Tesco, the UK’s largest retailer, has started using weather forecasts to help determine what to stock in its stores across the UK.
Traditional approaches to stock management use historical buying data to drive stock decisions. This has worked well to date, but the increasing unpredictability of today’s weather patterns — driven by global warming — has presented business with both an opportunity and a challenge. An unexpected warm (or cold) spell can create unexpected spikes in demand which go unserviced, while existing stock is left on the shelves.
In Tesco’s own words:
In recent years, the unpredictability of the British summer — not to mention the unreliability of British weather forecasters — has caused a massive headache for those in the retail food business deciding exactly which foods to put out on shelves.
The present summer is a perfect example, with the weather changing almost daily and shoppers wanting barbecue and salad foods one day and winter food the next.
Tesco’s solution was to integrate detailed regional weather reports — valuable, external information — with the sales history at each Tesco store. A rise of 10C, for example, led to a 300% uplift in sales of barbecue meat and a 50% increase in sales of lettuce.
Integrating weather and sales data will enable Tesco to both capture these spikes in demand, while avoiding waste.
(Largely adapted from the article in the Times Online.)