Temperature in My Hometown Business

¶ … 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.

Overview of Issue

Increasingly, the problem of extreme weather conditions has gotten more and more national press over the past years. This has been particularly true of the past several weeks, given the real and threatened prospects of the damage done by national phenomenon such as hurricanes. Is this apparently greater prevalence of extreme hot and cold temperatures, and the greater instability of the atmosphere due to the influences of global warming, and will it continue? How do fluctuations in the weather affect the economy? All of these pressing questions, so vital to daily life and the economy's future, make the monitoring of one's local temperature and climate conditions a vital issue for local businesses. Local businesses also, by relying upon past and future weather forecasts, wish to know how to budget their in-store cooling and heating budgets, and to market their seasonal products, depending on the likely local weather. Consumers wish to know if they will have enough disposable income to travel during August, to heat their homes and buy Christmas goods during December, so one's likely retail base will also be monitoring the weather reports. Understanding the issue of how temperature affects the buying patterns of consumers is vital.

Just recently, the Associated Press wire reported that this winter's heating costs might increase as much as twenty percent because of the damage done by Hurricane Katrina to the Gulf Coast refineries in the South, and the corresponding increases in the price of oil and gasoline. This event shows how changes in the weather can suddenly give consumers less money to spend on other goods and services, and give retailers an added difficulty in terms of dealing with the drain on their transportation budgets and the operating costs of keeping their stores open. This weather-related problem is particularly difficult this year, however, because even the regions not directly hit by the hurricane have been dealing with larger than normal fluctuations in temperature on both extremes of the spectrum, as well as higher oil prices.

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)