Which Way Is the Wind Pushing Your Business Goals?

Author: Alex Rutter, Director EMEA at The Weather Company, an IBM Business

They say that the only constant in business is change, but I disagree: the real constant is weather. It affects every business in every industry worldwide every day, but many businesses use it as an excuse rather than as a potential advantage for their business goals. Bad sales? Shoppers stayed at home because of the rain. Bad monthly numbers? Our planes faced snow delays. Too many insurance claims? There was a hail storm!

In 2016 alone, organisations around the world wrote off half a trillion dollars, directly citing the weather as the cause. But what if you could inject weather forecast data directly into your business operations to help you prepare for, rather than react to, weather events? This would help your business to lower costs, increase profit, gain greater control of the supply chain and maximise efficiency.

Stop using weather as your scapegoat and start harnessing the power of weather data to help grow your business and further your profit goals.

Gain actionable insight from forecasts

Worldwide, the statistics are staggering:

  • In agriculture, 90%[1] of crop disruption is weather-related – in summer 2017, weather damage quadrupled the cost of aubergines and courgettes.
  • Energy companies in France need to generate and distribute 30,000 megawatts to compensate for a 1-degree drop in temperature.
  • US insurers pay out $2 billion every year in compensation for vehicles damaged by hail.

In aviation, weather has always been a critical factor in scheduling, delays, and passenger safety – but turbulence is also an important factor in ensuring safe travel and repeat passengers. Alitalia has saved over 40,000 kilos[2] of fuel every month – a direct link to profits and its bottom line, as fuel is 90%+ of an airline’s operating costs – by planning for and adjusting routes to avoid turbulent conditions using solutions from The Weather Company[3].

A study in analytics and profits: retail

Retail is another industry that bends, sways, and snaps based on the weather conditions. Let’s take a closer look at how the industry deals with its weather-related responses.

Buyers across any vertical are tricky to read. Fine weather could make them want to shop or make them want to go to the park. Snowy conditions may make them stay at home, but it hardly halts online shopping.

In fact, anticipating supply and demand doesn’t have to entail arbitrary fits and starts of guesswork: Advanced weather analytics show distinct patterns in shopper behaviour that directly correlate to the current and forecast conditions.

According to statistics, a 1-degree temperature fluctuation above or below the average can lead to a 1% swing in U.K. sales. While that doesn’t seem significant, it’s a swing of more than £3 billion. Being able to cross-match historical sales data against current weather conditions helps retailers learn from the past and build a strategy up to three months in advance using real insight to deploy and allocate resources such as staff and stock.

The results speak for themselves…

In-store, we’ve helped a major UK retailer identify the correlation between bad weather on a Friday and Saturday and a 30% rise in average spending on the Sunday. Again, even though 60% of seasonal goods such as winter apparel, snow shovels and portable heaters are sold over the winter months, retailers must be prepared for warmer temps to creep in and disrupt sales. No one wants boxes of goods that no one wants to buy – steep discounts aren’t good for year-end numbers.

The right weather data in the right context can mitigate these problems, helping retailers – and every other industry – to correlate forecast data with seasonal and historical data to understand what to expect and how to profit from it.

Make better business decisions with weather

The Weather Company has access to more than 250,000 personal weather stations around the world, giving you instant visibility into hyperlocal weather in the locations that matter most to you. In the UK, data is collected from 8,900 such stations and 220 million active users on smartphones sending us barometric pressure readings and enabling us to accurately report on 2.2 billion locations.

Every second your business spends making excuses about the weather rather than proactively preparing for those ever-present weather variations throughout the year is profit that is lost. To find out more about the potential threats and opportunities the weather represents for you, visit www.ibm.com/uk/weather.

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  1. Source: IBM https://www.ibm.com/blogs/internet-of-things/agricultural-industry/
  2. Source: Alitalia https://wsi.wistia.com/medias/l8n1ii4okc
  3. Source: IBM http://ecc.ibm.com/case-study/us-en/ECCF-IMC15059USEN

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