PORTLAND, Ore. (TheStreet) - When retailers and restaurants rely on sun and fun to drive the majority of their sales, the approaching winter can be especially harsh.
No retailer has it particularly easy when Labor Day passes and the kids get out of school. While holiday sales help a bit, the fall and winter months that bookend them are some of the bleakest on the retail calendar. As the Census Bureau makes abundantly clear, shoppers since the recession have no problem spending during the summer months and in much of November and December heading into the winter holidays, but basically freeze spending from January through April and go into a brief hibernation in September and October.
It's why you see Halloween decorations on the floor at Costco in early August and Christmas decorations there and at Wal-Mart, Macy's, JCPenney and elsewhere just after Labor Day. It's also why stores push their after-Christmas sales in January and car dealers tout Presidents Day deals in February. The winter weather is bleak and the spending is miserable. If you're considered a "seasonal" business, however, that spending is just about nonexistent.
That doesn't fly in an ever-connected global marketplace that just doesn't account for downtime. As a result, companies that used to be just fine waiting for May and holiday sales to crank up find themselves looking for ways to fill their retail calendar. The folks at market research firm IBISWorld looked into seasonal industries and found five that have adapted to changing times.
Roller coasters, water parks, drive-through safaris: Just about none of those are particularly fun during the fall and winter, when their youngest patrons are stuck in school and older customers have better things to do than freeze on high-speed, high-elevation rides.
The larger amusement park chains get around this by setting up shop in warm-weather locations and letting the shivering masses come to them. When school schedules or slow vacation accruement get in the way, chains including SeaWorld, Universal and DisneyParks simply slash prices and offer hotel deals.
That just doesn't work if some of your biggest parks are in the Northeast or along the Great Lakes. Six Flags, which operates 16 amusement parks in the United States and holds a 6.4% market share, earns 80% of its revenue between Memorial Day and Labor Day. It's a similar case for Cedar Fair, which operates 11 amusement parks in North America and has one of its largest, Cedar Point, right on Lake Erie in Sandusky, Ohio.
So how do you get around it? Well, you could either try to boost peak-season revenue by offering tiers of season passes to increase visitor volume. Or you can do what Cedar Fair did and open an indoor water park such as Castaway Bay, which sits right next to Cedar Point. Six Flags used a similar tactic in Queensbury, N.Y., when it opened the indoor White Water Bay just across from its Great Escape amusement park near Lake George.
Summer tans fade, but fear is forever.
Sunscreen manufacturers put out their lotions, creams and sprays as soon as the warm weather hits to combat harmful, cancer-causing UV rays and help prevent sunburn. In the U.S., sunscreen manufacturers including Johnson & Johnson, Procter & Gamble and Bayer AG bring in $382.4 million from their largely summer-based sales.
But those companies have gone through great pains to inform the public that sunburn and melanoma are year-round concerns. Sunscreens and other similar products are still highly seasonal highly seasonal purchases, and even reflected sunlight from snow during skiing and snowboarding season hasn't done much to stretch sales beyond the late winter through midsummer months.
As a result, more companies are trying to market sunscreen products more like skin lotions by highlighting the various nutrients in each along with pointing to studies advising sunscreen during non-summer months — especially on the slopes and in high-altitude areas during winter. Additionally, more evidence supports nonsummer months as an important time of year to continue routine use of sunscreen during outdoor activities. Studies have shown that dangerous overexposure to UV radiation can still occur during the coldest months, particularly in high-altitude areas and locations where UV rays can be reflected by the snow. For skiers and snowboarders across the country, sunscreen may soon join helmets as an essential item to grab before hitting the slopes.
You'll notice that Dunkin Brands' Baskin-Robbins, Unilever's Ben & Jerry's, Coldstone Creamery and even some locations of Berkshire Hathaway's Dairy Queen don't just turn out the lights and board up the windows once summer is over.
For some — especially DQ — the answer is to diversify into other food items that are in demand long after the warm weather cools down. For just about everybody else, the answer is somewhat more straightforward: Sell your ice cream elsewhere. Just this year, Baskin-Robbins decided it was time to start selling its brand of ice cream in supermarkets nationwide. Ben & Jerry's is wondering what took them so long, while Northeast restaurant chain Friendly's had a 7,500-supermarkets head start that included a new contract with Wal-Mart.
In Coldstone's case, it went with the old Carvel model of offering ice cream products such as cakes that people would want year-round. Throw in an online ordering option, and it's fairly easy to pick up a custom ice cream cake even when it's chilly outside.
Beer is around all year, but there's no question summer is beer's peak sales season.
When the 30-packs show up on shelves and the beer coolers come out of storage, the whole industry gets a boost. Last year, the beer industry made between 14.5 million and 16 million barrels for the first four months of the year. By the time Memorial Day came around in May, that number was up to 18 million. That million-barrel bump from April to May has been constant since the recession, but was a 4 million-barrel leap in 2008.
The slide down is fairly steep, however. Beer production that's still around 17 million barrels in August collapses to closer to 14 million by December and doesn't get a big boost until around St. Patrick's Day in March. So how do you get through? Seasonals, and lots of them. Market research firm Symphony IRI points out that 15% to 25% of all beers sold by small craft brewers including Boston Beer's Samuel Adams brand and the Craft Brew Alliance's Redhook, Kona and Widmer Brothers brands are seasonals. In the fall and early winter, those beers become especially important as pumpkin beer and other fall seasonals become craft beer's best sellers.
They've become so popular, in fact, that even larger brewers including Anheuser-Busch InBev and MolsonCoors/SABMiller joint venture MillerCoors have begun producing increasing numbers of limited-release seasonal beers.
If you didn't figure this out Labor Day weekend, home and garden stores don't exactly fall off of the map once the summer ends.
Chains including Home Depot and Lowe's hit a lull between the summer months and the winter holidays, but really feel the pinch if a winter passes without some severe snowfall. That wasn't so much of a problem for the big chains this year, as the Polar Vortex kept much of the country in need of salt, shovels and snowblowers.
Those home improvement stores have started hedging by becoming big players during Black Friday and unloading some of their rotating appliance stock for deep discounts during that time. Combined with a larger array of staple items including toilet paper and cleaning supplies, that more intense approach toward Black Friday and post-holiday sales is part of a push to make home and garden shops relevant year-round.
— Written by Jason Notte in Portland, Ore.
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