[1-Degree Economy] ① Seasons Disappear... How Climate Change Is Redrawing the Industrial Landscape

Sales Surge for Iced Coffee and Beer with Just a 1-Degree Rise in Temperature
Disappearing Spring and Autumn... Fashion Industry Adjusts Production and Launch Schedules

Editor's NoteClimate change is reshaping the industrial landscape. In the retail sector, companies are reorganizing their marketing strategies based on even a 1-degree difference in temperature, while the fashion industry is planning products according to weather rather than seasons. Weather data has now become a core indicator in corporate strategy. Climate has become a key variable that directly affects industrial strategy and policy direction, beyond just being an environmental issue. Companies are adjusting every stage of their operations, from demand forecasting to production and distribution, to align with the weather as part of their response to the '1-degree economy.' Asia Economy has examined how the era of weather as data is transforming industries.

"From Monday to Wednesday this week, the average temperature will be more than 2 degrees higher than usual. We will expand our iced beverage promotions and proactively secure inventory of cup ice and carbonated drinks."

At the BGF Retail headquarters in Gangnam-gu, Seoul, which operates convenience store chain CU, every Monday's executive meeting begins with a 'weather report.' Once the executive in charge of meteorological data shares the weekly weather outlook, the marketing, product planning, and logistics departments immediately discuss response measures. This shows that weather information has become central to management strategy.

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Sales Fluctuate with a 1-Degree Change in Temperature... 'Weather Management' at Convenience Stores

The convenience store industry, where sales are highly sensitive to a 1-degree change in temperature, has already deployed climate response systems in practice. CU, Seven-Eleven, and others manage separate data for the 'critical temperature' of each product. For example, when the temperature exceeds 24 degrees Celsius, sales of iced coffee surge; at 26 degrees, beer; at 27 degrees, ice cream bars; and at 31 degrees, tube-shaped ice cream. Sales of bottled water and sports drinks rise significantly when temperatures are above 29 degrees.

Based on this data, Seven-Eleven launched its 1,000-won beer promotion in March this year, a month earlier than usual. In just two weeks, 400,000 cans were sold, marking a successful campaign. This is a representative case where marketing based on meteorological data has led to tangible results. According to last year's monthly beer sales index, the index started to exceed 100 in April, and during the summer peak in August, it rose to around 130 compared to the average. A sales index above 100 means sales are higher than average, while below 100 means sales are correspondingly lower.

Convenience stores are immediate-purchase channels where sales are determined by foot traffic. When it rains, Makgeolli, pancake ingredients, and umbrellas sell well; when it's hot, refrigerated beverages and ice products are in high demand.

Since 2001, CU has operated a 'weather information utilization system' using data from the Korea Meteorological Administration. Weather forecasts and sales data for each store are transmitted to the POS system every two hours, allowing store owners to adjust their daily order quantities in real time. A CU store owner in Gangnam-gu said, "By adjusting order quantities according to the temperature, I am also reducing the disposal rate."

Seasonal Products Disappear... The Fashion Industry's 'Climate Response'

The fashion industry has started to move according to 'climate' rather than seasons. Traditional concepts such as 'March = spring, June = summer' have already become meaningless. With shorter springs and autumns, longer summers, and winters arriving later, the fashion industry is struggling with inventory burdens. This is because companies are unable to accurately determine how much to produce and when, leading to accumulated inventory.

Last year, extreme abnormal weather rendered all predictions inaccurate. Companies that increased their stock of winter coats and padding in anticipation of a severe cold snap suffered losses as temperatures remained above 20 degrees Celsius through November, preventing timely sales of winter outerwear. Although a severe cold spell hit in January and February, the late cold did not stimulate consumer spending. With the mindset of "spring is just around the corner, let's hold out a little longer," fashion companies had to lower their margins even further to sell products.

The failure to predict seasons due to climate was directly reflected in financial indicators. For example, Handsome's inventory-to-asset ratio rose from 25.5% in 2023 to 35.3% in the first quarter of this year. Shinsegae International's ratio also climbed to 25.8%, up from 23.3% in the same period last year. Meanwhile, Misto Holdings still has 953.2 billion won in inventory assets, accounting for 16.5% of its total assets.

Shinsegae Department Store Yeongdeungpo Branch 6th Floor Sports Store. The department store floor atmosphere has been completely transformed for the vacation season. Photo by Im Hyesun.

The fashion industry's response to the climate crisis is accelerating. The Korea Fashion Industry Association is developing a weather prediction platform using artificial intelligence (AI). The goal is to enable member fashion companies to utilize meteorological data in relevant areas. Park Youngsoo, executive director of the Korea Fashion Industry Association, explained, "Of all industries, few are as affected by weather as fashion. Since fashion companies are struggling with weather forecasting, there is a consensus on the need to develop a platform that provides access to weather data."

Individual fashion companies are also strengthening their own responses. In women's apparel, which operates a multi-item, small-batch production system, companies are responding to inventory issues with a just-in-time production system. Shinsegae International's 'Studio Tomboy' introduced a 'monthly drop' system this January, releasing products as mini collections every month or week. After placing small orders, they monitor sell-through rates to decide whether to reorder.

To cope with longer summers, companies are devising more detailed summer strategies. Beanpole, the fashion division of Samsung C&T, plans to expand from the traditional four-season system to a seven-season approach, adding early spring/early autumn and midsummer. Kolon FnC has doubled its supply of summer T-shirts and shirts compared to last year. LF has also moved up the launch of spring and summer products by about a month to mid-January, and is already selling short-sleeved items from February.

Department stores are also joining forces with the fashion industry to respond to abnormal weather. In early June, Shinsegae Department Store's Yeongdeungpo branch completely transformed the atmosphere of its 6th floor sports store for the vacation season, moving up the vacation season by about a month from the usual June schedule. A Shinsegae Department Store representative said, "For seasonal clothing, sales fluctuate greatly depending on the weather, so we have decided to flexibly operate special exhibitions and event periods according to weather forecasts." Department store buyers are also discussing with fashion companies to coordinate marketing timing and duration, and are considering bringing in more all-season clothing that is less affected by weather.

Fashion sales account for more than half of total department store sales, making it a core area. However, faced with the major challenge of abnormal weather, the fashion sales growth rate at major department stores such as Lotte and Shinsegae has remained in the 0% range so far this year. Although product prices have risen due to increases in raw material, labor, and logistics costs, the stagnant sales growth rate indicates a significant decline in fashion customers. An industry insider commented, "In the past, fashion companies supplied products in line with retailers' marketing, and joined discount events according to the season. Now, with the climate crisis causing a downturn across the fashion industry, both manufacturers and retailers are undergoing changes."