After a triumphant return to spending during the back-to-school season in 2021 and 2022, parents took a step back from spending on indulgences in the face of inflation last season, a trend that experts say will continue this year.
According to Deloitte’s annual back-to-school consumer survey, conducted this spring with more than 1,000 parents of at least one child attending school in grades K through 12, financial concerns will cause spending to remain flat. The report estimates back-to-school spending to reach approximately $586 per student for a collective $31.3 billion. This shift is down $11 from 2023 but still $57 higher than spending seen in 2020.
Deloitte’s researchers said the challenge this year will be for parents working to balance between fulfilling their child’s needs and splurging on desired novelties. At the same time, the cost of school supplies continues to rise, having increased almost 25 percent over the past four years, according to the Bureau of Labor Statistics’ Consumer Price Index.
“We expect back-to-school spending to be flat to down modestly when adjusted for inflation, mainly driven by middle-income families juggling financial priorities and ongoing inflation perceptions,” said Stephen Rogers, managing director at Deloitte Insights Consumer Industry Center, Deloitte Services LP. “Retailers can expect headwinds to volume and loyalty as consumers seek to save money. However, wanting to please their kids, retailers will likely have opportunities to harness the indulgences parents are willing to make.”
Parents told Deloitte they would plan to decrease spending within the technology category (decreasing spend by an average of 11 percent) while increasing spend on other categories including personal hygiene and educational furniture by 22 percent. Notably, planned budgets for clothing and school supplies remain unchanged year-over-year.
Even with financial concerns, however, 85 percent of parents said they would “splurge on their child’s must-have back-to-school products.” Additionally, 80 percent of parents said they plan to enroll their children in extracurricular activities with the average spend reaching $582 per child.
When deciding how, when and where to shop, survey respondents told Deloitte that value was the top factor. Similar to findings last year, parents said they plan to take advantage of early discounts (66 percent). Fifty-nine percent of respondents said they believe the best deal occur earlier in the season, while 41 percent said the best deals occur later.
On average parents said they plan to shop across 4.7 formats to hunt for deals. And with 62 percent of respondents reporting they have a fixed budget many will sacrifice loyalty to brands and retailers to prevent overspending with 67 percent reporting they will “shift brands if the preferred brand is too expensive,” 62 percent reporting they will “shop at a more affordable retailer” and half reporting they will “shop for private labels over name brands.” Technology like social commerce and GenAI were also cited by parents as tools they would utilize to find savings.
As these findings underscore the “need for retailers to offer incentives to keep shoppers engaged,” Brian McCarthy, principal, of retail strategy at Deloitte Consulting LLP, said that as families search for deals and prioritize value and convenience to save, the “dynamic creates an opportunity for retailers to take some of the anxiety out of the season by extending loyalty programs and incentives. In addition, building a seamless omnichannel approach could better position retailers to see consumers coming back throughout the season.”
Back-to-school shopping is getting an early start to head off rising prices.
Drazen – stock.adobe.com
Notably, as back-to-school shopping ramps up early this year and Prime Day sales launch alongside sales from other major retailers, data from the latest EY Future Consumer Index report finds similar sentiments and developing behaviors. Key findings include attention to early bird discounts with 45 percent of consumers reporting using a discount code or voucher while online shopping in the last six months. Early bird discounts, said the authors of EY’s report, will be a powerful incentive for back-to-school shoppers to shop early and will allow retailers to smooth out demand or reduce last-minute rush.
EY’s report also suggests implementing price matching guarantees where by matching lower prices offered by competitors retailers reassure their customers that they are receiving the best deal. This strategy, said the authors of the report, also helps to build trust and prevent shoppers from looking to other retailers. Further, the report advises retailers to take advantage of brand apps to build loyalty through loyalty promotions or exclusive deal offers. Seventy percent of consumers said they would join a company’s loyalty program for incentives or free shipping.
Acknowledging the significance that the back-to-school shopping season can have on a retailer’s business, Nikki Baird, vice president of strategy and product at Aptos, said that while back-to-school gets the attention of a major spending period, “it doesn’t always get due recognition for the unique role it plays in nurturing consumer trust and delivering on store expectations. Shopper emotions run high during the back-to-school season, driven by the nerves kids feel when entering a new school year and the stress parents feel over making that transition as smooth as possible.”
With that in mind, Baird said there is an “unmatched opportunity for retailers to play a special role in elevating the sentimental moment that takes place between child and parent in preparation for a strong school year. If retailers deliver a subpar experience during the back-to-school season, it will negatively impact their standing when consumers consider their holiday shopping plans.”
To get the back-to-school formula right, Baird said that before consumers walk through the door a company should do three things:
- provide online resources that help families easily plan their visit;
- predict what customers will need by focusing on the right assortments, product displays and staff coverage, and
- host summertime community activities and pop-up shops in family-frequented venues ranging from festivals to sporting events.
During a consumer visit, she said, companies should then: incentivize customers to exchange personal data for better shopper experiences with valuable offerings, such as mobile app guidance to locate store items or local school district shopping lists; make buying decisions easier with relevant product suggestions about customers’ buyer history and profiles; prioritize customer engagement and upselling to capture increased loyalty and spend, and get customers in and out for easy browse, try and buy experiences, with features such as clear assortment options and good-better-best selections, mobile checkout and endless aisle capabilities.