As soon as the July 4 holiday ends, families often switch their spending intentions toward back-to-school. A recent survey by JLL found parents plan to spend 21.8% more on back-to-school shopping this year, a good sign for retailers in a tepid year for discretionary sales.
The JLL survey is an early read on consumer spending expectations. The National Retail Federation will release its back-to-school spending predictions in late July.
JLL also found consumers plan to start shopping early this year to spread out the costs over multiple pay periods. The survey found that parents across all income groups — especially those with higher incomes — intend to allocate a larger share of their budgets to discretionary products rather than school-required items.
“For the second consecutive year, parents are increasing their per-child spending from $390 to $475, despite concerns about inflation,” said Keisha Virtue, senior analyst of Retail Research at JLL. “Our survey demonstrates that parents are prioritizing back-to-school essentials and will continue to play a crucial part in driving consumer spending and foot traffic.”
When it comes to choosing where to shop, Walmart, Amazon and Target remain top choices for parents. Other top retailers include Costco, Old Navy and Dollar General, the report notes. Almost 90% of parents will use physical stores in some way for their back-to-school shopping, emphasizing the continued importance of brick-and-mortar retailers in this sector. Parents will spend more than 63% of their shopping budgets in stores versus online, and this is especially true of high-income shoppers.
BACK TO THE MALL
The report also reveals consumers are looking for sales, deals and coupons, and about 48% of parents will buy fewer products or purchase second-hand to save money. There also is an increase in the number of parents planning to visit multiple stores to get the best deals. The survey found malls have gained popularity for back-to-school shopping, with 6% more parents planning to shop at malls this year. The average budget for mall shoppers is forecast at $656, and 45.8% said they plan to visit four or more stores.
“The mall offers parents a wider variety of options and allows them to have a more comprehensive shopping experience for their back-to-school needs,” said Kristin Mueller, president of JLL Retail Property Management. “With a multitude of retailers offering deals throughout the back-to-school shopping season, we can expect the malls to be a go-to shopping destination this season.”
JLL also found 75% of parents have begun their back-to-school shopping after July 4, and 25% said they began a bit earlier than that.
“We are seeing a positive shift in parents’ shopping habits for back-to-school,” said Naveen Jaggi, president of JLL Retail Advisory Services. “With the hefty rise in parents shopping in physical stores and the availability of multiple retail options, parents are taking advantage of sales, deals and coupons while also exploring different store options to find the best value for their back-to-school needs.”
Data insights firm Resonate also recently surveyed consumers regarding back-to-school spending and found that 14% of respondents plan to look for discounts on everything from pencils to apparel. The summer sales events from giants such as Amazon, Target and Walmart are also designed to draw in bargain hunters.
Resonate reports that 70% will purchase clothing, 45% plan to buy personal items and 31% cited electronics on their back-to-school shopping lists. The top retailers that respondents cited as shopping destinations included T.J. Maxx, Kohl’s and Aldi. Aldi will feature back-to-school items in late July offering families savings on private brand accessories and supplies.
SALES TAX BREAK
Arkansas will hold its sales tax-free weekend Aug. 3–4, providing sales tax exemptions on certain electronic devices, school supplies, art supplies, school instructional materials and clothing. All retailers are required to participate and may not charge tax on items that are legally tax-exempt during the sales tax holiday.
Amy Wagner with Allworth Financial said early July is not too early to begin shopping for back-to-school items because procrastination does not pay especially when retailers are holding summer sales, and states will also offer tax-exempt weekends that help family budgets go farther.
Wagner suggests families make a list now of items they know they are going to need. She said families can reuse school items from one year to the next. She suggests families collect all the unused pencils, crayons and other school supplies at the end of the school year and store them away until the fall semester and that will cut down on some items.
“Because back-to-school can kind of creep on us, it pays to think ahead for these more expensive times in the year. I like to invest in a sturdy backpack that can be used for multiple years. We also tend to shop the summer sales for shorts and T-shirts that kids will need to wear through September and into early October. Families can put off buying those hoodies and jeans until they go on sale in the fall,” Wagner said in her blog post.
Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Firebend.