[Climate Management] ② Weather Information Influencing Corporate Sales... Emergence of Professional Consultants

Shinil Electronics Utilizes Weather Information in Management Since 2012
CU Convenience Store Checks Regional Weather Data via POS
Kweather Provides Weather Management Consulting to Over 4,000 Companies

[Asia Economy Reporter Donghyun Choi] Climate change has brought many changes to corporate management. In the past, when the changes of the four seasons were relatively distinct, companies could easily adjust product development or production volume targeting specific seasons. However, as abnormal climate phenomena continue, companies now need to predict and act according to the climate of the next season.

Fan Companies Make Heaters, Boiler Companies Sell Air Conditioners

Exterior view of Shinil Electronics Cheonan Factory.

A representative company is Shinil Electronics. With 63 years of experience this year, the public perception of Shinil in the past was that it was a ‘company that makes fans.’ It was a regular advertiser on TV during summer. However, Shinil already produces various winter products such as general household electric heaters, camping fan heaters, large hot air heaters, and floor heating carpet mats. The reason Shinil declared its leap to a comprehensive home appliance company in 2019, its 60th anniversary, is due to this diversification.

Shinil’s change began after it took an interest in climate change. Since 2012, Shinil has been utilizing weather information from the Korea Meteorological Administration (KMA) in its management. Based on information provided by the KMA, the company builds big data including daily maximum, minimum, and average temperatures, relative humidity, and weekly product sales, which is shared company-wide. Since 70% of its sales come from seasonal home appliances, weather data is used throughout the entire business operation process, from product planning to sales, logistics, and production. Through this, Shinil achieves about 3 billion KRW in annual cost savings.

Similarly, Kiturami, well known as a boiler company, launched its first window-type air conditioner in 2020 after more than half a century in the boiler business since its establishment in 1962. It sold 10,000 units within a month, securing a foothold in the cooling market. Additionally, it introduced products such as the ‘Ventilation Plus Air Purification System’ with air purification and ventilation functions and a ‘Carbon Monoxide Detector.’ As the global trend to reduce carbon emissions in response to climate change spreads, Kiturami judged that relying solely on boilers, which produce carbon monoxide, had its limits.

Profitable Weather Information, Climate Marketing

Consumers are shopping at a convenience store.
[Image source=Yonhap News]

There are many cases where climate information has been used in marketing to achieve so-called ‘big hits.’ The convenience store industry is a prime example. Since adopting the Point of Sale (POS) system, convenience stores have actively utilized climate marketing to maximize sales strategies.

CU transmits regional weather data to stores nationwide and provides current and next-day weather conditions and forecasts through POS at an average interval of every two hours. Franchise owners can check the weather and sales volume of individual products over the past week. Based on this, they can adjust product types and order quantities according to the forecasted weather for the following week. For example, if ice cream sells best on cloudy days and liquor sales are low, they can increase or decrease product quantities accordingly. CU once increased overall food sales by more than 30% by reducing inventory costs and waste through this system.

The apparel industry is also sensitive to climate. It is known that apparel sales are generally influenced 30% by the economy and 70% by climate. This is why there is a joke that ‘weather is the sales manager.’ The rapid growth of fast fashion (SPA) brands such as ZARA, H&M, and Eight Seconds in Korea, which pursue small-lot, multi-product production, was also influenced by the weather. These brands break away from the typical seasonal product planning and produce items on a monthly or even 1-2 week basis. They quickly respond to the unpredictable changes in Korean weather each year, capturing consumers’ hearts.

‘Weather Consultants’ Who Help Make Money from Weather

A weather company, Kweather, provided a weather sales index to a confectionery company. (Photo by Kweather)

Kim Dong-sik, CEO of K-Weather

As corporate interest in weather grows, a profession specializing in consulting on this has emerged: the ‘weather consultant.’ Weather consultants perform tasks such as ‘weather forecasting,’ which predicts future weather conditions based on meteorological observations; ‘weather appraisal,’ which analyzes the impact of weather on specific events; and ‘weather consulting,’ which analyzes and evaluates weather information to advise corporate management activities.

Dongshik Kim, CEO of Kweather (and Chairman of the Korea Meteorological Industry Association), is one of the top authorities in this field in Korea. He founded Kweather, the country’s first private meteorological company, in 1997, contributing to the establishment of business models utilizing weather information and the spread of weather management in Korea. He is also the person who first coined the term ‘weather management,’ which is the title of his 2006 book.

CEO Kim said, “Due to climate change, weather has become one of the three major risk factors in corporate management,” adding, “Not only are the number of weather consultants increasing, but now companies and local governments even hire their own weather consultants.”

Kweather currently provides weather management consulting services to over 4,000 companies. Paris Baguette has been receiving weather sales indices from Kweather since 2012. Through this, they confirmed that cream bread sells well in hot weather, and oily pizza bread sells well on rainy days. This is the background behind the saying in the bakery industry, ‘Bake more pizza bread when it rains.’ It marked the end of the era when store owners sold bread based on vague ‘gut feelings.’ CEO Kim predicted, “Sales differences caused by the ingredients in convenience store lunch boxes or kimbap are even affected by weather. Weather management and related industries will grow further in the future.”