Art Van Furniture is gambling on a snowy Super Bowl Sunday in a promotion that could mean $2 million in refunds for some Chicago customers.
The Warren, Mich.-based furniture chain is offering to give shoppers full refunds on any purchases made Saturday at its six Chicago area stores if it snows at least 3 inches on Super Bowl Sunday Feb. 1.
Saturday's "Let It Snow" promotion is a repeat of what Art Van did on New Year's Day, when the retailer said 2,000 customers, twice as many as on a typical day, flocked to its Chicago stores in hopes Super Bowl snow would bring them a refund.
If Mother Nature comes through with heavy snowfall on Feb. 1, Art Van expects it will refund about $2 million to the customers who shopped on Jan. 1 and Jan. 17, said Diane Charles, director of corporate communications for the company.
Art Van sells living room, dining room and bedroom furniture, plus mattresses, at mid-level prices. The refunds, which are available only to in-store shoppers, would include sales tax and delivery fees.
Weather promotions are nothing new.
Last year, Mundelein jeweler P.K. Bennett Jewelers promised to refund holiday customers more than $150,000 if it snowed at least 3 inches between midnight and noon on New Year's Day. But while it snowed quite a bit, the jeweler's insurance company concluded levels didn't meet the threshold.
Sometimes customers win.
In 2010, North Carolina jeweler Perry's Emporium promised holiday customers refunds if it snowed at least 6 inches in Asheville in December. It did, and Perry's — or, actually, its insurance company — doled out $400,000 in refunds, according to published reports at the time.
Betting on weather isn't too risky for retailers, who typically have the odds on their side and their promises covered by insurance.
Insurers review historical weather data and base the premium they charge on the likelihood that the weather event will happen, said Michael Thompson, vice president of underwriting for HCC Specialty, a Wakefield-, Mass.-based company that calls itself the biggest underwriter in the country for weather promotions.
The premium typically costs retailers 2 to 5 percent of the sales they generate during the promotion period, Thompson said.
Generally, there is a 1 to 5 percent chance that the promotion pays off for the customers, Thompson said. He estimates that five of the 100 weather promotions HCC underwrote last year paid out.
Thompson, who estimates there are about 300 weather promotions in the U.S. a year, said it has become an increasingly common tactic among retailers over the past five years.
"Retailers are trying to find more creative ways to draw customers than just offering sales," he said.
While snow is the most common bet, retailers also gamble on high and low temperatures and rainfall, he said. Rainfall is a popular promotion among jewelers, who promise refunds on engagement rings if it rains a certain amount on a person's wedding day, Thompson said.
Art Van's promotion, which requires the O'Hare Airport Weather Station to register at least 3 inches of snow between 12:01 a.m. and 11:59 p.m. on Feb. 1, is underwritten by insurer Lloyd's of London, Charles said.
The purpose, simply, is fun, Charles said, and to give people extra incentive to explore its stores. Art Van, founded in 1959, has 94 stores in the Midwest and plans to open two more Chicago area stores in Downers Grove and Naperville by June.
Based on history, the chance of it snowing at all in Chicago Feb. 1 is about 30 percent, said Bill Nelson, observation program leader at the National Weather Service's Chicago office in Romeoville.
As for 3 inches?
Wait and see.