers are already beginning to change their buying habits as a direct result of this warmer weather, and it makes for a great method of avoiding heavy losses.

Jane Cay, Founder of Birdsnest, has already done just that – with great results.

“We really think about the spring season starting at the beginning of July (I know crazy, especially if you live at the snow!), so by September – our Spring and core range is representing over 80 percent of sales,” Cay says.

“We are seeing an extraordinary amount of summer frocks leaving the nest at the moment so will be jumping on any opportunities to repeat those popular styles. We were well planned for this early Spring, we currently have over 1,000 dresses under $100 live on the site!”

Get Online and Sell to the World

Not only are small pureplays already taking advantage of of their agility to reconfigure seasonal product lines, they also have a couple of other advantages in comparison to SMB retail operations.

“Retailers, once online, have a far broader audience,” says Zimmerman. “Normally you’d look at your immediate geographic footprint as being the limit to sales from a single store or small chain. Online retailers have the ability to sell to the entire world.”

In essence, not only can excess stock be sold more effectively across the country, but winter season stock will be rising in popularity in the northern hemisphere just as it’s dwindling here, says APAC Managing Director of ChannelAdvisor, Mark Gray.

“Many retailers are expanding their reach internationally in order to sell excess seasonal stock. For example, some of our apparel and sportswear retailers have begun selling their summer stock to the Australian market once the season ends in Europe and the US,” says Gray. “This lengthens the season and avoids the issue of excess inventory or selling remaining products at a dramatically reduced price.”

Madeline Veenstra’s startup, Popbasic is a prime example of this method. As a global fashion brand, Veenstra has designed Popbasic to be ‘seasonally agnostic’, thereby catering to anyone, anywhere.

“As a global fashion brand we create pieces that cater for both opposing seasons, we are also seeing a lot of growth. Because of this we’ve actually seen an increase in sales during this period,” she says. “It’s so important as a fashion brand to be flexible. We run on a very short production cycle of six weeks, which allows us to react to our customers’ demands and create products that they want to see.”

Developing Agile Strategies

While warmer weather has, in this case, had seriously negative effects for some Australian apparel retailers, it isn’t bad for everyone. Sales for department stores, liquor and potentially many other categories actually see great benefit from extended warm periods.

To extend the argument yet further, temperature isn’t the only environmental concern that retailers are being influenced by in recent months. For some, the focus might be offshore competition. For others, the election may even be the source of some concern.

“Not only have we had a hard winter, we’ve also had a long election campaign and these are known to further suppress retail spending,” Zimmerman explains. “This has to be one of the longest campaigns we’ve ever had and retailers are sure to have been affected by that.”

Ultimately, the key to creating a sustainable retail offering in the new retail environment is to stay on your toes. By being acutely aware of changes in your operating environment, as well as listening closely to your own customers, any retailer is well-placed to weather any storm.

A fact that pureplay menswear retailer, The Mens Shop has practiced since inception.

“As a pureplay retailer in a highly competitive market, we believe the strength of online is that it enables us to maintain a constant dialogue with our consumer and thus react faster to changing demands,” says Amanda Alcott, Manager for The Mens Shop.

What is your experience with retail sales in unseasonal weather? Share your story in the comments below.

2 Comments

2 thoughts on “Warming Climate Puts the Heat on Retailers”

  1. Kindra says:

    I don’t see a year date anywhere. What year are you talking about?

    1. Hi Kindra,

      You’re right, we currently aren’t displaying the year on older articles, however we hope to change this in future.

      In answer to your question: this article was published in 2013.

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