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'Nemo' Will Take a Bite Out of February Retail

Paul Walsh, VP, Weather Analytics, The Weather Company
Friday, 8 Feb 2013 | 11:45 AM ET
Apostrophe Prod. | Workbook | Getty Images

The convergence of increasingly accurate weather forecasts and the explosion of the social media channel is super-charging the effect of Winter Storm "Nemo" on the Northeast's economy.

As with other big storms, the impact of Nemo on consumer and business activity is taking three distinct phases: pre-storm surge, shut-in during the storms, and post-storm replenishment.

With the Nemo storm, the pre-storm surge may be having an outsized impact on retail and could, for some sectors, offset the negative impacts resulting from lost weekend sales.

However, the impact of a lost Friday and Saturday will be very difficult to make up, and the overall effect will most likely result in a net negative for retail overall. This is especially true given the comparison to last February's balmy conditions.

Here are some key points:

1. Long Forecast Lead Times Create a Longer Sales Ramp Prior to the Storm

Similar to super storm Sandy, the forecasts of this storm have been remarkably accurate. We've been collectively signaling a potential major Northeast snow event since Monday. The threat has been on the radar of consumers for several days leading up to the storm. This will culminate today in long lines at grocery chains, big box retailers like Best Buy, gas stations and home centers like Home Depot and Lowe's, and could offset the negative impact of the loss of half of this weekend.

2. Social Media

The effect of the weather forecast on consumer demand is increasingly being juiced by the growth of the social media channel. The Twitter tag "#Nemo" is and has been a top trending term in the U.S.

The term and hash tag are being used by New York City's Mayor Michael Bloomberg and New Jersey's Governor Chris Christie in tweets as well as many other media outlets. Word is getting out and it's being amplified by social media.

For context, at Weather Channel — which, like CNBC, is operated by NBC — we've seen millions of retweets and mentions of Winter Storm Nemo. This is amplifying the spending "surge" effect in advance of major weather events. Not to mention the the boost it gets from politicians and celebrities like like Jimmy Kimmel and Stephen Colbert.

3. Supply Chain

If a retailer's supply systems can handle the surge, it can be a net-benefit for retailers. However, the loss of a weekend's sales will likely result in a net-negative for retail overall in February.

4. The Storm's Foot Print

Approximately 50 million people directly impacted by storm.

5. Big Snow Totals

Top-13 list for snowstorms at Boston Logan:

  • 1. February 17-18, 2003 27.5"
  • 2. February 6-7, 1978 27.1"
  • 3. February 24-27, 1969 26.3"
  • 4. March 31-April 1, 1997 25.4"
  • 5. January 22-24, 1945 22.8"
  • 6. January 22-23, 2005 22.5"
  • 7. January 20-21, 1978 21.4"
  • 8. March 3-5, 1960 19.8"
  • 9. February 16-17, 1958 19.4"
  • 10. February 8-10, 1994 18.7"
  • 11. January 7-8, 1996 18.2"
  • 11. December 20-22, 1975 18.2"
  • 11. December 26-27, 2010 18.2"

-By Paul Walsh, Vice President of Weather Analytics, The Weather Company

Questions? Comments? Email us at consumernation@cnbc.com.

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