Opportunities: Raining champion

It may seem obvious that different weather can have varying effects on your sales, but one man is out to go one step further. Phil Mellows investigates.

What will you be doing on September 23? If you are really sensitive to what your customers want you should be putting soup on the stove and stocking up on the whisky. For September 23, give or take a week or two, is the day when the winter weather starts.

At least that's when meteoroligists, who know a thing or two, break open their woolly vest drawer and start smearing on the Vick. And it's when ordinary people, without really thinking about it, begin to subtly change their eating and drinking habits.

If you've been running a pub over the last couple of months you can't fail to have noticed that the weather has a direct impact on your sales. The British Beer & Pub Association estimated that the hot spell in August increased beer volumes by a million pints a day over one weekend.

Publicans were not affected equally, of course. Those lucky enough to have gardens did very well while town and city centre houses were, in many cases, emptied. In a survey on thePublican.com 29 per cent of licensees declared that "my pub is too hot and people are staying away".

But while the weather effect is obvious to anyone in the trade, little scientific work has been done to determine precisely what that additional degree or temperature, that extra hour of sunshine or that shower of rain does to buying behaviour.

One lone weatherman is, however, out to change that. Neil Catto has a rare kind of CV that flips from nine years as a meteorologist to 13 years in sales and marketing with Schweppes and Coca-Cola, making him perhaps uniquely qualified for the project.

On realising that he had something to offer, he set himself up as Smart Research and rigged up an office at his home in the Mendip Hills. With some help from Cardiff University he has spent the last four years researching the links between weather and purchasing patterns, based on sales information supplied by Tesco and sponsored by top firms Heinz, Glaxo SmithKline, Birds Eye Walls and Geest.

He has now gathered enough data not only to demonstrate a strong weather effect on sales but to provide a service that combines weather and sales forecasting to advise pub companies and other retailers how to plan their business.

Correlating weather and sales information has already produced some striking results. Sales of soup, for instance, invariably start to soar within a couple of weeks of September 23 each year while coleslaw heads in the opposite direction.

While the research was based on figures from a major supermarket, Neil believes "the principles affect every business and the forecasts we can produce could work well for pubs, not just for getting stocking right but staffing, cash flow and the timing of promotions. The possibilities are endless."

The underlying theory is that weather factors influence not only the numbers of customers that come through your door but also the mood they are in.

"It can result in huge over-stocks and waste and under-stocks too," said Neil. He says that the average over-stock in a business is 3.3 per cent, although that is probably a low estimate and it may be as much as five or 10 per cent.

Out of that 3.3 per cent, 2.4 per cent is unexplained by the factors usually taken into account by sales analysts. That, he believes, leaves a gap in the food and drink market that is worth £1.59bn - and it is probably down to the weather.

If you can generate more accurate sales projections by using weather forecasts, you can reduce over-stocking, eliminate the under-stocking that hit pubs and brewers this summer, and create efficiencies that could add millions to the bottom line.

Yet the project is testing his sales skills. "Everyone knows that the weather has an effect on their business but I have encountered a huge amount of scepticism about what I am trying to do," he said. "The problem is that companies have bought in weather data before, but it hasn't worked. They are aware of the seasonality of various products, but what's a season? It's not got much to do with the weather."

Neil believes his forecasts are different because he uses his sales and marketing experience to exclude variables other than the weather.

"In my system, weather is one of six influences on a sales profile," he explained. "It is vital to have a thorough knowledge of the weather and an excellent understanding of manufacturing, brand and trade marketing, the supply chain and retail marketing.

"You can't just look at sales figures alongside average temperatures for the UK. Weather is just one effect, you have to isolate it, clean other effects from the data."

For instance, pricing and promotions need to be taken out of the equation, so do your competitors' pricing and promotions, along with advertising, point-of-sale materials, anything that might influence purchasing.

There is also more to weather than temperature. Neil has also found correlations based on sunshine and humidity and uses a special index that is based on a mixture of temperature and sunshine.

Everyone feels better when the sun shines but Neil wants to get closer to a scientific idea of what lies behind the feelgood factor that causes people to purchase more.

"Buying is a psychological decision, and that psychology is influenced by the weather, often in a quite subliminal way," he said. "Most just look at the temperature, but high winds, for instance, have been shown to make schoolchildren hyperactive.

"I have always thought that the weather affects sales more than people think. Every degree makes a difference."

The impact of hot weather on one product he was studying - those packets of mixed salad leaves you can buy in the supermarket - was so dramatic "I nearly fell off my seat," he said. "And that market is worth £60m to one supermarket chain alone."

Neil has even studied his own behaviour. "I know that I swap from drinking ale in the pub to drinking lager when the temperature hits 23OC."

His weather data comes from 28 places around the UK and the research has also brought out big regional variations that make nationwide forecasts virtually useless.

"The weather effect is strongest in the South East," said Neil. "I don't know why, perhaps they really are soft. But the point is that the South East is the country's major sales area."

Not all types of food and drink correlate with the weather but as Neil points out, "negatives are as good as positives. If there is no weather effect, you don't waste your time analysing the figures."

Smart Research is now in the final stages of formulating an agreement with American software giant SAS to enable it to computer-model the weather effect across a range of products and retail situations.

This can then be extended to automate ordering and purchasing, based on changes in the weather.

It could still be that, for a pub industry with lots of other things on its mind, weather effect sales forecasting is some way in the future.

As the marketplace becomes ever more competitive, however, factors such as stocking and staffing are increasingly critical to the success of a business. At the moment the trade puts up with the weather effect as something out of its control. But imagine looking forward to a heatwave in the confidence that you have enough beer in stock. If Neil Catto is right, we have the technology to make that possible.

• For more information go to www.smart-research.co.uk