“It’s back, it’s big and the business impact in California could be huge.”

 

Given the simultaneous fires and flooding rains in California. I thought it would be a good  time to revisit our call on the expected consumer impacts in California resulting from 1) the on-going historic drought and 2) the developing (and potentially historic) El Nino event.

El Nino Review

We discussed the expected effects of the El Nino on California back on July 17th.

See: What Marketers Need to Know About California and El Nino

Here’s what we said then:

From a planning perspective, therefore, marketers need to be thinking differently about how they communicate with consumers this year.

In California specifically, the effect of almost any rain this year (a relatively rare event recently) will be amplified and particularly impactful.

Retail, QSR, insurance and travel categories will be significantly impacted as people will be staying home and hunkering down at a frequency not seen in several years (at least).”

All this holds true today.

The only change to what I was advising is that the impacts are coming earlier and the effects on consumer demand will likely be even stronger than what we’d already called out.

When it Rains in LA

California consumers are typically more weather sensitive than people in other parts of the country simply because the weather in general is less volatile.

What this means is that smaller changes in the weather have much larger impacts on consumers than in other (more weather robust) geographies.

 

This effect was captured perfectly by Buzz Feedin this insightful (and hilarious) video:

The Forecast

As the El Nino environment continues to strengthen the confidence in a stormier California continues to grow.

Looking forward to the balance of the winter and into the early spring 0f 2016, the predictions are pretty much unanimous for California — it’s going to be wet!

http://www.weather.com/news/climate/news/el-nino-noaa-update-august2015

The Impacts

Of course, understanding the past is the first step in understanding the future.  

Below is a brief summary of some of the impacts from the last big El Nino event:

“For historical perspective, the last time we saw an El Nino of this scale was in 1997 and 1998.

See:  El Nino 1997 – 98: The Climate Event of the Century

Specific impacts of that event included:

  • California Retail Sales: down 3 to 5%
  • Insured Losses: $1.7 billion
  • Fresh Produce Prices: up 5 to 8%
  • California (and Florida) Tourism: down 30%

Source: Impacts of 1997 – 98 El Nino Generated Weather in the United States

Fire and Flood

As a quick recap, below is a segment I did on The Weather Channel in early July outlining the fire and flood risks facing California consumers.

Sadly, these effects  are already being felt.

 

I’ll be doing updated television segments this coming Sunday at 07:20 and 09:40 AM ET on AMHQ Weekend on The Weather Channel.

Marketing / Weather Strategy Questions?

Specific marketing strategies and tactics will be largely dictated by the type of businesses that are in the path of the storms generated by the event.

If you have questions or would like to learn how other companies are managing through this event and planning for the upcoming winter and spring, drop us a note or give us a call HERE.

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