Fewer holiday bargains expected due to last year’s mild winter: analyst

PHILADELPHIA – If you snooze, you may lose out on buying cold-weather gifts this holiday season in the eastern half of the country. A mild winter last year could mean a lean inventory this year.

“Last year was a relatively mild winter,” explained Paul Walsh, CEO of Meteomatics North America, a weather analytics consulting company. “Typically, retailers plan their next year based on how much they sold last year.”

Walsh said he didn’t have to use his snowblower once at his home in the Northeast last year. He didn’t buy a new winter coat either. He said he expects a colder winter this year and believes many consumers and gift-givers are in the same boat – wanting new winter gear.

“I think what we may be seeing is markdowns that are not as robust as you would expect,” he said.

More demand for seasonal items in the East, lower demand in the West

Different parts of the country will have different needs and supply, he said. Planalytics, a company that forecasts the impact weather will have on demand, put out a seasonal report that indicated the overall percent change in weather-driven demand will be almost flat nationwide. But demand for seasonal items will be significantly higher in the East and lower in the West.

“They’re expecting, for example, in Boston that demand for jackets and coats is going to be up about 4% compared to last year, which is a lot because we’re talking about the entire Northeast (experiencing a mild winter),” Walsh said. “While in the West, which was relatively cold last year, the expectation is that demand will be down about 7% in Los Angeles, for example. So you can see it’s very diverse around the country.”

Houston’s weather-driven demand for sweaters will be 6% higher than last year, the Planalytics report stated, while Seattle’s demand goes down 1%. Portland, Oregon’s demand for gloves goes down 4% while New York City’s demand is 3% higher. New Orleans’ demand for fleece goes up 3%, while Minneapolis shoppers want 3% fewer thermals.

The National Retail Foundation (NRF) forecast is for a big shopping year, 3% to 4% over dollars spent last holiday season (November and December.) That means more shoppers for fewer items.

Not much selection when weather-driven spending sets in

“And once it starts getting cold, demand goes up,” Walsh cautioned. “When demand goes up, inventories are tight. All of a sudden, the retailers don’t really have a big motivation to reduce prices. So I think buying a coat early might actually not be a bad idea. And not just coat – gloves, etc., etc.”

As a rule of thumb, Walsh said, weather influences purchase decisions on at least 25% of sales. The NRF forecasts $977 billion in sales for the holidays. That would mean $244 billion spent would be weather-driven.

A closer look at the Black Friday to Cyber Monday sales forecasts from Planalytics shows the cold snap and the winter weather impacting the Rockies and Plains and then spreading east are pushing up cold-weather-wear demand.

Boot demand:

• Minneapolis: +30%
• Denver: +4%
• St. Louis: +1%

Fleece demand:

• Miami: +14%
• Nashville: +8%
• Raleigh: +6%

Hats, gloves and scarves demand:

• Detroit: +22%
• Omaha: +12%
• Cleveland: +8%

Weather outlook

“(The) NWS forecast is for a relatively mild month in the East but with higher-than-normal precipitation in the Southeast and eastern U.S.,” Walsh said. 

But, El Niño could be a wild card.

“El Niño could play an outsized role in those areas, and even with a relatively mild year, that increase in (precipitation) could lead to a higher chance of a ‘whiter’ Christmas than last year in the Northeast,” Walsh continued.

El Niño could also mean a cooler and stormier western U.S.

Regardless of what happens with the weather this winter, Walsh suggests getting those fingers busy on Cyber Monday because sales may be far and few between closer to the holidays.