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

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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.

Suggested Citation

  • Brigitte Roth Tran, 2019. "Sellin’ in the Rain: Adaptation to Weather and Climate in the Retail Sector," Finance and Economics Discussion Series 2019-067, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2019-67
    DOI: 10.17016/FEDS.2019.067
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    References listed on IDEAS

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    Cited by:

    1. Charles Fries & François Gourio, 2020. "Adaptation and the Cost of Rising Temperature for the U.S. Economy," Working Paper Series WP 2020-08, Federal Reserve Bank of Chicago.
    2. Stanko Dimitrov & Régis Y. Chenavaz & Octavio Escobar, 2023. "Accounting for Climate When Determining the Impact of Weather on Retail Sales," Businesses, MDPI, vol. 3(3), pages 1-18, September.

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    More about this item

    Keywords

    Adaptation; Climate change; Lasso; Machine learning; Retail; Sales; Weather;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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