Posted by Bill Kirk, CEO
Globally- it was a frigid January with the coldest and snowiest conditions in decades for much of the U.K., Europe, Russia, Northern China and the Southern U.S. which is a big negative for overall retail sales performance.
Historically a warmer, drier and less snowy January results in +5% higher retail industry same-store sales (SSS) gains compared to a cold and snowy month.
Here in North America the pattern was up-side-down with Canada having the 2nd warmest January in two decades with snowfall across the country down -47% vs. a year ago while the Deep South of the U.S. had snowfall up +161% in the Southeast over last year (most in 14 years), up +188% in the South Central U.S. (most in 13 years) and up +331% in the Southwest (most in 5 years). The late month Deep South snow storm resulted in U.S. snow cover reaching 70% of the U.S. blanketed in some snow – something that hasn’t occurred in decades. Across the Southern U.S. temperatures were also the coldest in 9 years with record breaking freezes as far south as Florida driving triple digit sales gains for Winter merchandise. CLICK ON CHART FOR LARGER VIEW
Across the northern U.S. it wasn’t quite as bad with the Pacific Northwest having the warmest January in over 18 years and snowfall down a whopping -83% the least in 16 years (very favorable for retail store traffic). Even in the North Central U.S. and Northeast snowfall was down -39% and -34% respectively with 5°F warmer conditions than a year ago (a significant change on a monthly level).
Nationally, snowfall was down -22% vs. a year ago January (9th snowiest of the past 17 years) and -6% below average. These milder and less snowy trends across the Northern U.S. were certainly a plus for overall retail industry SSS and while the stormy weather in the South would ordinarily be a negative it actually spurred strong sales for Winter seasonal merchandise with “panic” buying for storm related merchandise and pantry loading items. The chart below shows a day-by-day summary of the extreme record breaking cold early in the month followed by a big January thaw warm-up. CLICK ON CHART FOR LARGER VIEW
“The most important and statistically significant factors for stronger retail sales performance in January are the consumer confidence index followed closely by less severe weather,” said Bill Kirk, CEO Weather Trends International. Last year the January index was at an all time low (38) which in part explains the disastrous retail SSS results of -4.8% according to ICSC’s tally of 60 major retailers vs. this year’s confidence index of 53. While 53 is nothing to get too excited about (90 is a strong index indicating a strong economy) it’s still better than last year and combined with the more favorable weather trends retailers should post gains in-line to higher than expected when results are announced Thursday, February 4th. Over the past 25 years a stronger than expected December (December 2009 brought very strong industry gains of +3.6% according to ICSC) is followed by a stronger than expected January 82% of cases so the math suggests more retailers will again be in positive territory!
For a complete business-weather roundup click on the links below for a detailed PDF summary report:
U.S. January 2010 Retail Business Weather Summary Report