Inflation is weighing heavily on family budgets just as the back-to-school shopping season begins. The National Retail Federation reports that 38% of families admit to having to cut spending in other areas to cover back-to-school costs.
The retail group estimates that consumers will spend $37 billion on back-to-school items this year. Families with children in K-12 expect to hand out an average of $864 this year in school supplies. Back-to-school spending has suffered amid the pandemic as families shift to virtual and hybrid education models. NRF said back-to-school spending would rise sharply from the pre-pandemic year of 2019, with consumers expected to spend $168 more on average than in 2019, for a total increase of $11 billion.
“Families view back-to-school and college items as an essential category, and they are taking all possible measures, including reducing discretionary spending, shopping sales and buying in-store or off-brand items to buy what they need for the upcoming school year,” said NRF CEO Matthew Shay. “The back-to-school season is one of the most important shopping events for consumers and retailers, second only to the winter holiday season.”
Total back-to-college spending is expected to hit a record $74 billion, up from $71 billion last year. NRF said more students and their families plan to shop this year compared to the previous year and plan to spend an average of $1,199 on college or university items, matching the record high of $1,200 in the ‘last year.
Since 2019, total planned back-to-school spending has increased by $19 billion, and consumers are spending an average of $223 more than before the pandemic. Nearly half of this increase comes from spending on electronics and dorm or apartment furniture.
Shay said that, like past holiday seasons, shoppers are starting early to find the best deals and help spread the cost. By early July, 56% of respondents had started shopping for school and college supplies. The survey found that 68% of respondents said they saw higher prices on school items. The main areas where consumers noticed higher prices were clothing, accessories and school supplies.
NRF said 85% of families said they were at least halfway done shopping. The main reasons consumers haven’t checked items off their list are because they don’t know what they need yet and are waiting for the best deals.
The report says 62% of respondents planned to buy Amazon Prime Day deals, and a further 31% said they would seek online sales from other retailers, while 20% are looking to buy from physical stores. .
“We have seen real changes in the way people buy and spend on back-to-school items since before the pandemic. As a result, retailers are also evolving by introducing inventory earlier and expanding back-to-class offers,” said Phil Rist, executive vice president of strategy at Prosper Insights.
Some retail analysts expect the back-to-school season to be somewhat promotional after Target announced in early July that it planned to offer additional discounts to students and teachers during a preparation event that is offering educators a 15% discount on school supplies and other products through September 3. The offer is also available through the Target Circle loyalty program that all teachers, including homeschoolers, can use, those who work in daycares and early learning centers, university professors or college and professional or business personnel with valid identification.
“We know that back to school is a big milestone for millions of families across the country – and we’re here to help by introducing even more ways for customers to save and find everything they need in one convenient place,” said Jill Sando, director of merchandising at Target. “From supplies and stylish apparel to snacks and the latest electronics, customers can count on Target to make the most of their budget, with thousands of items under $10.”
Analysts said Target’s promotion comes as the retailer tries to reduce excess inventory from the previous quarter. Wall Street also expects Walmart and other discounters to entice shoppers with special offers, while trying to protect their margins.
Another Mastercard report predicts back-to-school sales between mid-July and Labor Day will increase 7.5% from 2021 and 18.3% from 2019. The report says purchases in stores are expected to increase by 8.2% over last year.
“Back to school is the second biggest season for retailers and is often seen as an early indicator of retail momentum ahead of the traditional holiday season,” said Steve Sadove, senior advisor at Mastercard. “As growth is forecast, retailers will need to find innovative ways to entice shoppers, as discretionary spending may run out due to rising prices.”
Deloitte’s back-to-school survey found families will spend more even with a pessimistic economic outlook. Deloitte projects back-to-school spending of $34 billion this year, or about $661 per K-12 student. The opening average is up 8% compared to last year.
The survey revealed that 36% of families are concerned about upcoming school-related payments. This is further compounded by expectations that the economy will weaken over the next six months for 54% of K-12 parents surveyed, up from 28% in 2021. A further 57% say they are concerned about the rise back-to-school item costs. , and 30% said their financial situation was worse this year than a year ago.
Deloitte also found that buyers remain concerned about product availability as many retailers continue to grapple with supply chain challenges. Deloitte also warns that higher costs and a lack of inventory could jeopardize brand loyalty, as 77% of shoppers surveyed say they will swap brands if prices are too high or their item is out of stock. of stock.
“Even though economic and inflationary pressures are at the heart of our concerns, parents seem resilient and determined to ensure that their children receive the school supplies needed to succeed this year. Retailers who remain cognizant of this resolve, while being mindful of addressing the lingering economic concerns of shoppers, could gain confidence and position themselves strongly,” said Nick Handrinos, U.S. head of retail and consumer products at Deloitte.
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