White Night is Coming to Bendigo

White Night is Coming to Bendigo: let’s hope the weather is good

Traders know the sun brings out people to shop and, when they do come out, they often spend more. This has been shown through anecdote and through survey-based research.

Now we have access to daily bank transaction data, we can evaluate it a little more accurately and see if we can derive a simple rule of thumb.

Daily Spendmapp data for the City of Greater Bendigo in regional Victoria, when matched with daily temperature and rainfall shows that, for local cafés, restaurants and entertainment venue, a really wet weekend will cost local traders around $5,000 in visitor spending.

When it’s a cold and wet winter weekend, it costs about $5,200 to these traders and when it’s a really hot summer weekend, there will be an average of $13,000 less through the till.

The data also shows that event weekends bring in an average of 32% more spending from visitors and 11% from residents, but not when the weather is too hot or too cold. Visitor spending will still be higher, but only by about 10%.

Bendigo is going to host White Night on Saturday 1st of September. The same time last year was a little colder than average and, as a result, an unusually low spending Saturday for visitors to Bendigo.

Let’s hope the weather is a little better this year. Either way, we can take a look at what happens to spending in a few months’ time. I’ll get back to you.

The rules of thumb for weather and visitor spend in Bendigo

Recently I was in Bendigo about one hour north east of Melbourne, Victoria. It was night-time, cold and wet and no one was out. I wondered what sort effect the weather was having on trade. There is research literature on this, which has proven a statistically significant effect of weather on spending patterns. In simple terms, with the sun out, you spend more. But much of this research is based on small survey samples (e.g. from a single retailer or a few products).

Spendmapp data, though, tracks all spending by category for an entire area and for visitors and residents of a suburb, or local government area. With the more extensive data, there is a more complex picture.

The big picture by season and by day of the week

Looking at visitor spend per day on Dining & Entertainment, there are peaks in autumn; spring is not too bad either, but then spending falls away in winter and summer (Figure 1).

Figure 1: Average Daily Spend (Visitors by Season, 2017-2018)

Figure 1: Average Daily Spend (Visitors by Season, 2017-2018)

And Figure 2 below shows, on average:

Figure 2: Weather and Spending Changes

Figure 2: Weather and Spending Changes

This is the sort of seasonal variation you would expect in an inland regional city like Bendigo. It’s cold there in winter and it can be very wet. In summer it can be hot, which means anyone travelling to regional Victoria for a break is far more likely to be heading to the beach.

This all matches with the research I’ve read.

Predicting spending using the weather

It’s one thing to say spending on Dining & Entertainment is higher in autumn, but does this pattern mean we can predict spending patterns by looking ahead to the weather forecast? We have daily temperature data going back decades and daily spending data going back two years and counting.

A simple test for the significance of variation in spending on weekends when it’s either very hot, very cold or very wet shows that:

· Above average rainfall costs about $5,000 in total local visitor spending over the weekend;

· Above average (maximum) temperatures costs about $13,000; and

· Cold and wet weekends cost about $5,200 compared with a warm(er) and dry weekend.

Not exactly predictive, but a statistically valid estimate. Roughly, if it’s over 30 degrees in Bendigo on the weekend, then takings will be down (on average) by about $13,000 across all traders. That’s about 5% of the average weekend visitor spend of around $260,000 over the year. Above average daily rainfall results in a 2% drop in spending. If it’s both cold and wet, then it’s about $11,000 less.

But there is another dimension to this: whether these impacts vary over the year. That is, is an unusually hot summer worse on spending than a cold autumn? The data shows that:

· Cold spring and autumn weekends can reduce daily visitor spending by around $3,500 on weekends;

· Hot summers can reduce spending by about the same; and

· Wet autumns have the largest impact by far, up to $39,000 a day less spending on a wet weekend.

And, finally, what about major events? A search shows they are statistical outliers when it comes to spending. In fact, event days bring in, on average, 32% more in visitor spend and 11% more in resident spend than non-event days (Figure 3).

Figure 3: Impact of events on local spending

Figure 3: Impact of events on local spending

The exception to this is when the weather is bad. We’re only looking at four occasions for the data we have[1], so we need to be a little cautious about drawing conclusions. However, on all four weekends, spending was down by around 20% compared with other event weekends.

The policy response

We have just shy of two years of spending data to work with so far, so it’s a little early to be too conclusive. But, we can say that wet or very cold autumn weekends in Bendigo are not good for business. It’s the peak season for visitors, not least because the weather is considered ideal. And really hot days in summer are problematic as well. Otherwise, though, event weekends are good for business and autumn is the best season for local Dining & Entertainment businesses, especially for the visitor market.

But, if you are looking at a bad weather weekend, maybe think about what can be done to keep the visitors dry and warm. But when it’s hot, it’s even more important. This means shady trees and good air conditioning are essential. If you have an event on, well, cross your fingers.

 

[1] Two cold winter weekends; one an above average rainy spring weekend; and one a cold and wet summer weekend.

Kevin Johnson