Posted by: Bill Kirk, CEO
U.S. JUNE 2010 SUMMARY: It was the 2nd hottest June in 18+ years for the nation as a whole with 82% of the U.S. trending warmer than a year ago along with 1,506 record high temperatures. The Northeast had the greatest change toward much hotter weather benefiting strong double and even triple digit sales gains for items like AC, fans, auto batteries, irrigation, pest control, summer apparel, cold beverages, sun care, etc. In the West it was a different story with the coldest June in 11 years for the Northwest along with the wettest conditions in over 18 years putting a damper on Summer category sales (see regional summary chart below):
Memorial Day week was by far the best of the holidays with the warmest holiday in 18+ years driving strong demand for must have seasonal items. Every weekend day in June trended more favorable than a year ago for the nation as a whole.
The tropics heated up early with the earliest hurricane (Alex) in 15 years. South Texas was within a 100 miles of this hurricane bringing flooding rains to parts of Texas and winds as high as 66 mph.
Overall, the weather was a huge plus for retail industry same store sales (SSS) which came in at +3% according to ICSC. Luxury did the best at +8.8% followed by Department Stores (folks flocking to the malls to escape the heat) +5.9%, Clubs +4.0%, Discounters +2.0% and the laggards Drug Stores +0.8%. While consumer confidence plunged to 52.9 in June (down from May), it was still slightly better than last year when the index stood at 49.3, so this was a neutral factor for retailers. Gasoline prices were also a neutral factor at +4% higher than levels a year ago. The big positive was the very easy comparisons to last year when Retail Industry SSS were the worst ever at -5.1%.
U.K. JUNE 2010 SUMMARY: June trended as the 3rd warmest in 17+ years for the U.K. Temperatures during the first 2 weeks of the month trended warmer than LY, while the last 3 weeks of the month turned cooler y-o-y. Although warmer than normal, the mild temperatures of the final 2 weeks of June 2010 were no match for the blistering heat wave experienced during the end of June 2009, thus, the cooler y-o-y trends.
For the 3rd month in a row, precipitation trended both drier than normal and last year as this was the 4th driest retail June in 17+ years. Although drier conditions benefit footfall and outdoor products, this was not good news for the rising threat of a drought, particularly in North West England where precipitation has been the least in 17+ years for the first 6 months of 2010.
Although the 1st week trended warmer than LY, the week actually began on a cool and soggy note, putting a damper on categories like picnic foods, grilling, pool supplies, sun care and Summer apparel over the Summer Bank Holiday weekend. Late week warmer y-o-y weather stuck around into the 2nd week which should have provided a boost for warm weather categories. The week prior to Father’s day trended both cooler than LY and normal, dampening demand for Summer related products, however, a warm-up by the weekend was favorable for last minute gift purchases for Dad. Although temperatures turned milder for the final 2 weeks of the month, demand for volatile hot weather categories like air conditioners, fans and car batteries likely saw a dip as temperatures were not as scorching hot as LY.
G-20 JUNE 2010 SUMMARY: It was a warmer month across much of the Northern Hemisphere, but cooler for the start of Winter across much of the Southern Hemisphere. Russia had the greatest change toward much hotter weather driving demand for consumables. Rainfall was excessive for the month across the G-20 with widespread flooding in SE China, SE Bangladesh, Southern France and NE Brazil. Drought was most extreme in Israel where conditions are the driest in 90 years and the driest in 20 years across Thailand. The drought in Thailand is having a major impact on crop yields and rice production which is expected to be well below average. The collapse of El Nino is now giving way to a La Nina event (cooling of the Pacific Ocean) which continues to keep overall global tropical activity well below average – lowest levels in 30 years. However, the two areas with much warmer Ocean water temperatures are off the U.S. Gulf/Atlantic coastline and across Indonesia. This will create very favorable conditions for an active season in those regions. The maps below show temperature and precipitation trends vs last year.
