[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 a mere 1-degree difference in temperature, while the fashion industry is planning products according to weather rather than traditional seasons. Weather data has now become a core metric in corporate strategy. Climate has evolved from being an environmental issue to a key variable that directly impacts industrial strategies and policy directions. To adapt to the '1-degree economy,' companies are adjusting every stage of their operations-from demand forecasting to production and distribution-to align with weather conditions. The Asia Business Daily examines 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 stock of cup ice and carbonated drinks."

At the headquarters of BGF Retail in Gangnam-gu, Seoul, which operates the convenience store chain CU, every Monday's executive meeting begins with a 'weather report.' Once the executive in charge of weather data shares the weekly forecast, the marketing, product planning, and logistics departments immediately discuss countermeasures. This shows that weather information has become central to business 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. Chains like CU and 7-Eleven manage separate 'critical temperature' data for 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 ice cream. Sales of bottled water and sports drinks rise sharply when the temperature is above 29 degrees.

Based on this data, 7-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, making the promotion a success. This is a prime example of marketing based on weather data leading to tangible results. According to last year's monthly beer sales index, the index surpassed 100 starting in April, and during the peak summer month of August, it rose to around 130 compared to the average. An index above 100 means sales are higher than average, while below 100 indicates lower sales.

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

Since 2001, CU has operated a 'weather information utilization system' using data from the Korea Meteorological Administration. Every store's POS system receives weather forecasts and sales data in two-hour intervals, allowing store owners to adjust their orders in real time. A CU store owner in Gangnam-gu said, "By adjusting order quantities according to the temperature, we've also reduced the disposal rate."

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

The fashion industry has started operating based on 'climate' rather than traditional 'seasons.' The conventional concept of seasons-spring in March, summer in June, and so on-has lost its meaning. With shorter springs and autumns, longer summers, and winters arriving later, the fashion industry is struggling with inventory burdens. As companies cannot accurately determine how much to produce and when, excess inventory is accumulating.

Last year, extreme abnormal weather made all predictions go awry. Companies increased production of winter coats and padded jackets, expecting a harsh winter, but temperatures remained above 20 degrees Celsius through November, resulting in unsold winter outerwear. In January and February, there was a cold snap, but the late cold failed to stimulate consumer demand. With the mindset of "spring is just around the corner, let's just hold out a bit longer," fashion companies had to lower their margins even further to sell products.

Failed seasonal predictions due to climate were clearly 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 increased 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 has also accelerated its response to the climate crisis. The Korea Fashion Industry Association is developing a weather prediction platform using artificial intelligence (AI). This will allow member companies to utilize weather data and apply it where needed. Park Youngsoo, Executive Director of the Korea Fashion Industry Association, explained, "Among all industries, none is as affected by the weather as fashion," adding, "Since fashion companies are struggling with weather prediction, there is a consensus on the need to develop a platform for acquiring weather data."

Individual fashion companies are also strengthening their own responses. In women's apparel, which operates on a multi-item, small-batch production system, companies are using just-in-time production to manage inventory. Shinsegae International's 'Studio Tomboy' introduced a 'Monthly Drop' system this January, releasing products as mini-collections every month or week. After placing a small order, the company monitors sell-through rates to decide whether to reorder.

To cope with longer summers, companies are devising even more detailed summer strategies. Beanpole, the fashion division of Samsung C&T, plans to shift from a four-season system to a seven-season product planning approach, adding early spring/early autumn and midsummer. Kolon FnC has doubled its volume of summer short-sleeved shirts compared to last year. LF has also moved up its spring and summer product launches 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. Earlier this month, 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 compared to the usual June schedule. A Shinsegae Department Store representative said, "For seasonal apparel, sales fluctuate greatly depending on the weather, so we have decided to flexibly adjust the timing of special exhibitions and events according to weather forecasts." Department store buyers are also working with fashion companies to coordinate marketing schedules and periods, 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 revenue, making it a core area. However, faced with the major challenge of abnormal weather, the fashion sales growth rate at leading department stores such as Lotte and Shinsegae has remained in the 0% range this year. Although product prices have risen due to higher raw material, labor, and logistics costs, stagnant sales growth means that the number of fashion consumers has dropped significantly. An industry insider commented, "In the past, fashion companies supplied products according to retailers' marketing schedules and participated in discount events in line with the season. But with the climate crisis causing a downturn across the fashion industry, both manufacturers and retailers are changing."