Working Paper

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

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.

Keywords: Adaptation; Climate change; Lasso; Machine learning; Retail; Sales; Weather;

JEL Classification: D12; L81; Q54;

https://doi.org/10.17016/FEDS.2019.067

Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: Finance and Economics Discussion Series

Publication Date: 2019-09-06

Number: 2019-067