New lessons for retailers on back-to-school shoppers

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New lessons for retailers on back-to-school shoppers

By Louisa Hallett - 07/11/2018
K-12 back to school shopping is expected to reach $28 billion this year.

Retailers may be expecting most back to school shopping to be conducted online, but a recent Deloitte survey suggests otherwise.
 
According to the survey, which consisted of a sample of 1,200 parents of school aged children, K-12 back to school shopping is expected to reach $28 billion this year. Parents surveyed say that they spend an average of $510 on back to school supplies between July and September, with $292 going to in store purchases and only $115 being spent online. Therefore, in-store purchases account for nearly 23 percent of the budget.
 
“The amount people plan to spend and tendency to shop in physical stores for back-to-school are consistent with last year, but retailers need to act fast for that $5.5 billion wild card,” said Rod Sides, Vice Chairman, Deloitte LLP, and U.S. Retail, Wholesale and Distribution leader. “In just one year, previously undecided dollars have shifted dramatically by product category. For example, in 2017, 30 percent of people said they hadn’t decided if they would purchase computers online or in-store and that number shrunk to 20 percent this year, most of it going online. In electronics, undecided spending dropped 10 percentage points, moving primarily into the stores.”
 
What about the remaining 20 percent? According to the survey, respondents are undecided -- leaving $5.5 billion in revenue up for grabs between in-store and online retailers. The survey also found that the heaviest influencers during back to school shopping are children, who account for $21 billion of the $28 billion back to school spending.
 
Parents’ reliance on tools like laptops and social media may have hit a digital saturation point. Among respondents, 49 percent plan to use their desktop or laptop to shop, down from 57 percent last year. Mobile use increased to 53 percent after trailing desktop/laptop use in 2017. Parents’ social media use also appears to be decreasing, with 23 percent saying they plan to use these tools to find promotions, receive coupons and browse products, down from 27 percent in 2017 and 32 percent in 2016.
 
Mass merchants remain as the number one shopping destination for back to school shopping, drawing nearly 83 percent of survey respondents. Other price-based retailers like dollar (38 percent), online-only (36 percent) and off-price stores (32 percent) follow, continuing to squeeze more traditional retailers out of the higher ranks. For example, off-price stores jumped from No. 14 in 2016 to number four this year, while department stores fell from the No.2 position in 2016 to No. 6 in the last two years of the survey. While people plan to visit price-based retailers more frequently, those who shop at traditional retailers like department stores, home electronics and office supply stores make larger purchases at these locations compared with other venues like mass merchants.
 
“Back-to-school shopping tends to be price-focused as parents look for promotions and mass merchants for the best deals,” added Sides. “But when we look below the surface, we notice several distinctions between high and low-income households and the way people shop for specific items like clothing, technology, and supplies. The potential lesson for retailers is that back-to-school may require them to do more than compete on price alone or try to sell across all categories. Survey results show it may be about delivering the best product or experience to customers in specific categories.” Sides added, “This behavior is a continuation of a trend that we uncovered in our earlier research on “The Great Retail Bifurcation.” That study revealed that price-based and premier retailers are far outperforming their competitors in the mid-tier, largely due to a widening income gap among American households that is forcing a behavior shift in how and where people shop.”
 
To see more survey data, click here.