Sellin' in the Rain: Adaptation to Weather and Climate in the Retail Sector

40 Pages Posted: 8 Mar 2019 Last revised: 16 Sep 2020

See all articles by Brigitte Roth Tran

Brigitte Roth Tran

Federal Reserve Bank of San Francisco

Multiple version iconThere are 2 versions of this paper

Date Written: September 15, 2020

Abstract

Consistent with long-run adaptation to climate, I find that weather sensitivity of daily store level sales decreases with increasing historical weather variability and norms at an apparel and sporting goods brand. I examine short-run adaptation to weather shocks using a machine learning based index. I find that weather induces little intertemporal substitution. A one-standard deviation one-day weather shock shifts sales about 10 percent over several weeks. Ecommerce fails to offset weather-induced losses in stores. While diversifying among indoor and outdoor mall stores could protect brands against effects of precipitation, snow events and extreme temperatures appear to decrease sales at both types of stores.

Keywords: adaptation, climate change, weather, machine learning, sales

JEL Classification: Q5, Q54, L81

Suggested Citation

Roth Tran, Brigitte, Sellin' in the Rain: Adaptation to Weather and Climate in the Retail Sector (September 15, 2020). Available at SSRN: https://ssrn.com/abstract=3337110 or http://dx.doi.org/10.2139/ssrn.3337110

Brigitte Roth Tran (Contact Author)

Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States

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