Exercise 71 – How would you assess the impact of weather on consumer spend last winter?

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NabsPM
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How would you asses the impact of weather on consumer spend – You first ask clarifying questions – What is consumer spend- Can we assume retail spend across all categories and across ecommerce and brick and mortar? If Yes, What is winter? Which place is this? Is it October to November in US because Winter in India or Australia could be different or is this generic winter in any place? And then the most important question of all – What do you mean by Impact? Typically, you have forecasts of consumer spend – How much you thought consumers would spend as a whole or by category or by demographic or geo location etc. You also take seasonality in to account as you forecast. When the actual number is different from forecast, you try to attribute the forecast error to various factors and weather could be one of them. So you first look at actual weather vs forecast – was it an exceptionally cold winter, was it a hotter winter than expected? This would typically manifest itself by people buying more or less of winter specific products – like clothes, food, furniture. You can also look at the regular products such as toilet paper, bread etc that people buy irrespective of weather and see if they met forecasts or if people could not shop because of bad weather and they were impacted as well… I would do a forecast vs actual analysis and then do specific weather related attribution to the forecast error

Aj
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Clarifying questions
By assessing impact means change in spending last winter vs previous winters and whether the change was because of weather?

1. Any geography or all?
2. Any specific category?

Steps
1. Spend means – Change in spending on goods(essential & non-essential), Change in spending on services(vacation travel/hotel), Change in seasonal spending
2. Look at YoY spend during the same period.
3. Look at change during holiday period when spending peaks
4. Look at environmental factors such as unemployment, recession, war etc…
5. Look at weather related issues such as storms, harsh winters etc…
6. Look at spend on essential vs non-essential items. Essential means groceries vs non-essential means luxury goods, clothing etc…
7. Look at spending across diff. geographies. Especially areas with severe winters vs low winters.
8. Look at other factors such as change in tariffs, taxation which can contribute to pricing thus spending spending.