IDEAS home Printed from https://ideas.repec.org/p/fip/fedfwp/93659.html
   My bibliography  Save this paper

Sellin' in the Rain: Weather, Climate, and Retail Sales

Author

Abstract

I apply a novel machine-learning based “weather index” method to daily store- level sales data for a national apparel and sporting goods brand to examine short-run responses to weather and long-run adaptation to climate. I find that even when considering potentially offsetting shifts of sales between outdoor and indoor stores, to the firm's website, or over time, weather has significant persistent effects on sales. This suggests that weather may increase sales volatility as more severe weather shocks be- come more frequent under climate change. Consistent with adaptation to climate, I find that sensitivity of sales to weather decreases with historical experience for precipitation, snow, and cold weather events, but-surprisingly-not for extreme heat events. This suggests that adaptation may moderate some but not all of the adverse impacts of climate change on sales. Retailers can respond by adjusting their staffing, inventory, promotion events, compensation, and financial reporting.

Suggested Citation

  • Brigitte Roth Tran, 2022. "Sellin' in the Rain: Weather, Climate, and Retail Sales," Working Paper Series 2022-02, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfwp:93659
    DOI: 10.24148/wp2022-02
    as

    Download full text from publisher

    File URL: https://www.frbsf.org/economic-research/files/wp2022-02.pdf
    File Function: Full text - article PDF
    Download Restriction: no
    File URL: https://www.frbsf.org/economic-research/files/wp2022-02_appendix.pdf
    File Function: Supplemental appendix
    Download Restriction: no
    File URL: https://libkey.io/10.24148/wp2022-02?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Solomon M. Hsiang & Daiju Narita, 2012. "Adaptation To Cyclone Risk: Evidence From The Global Cross-Section," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 1-28.
    2. Martínez-de-Albéniz, Victor & Belkaid, Abdel, 2021. "Here comes the sun: Fashion goods retailing under weather fluctuations," European Journal of Operational Research, Elsevier, vol. 294(3), pages 820-830.
    3. Joshua Graff Zivin & Matthew Neidell, 2014. "Temperature and the Allocation of Time: Implications for Climate Change," Journal of Labor Economics, University of Chicago Press, vol. 32(1), pages 1-26.
    4. Nathan W. Chan & Casey J. Wichman, 2020. "Climate Change and Recreation: Evidence from North American Cycling," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(1), pages 119-151, May.
    5. Herrnstadt, Evan & Muehlegger, Erich, 2014. "Weather, salience of climate change and congressional voting," Journal of Environmental Economics and Management, Elsevier, vol. 68(3), pages 435-448.
    6. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature," Journal of Economic Literature, American Economic Association, vol. 52(3), pages 740-798, September.
    7. Aditya Aladangady & Shifrah Aron-Dine & Wendy E. Dunn & Laura Feiveson & Paul Lengermann & Claudia R. Sahm, 2016. "The Effect of Hurricane Matthew on Consumer Spending," FEDS Notes 2016-12-02, Board of Governors of the Federal Reserve System (U.S.).
    8. Bertrand, Jean-Louis & Brusset, Xavier & Fortin, Maxime, 2015. "Assessing and hedging the cost of unseasonal weather: Case of the apparel sector," European Journal of Operational Research, Elsevier, vol. 244(1), pages 261-276.
    9. Michael Conlin & Ted O'Donoghue & Timothy J. Vogelsang, 2007. "Projection Bias in Catalog Orders," American Economic Review, American Economic Association, vol. 97(4), pages 1217-1249, September.
    10. Tatyana Deryugina & Solomon Hsiang, 2017. "The Marginal Product of Climate," NBER Working Papers 24072, National Bureau of Economic Research, Inc.
    11. Justin Bloesch & François Gourio, 2015. "The Effect of Winter Weather on U.S. Economic Activity," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I.
    12. Miia Parnaudeau & Jean-Louis Bertrand, 2018. "The contribution of weather variability to economic sectors," Applied Economics, Taylor & Francis Journals, vol. 50(43), pages 4632-4649, September.
    13. Levy, Ori & Galili, Itai, 2008. "Stock purchase and the weather: Individual differences," Journal of Economic Behavior & Organization, Elsevier, vol. 67(3-4), pages 755-767, September.
    14. Laura A. Bakkensen & Robert O. Mendelsohn, 2016. "Risk and Adaptation: Evidence from Global Hurricane Damages and Fatalities," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(3), pages 555-587.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Brigitte Roth Tran, 2022. "The Impact of Weather on Retail Sales," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, vol. 2022(23), pages 1-5, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brigitte Roth Tran, 2019. "Sellin’ in the Rain: Adaptation to Weather and Climate in the Retail Sector," Finance and Economics Discussion Series 2019-067, Board of Governors of the Federal Reserve System (U.S.).
    2. Hee Soo (test record) Kim & Christian Matthes & Toan Phan, 2011. "Extreme Weather and the Macroeconomy," Working Paper 21-14, Federal Reserve Bank of Richmond.
    3. Steven J. Dundas & Roger H. von Haefen, 2021. "The importance of data structure and nonlinearities in estimating climate impacts on outdoor recreation," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 107(3), pages 2053-2075, July.
    4. Newell, Richard G. & Prest, Brian C. & Sexton, Steven E., 2021. "The GDP-Temperature relationship: Implications for climate change damages," Journal of Environmental Economics and Management, Elsevier, vol. 108(C).
    5. Charles Fries & François Gourio, 2020. "Adaptation and the Cost of Rising Temperature for the U.S. economy," Working Paper Series WP-2020-08, Federal Reserve Bank of Chicago.
    6. Nathan W. Chan & Casey J. Wichman, 2022. "Valuing Nonmarket Impacts of Climate Change on Recreation: From Reduced Form to Welfare," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 81(1), pages 179-213, January.
    7. Yoo, Jonghyun & Eom, Jiyong & Zhou, Yuyu, 2024. "Thermal comfort and retail sales: A big data analysis of extreme temperature's impact on brick-and-mortar stores," Journal of Retailing and Consumer Services, Elsevier, vol. 77(C).
    8. Lé Mathias, 2022. "The adaptation of economies to climate change: lessons from the economic research [L’adaptation des économies au changement climatique : les enseignements tirés de la recherche économique]," Bulletin de la Banque de France, Banque de France, issue 239.
    9. Jean-Louis Bertrand & Xavier Brusset, 2018. "Managing the financial consequences of weather variability," Journal of Asset Management, Palgrave Macmillan, vol. 19(5), pages 301-315, September.
    10. Cascarano, Michele & Natoli, Filippo & Petrella, Andrea, 2022. "Entry, exit and market structure in a changing climate," MPRA Paper 112868, University Library of Munich, Germany.
    11. Hu, Jianhao & Zhang, Xuan & Chen, Hanyu(Yuki) & Li, Wanyue, 2024. "When it rains, it pours? The impact of weather on customer returns in the brick-and-mortar retail store," Journal of Retailing and Consumer Services, Elsevier, vol. 77(C).
    12. Aguilar-Gomez, Sandra & Gutierrez, Emilio & Heres, David & Jaume, David & Tobal, Martin, 2024. "Thermal stress and financial distress: Extreme temperatures and firms’ loan defaults in Mexico," Journal of Development Economics, Elsevier, vol. 168(C).
    13. Martínez-de-Albéniz, Victor & Belkaid, Abdel, 2021. "Here comes the sun: Fashion goods retailing under weather fluctuations," European Journal of Operational Research, Elsevier, vol. 294(3), pages 820-830.
    14. Brookes Gray, Harriet & Taraz, Vis & Halliday, Simon D., 2023. "The impact of weather shocks on employment outcomes: evidence from South Africa," Environment and Development Economics, Cambridge University Press, vol. 28(3), pages 285-305, June.
    15. Philippe Kabore & Nicholas Rivers, 2023. "Manufacturing output and extreme temperature: Evidence from Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(1), pages 191-224, February.
    16. Tarsia, Romano, 2024. "Heterogeneous effects of weather shocks on firm economic performance," LSE Research Online Documents on Economics 124251, London School of Economics and Political Science, LSE Library.
    17. Feriga, Moustafa & Lozano Gracia, Nancy & Serneels, Pieter, 2024. "The Impact of Climate Change on Work Lessons for Developing Countries," IZA Discussion Papers 16914, Institute of Labor Economics (IZA).
    18. Meixuan Teng & Hua Liao & Paul J. Burke & Tianqi Chen & Chen Zhang, 2022. "Adaptive responses: the effects of temperature levels on residential electricity use in China," Climatic Change, Springer, vol. 172(3), pages 1-20, June.
    19. Etienne ESPAGNE & Nicolas DE LAUBIER-LONGUET MARX & Thanh NGO-DUC, 2019. "Non-linear Impacts of Climate Change on Income and Inequality in Vietnam," Working Paper e47825f2-0059-4010-8291-1, Agence française de développement.
    20. Tian, Xin & Cao, Shasha & Song, Yan, 2021. "The impact of weather on consumer behavior and retail performance: Evidence from a convenience store chain in China," Journal of Retailing and Consumer Services, Elsevier, vol. 62(C).

    More about this item

    Keywords

    adaptation; climate change; weather; machine learning; retail; sales;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedfwp:93659. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Federal Reserve Bank of San Francisco Research Library (email available below). General contact details of provider: https://edirc.repec.org/data/frbsfus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.