How to Weather a Retail Business Disruption due to Bad Conditions
Companies tend to view business disruption as the cessation of their operations, and worry about how much they can lose when things grind to a halt. But there’s another side to that disruption worth considering: a spike in activity, which can overwhelm employees, systems and processes during this time. Nothing showcases that contrast like the world of retail in severe winter weather.
When the weather outside is frightful, some retailers find increased revenue delightful. Others lose all hope of meeting their sales targets. But with preparation, technology and support from great employees, retailers can weather anything mother nature has to throw at them.
Winning at Winter
In the winter of 2014, a polar vortex sunk into the northern U.S., bringing snow and bitter cold. TIME Magazine reported that grocery stores saw sales of bread, milk and other eggs soar as temperatures plummeted. Supermarkets that anticipated the rush placed orders above normal stock levels, reaping sales that rivaled volume they’d expect to see during the holidays.
Simultaneously, companies that failed to stock their stores saw empty shelves, long lines and unsettled customers. As CBS Detroit reported, Detroit-area grocery lines nearly reached the back of some stores during the same frigid weather front. Customers swiped bread and milk from unattended carts and pillaged fruit displays, creating a shopping atmosphere that was reminiscent of an episode from “The Walking Dead.”
Grocers aren’t the only retailers poised to profit from winter weather business disruptions. Retailers that sell fuel and winter sports gear can also see big upticks in business, as can hardware stores that sell snow shovels, snowblowers, salt, generators, pellet stoves and wood for fireplaces. Winners respond flexibly to weather forecasts, boosting inventory and staffing to meet this heightened demand.
Getting Left in the Cold
For retailers dependent on holiday shopping for a major share of annual sales, a white Christmas can become a sea of red ink. John Hurst, president of the Retailers Association of Massachusetts, told the Boston Herald that Massachusetts retailers lost at least $10 million for each day that heavy snow kept customers at bay.
E-commerce, unfortunately, offers limited salvation during business disruption. As TIME reported, Adobe Digital Index data shows that a January 2015 snowstorm in the northeastern U.S. caused a $35-million decrease in online retail sales.
Unseasonably warm weather can cause as much business disruption as a winter storm. As the Portland Press Herald reported, unexpected warm weather caused specialty retailers like L.L. Bean to lose $421 million in sales between Nov. 1 and Dec. 19, 2015 as the need for warm clothing temporarily dipped. Retailers can still move inventory after these disruptions, but they’re often forced to slash prices or offer deep storewide discounts to clear the racks.
Shoveling Through Winter Business Disruption
Although there’s no one-size-fits-all approach to severe winter weather, retailers can stay responsive with smart technology solutions.
The glory days of Ye Olde Farmer’s Almanac are long gone. In its place are programs that help retailers map out ordering, staffing and delivery in response to winter weather. With predictive analytics, retailers can reallocate inventory to other locations in anticipation of weather-related business disruptions. They can also adjust marketing and advertising budgets and alter seasonal hiring, either to cut expenses or to bring in more revenue.
To respond to weather problems, retailers need supply chain software and other tools that enable fast communication with vendors. Where weather means increased demand, retailers need to get more product, perhaps from backup vendors. They also need tools for communicating with carriers to ensure prompt delivery.
When responding to winter weather, retailers may need to ditch the company agenda for the sake of local events. Instead of using company-wide software settings to limit manager activities — such as eliminating manual ordering to cut waste and costs — retailers should give autonomy to local stores and their managers to operate based on conditions that may not be affecting the business in other locations.
Never Skimp on Service
For retailers that thrive in blustery conditions, proper inventory levels are only the beginning. Stores should anticipate increased traffic and put the appropriate staffing and processes in place to keep customers moving and happy despite an otherwise challenging shopping experience.
When weather slows sales, personal attention, upselling and cross-promotion by active salespeople can all help stop the bleeding. Technology helps retailers anticipate business disruption related to winter weather. Human beings help them get through it.