Finance and Economics Discussion Series (FEDS)
September 2019
Sellin' in the Rain: Adaptation to Weather and Climate in the Retail Sector
Brigitte Roth Tran
Abstract:
Using novel methodology and proprietary daily store-level sporting goods and apparel brand data, I find that, consistent with long-run adaptation to climate, sales sensitivity to weather declines with historical norms and variability of weather. Short-run adaptation to weather shocks is dominated by changes in what people buy and how they buy it, with little intertemporal substitution. Over four weeks, a one-standard deviation one-day weather shock shifts sales by about 10 percent. While switching between indoor and outdoor stores offsets a small portion of contemporaneous responses to weather, I find no evidence that ecommerce offsets any of the effects.
Accessible materials (.zip)
Keywords: adaptation, climate change, lasso, machine learning, retail, sales, weather
DOI: https://doi.org/10.17016/FEDS.2019.067
PDF: Full Paper