How temperature fluctuations affected Clifton Heights businesses in August 2005

¶ … Temperature in my Hometown

Business Research Problem

How do unexpected changes in local temperature affect the local economy, such as consumer buying patterns? For example, due to the increased costs of electricity in the summer because of the greater need for air conditioning in consumer's homes, as well as retail establishments, and the cost of heating homes and businesses during the winter, consumers will have less disposable income to spend on other goods and services and thus may spend less. Businesses will have more expenses, namely to keep their retail spaces hot or cool and thus may be hard hit economically by temperature fluctuations. Other businesses, such as air conditioning or heating services, may benefit from extreme conditions. Stores such as Home Depot or stores that sell cool or warm weather clothing and gear may see an upturn in trade, depending on the temperature. This seems obvious, unless a hot spell or a cold spell hits during an inconvenient time, such as warm weather striking when skiing stores are trying to the newest gear for he upcoming season in December.

Using the data from Clifton Heights, PA, regarding the temperatures of August 2005, one can explore the specific business research question if the weather patterns over the month were overall salutary or harmful to businesses, and specifically to what businesses were the temperatures more or less harmful, or even helpful, during the month.

The Temperature in my Hometown: Data

For example, Clifton Heights, Pennsylvania, showed a great variety in temperature over the course of August 2005. The actual high temperature in degrees Fahrenheit was 97, and the low 63. The normal highs and lows in the month of August in Clifton heights are 88 and 66. This fluctuation means that on very hot days, stores would find it difficult to cool their interiors in a cost-efficient fashion, yet consumers werespending more to cool their homes, and thus had less disposable income to spend during August. Also, hot days, psychologically, consumers may be less apt to shop for the traditional August bread and butter retail goods of school clothes and supplies, as it still seems like it is summer. A bad hurricane season and the high price of oil further cuts into consumer's ability to buy during a month with high utlity bills. Stores that are also hard-hit by the same costs cannot necessarily slash prices to draw consumers into the stores.

There are regional differences in reactions to temperature and weather conditions such as temperature notes one business market analyst, researcher and meteorologist. Paul Walsh states one example is seen in how different regions of America "react to three inches of snow. In some neutral parts of the country, schools are closed and traffic is delayed. In Buffalo, N.Y., that's considered flurries and no one notices. [But] 'You get three inches in Atlanta, and that's [considered] Armageddon,'" Walsh said. (Schuman, 2004)

Pennsylvania would likely rate in the 'middle' or neutral area regarding snow. The snow is disastrous for malls and less necessity-based marketers during the holiday season, but bad weather is almost always a plus for stores such as Home Depot and 7-11. But besides the data, there is also a subjective factor, even in such stores that benefit from poor conditions, as the absolute temperature matters less as opposed to when people start to feel warm or cold in that region. "Until recently, retailers made buying decisions based on fixed," that is absolute and thus "usually incorrect" assumptions about how consumers react to weather. Warm in Florida is different than warm in Maine, and rainy in Seattle is different, perceptually than rain in Arizona. Walsh's company Planalytics "typically delivers a seven-day immediate weather and buying pattern prediction report for each client, focusing on appropriate geographies. But they also deliver an 11-month prediction, which Walsh says is accurate about 75% of the time." (Schuman, 2004) Although, as a temperate climate, Philadelphia may be more easy to predict a response to the absolute data temperature of warmth and coolness, the greater seasonal variation of weather is an added incentive for retailers and consumers to keep an eye on the ever-changing temperature forecasts of different locations, and for businesses to understand how the absolute data of August was and will be translated into future consumer buying patterns, based upon real and psychological consumer perceptions of warmth or coldness, and how warmth and coolness can affect consumer buying power and store budgets.