Sellin' in the Rain: Adaptation to Weather and Climate in the Retail Sector
40 Pages Posted: 8 Mar 2019 Last revised: 16 Sep 2020
Date Written: September 15, 2020
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: Suggested Citation