Retailers do their back-to-school homework

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Inflation, growing competition and continued consumer adoption of e-commerce are on the agenda for this year’s back-to-school season.

While supermarkets can always rely on back-to-school shopping to drive sales in food categories, non-food supplies pose a significant challenge to traditional food retailers. Dollar stores, mass merchandisers, office supply stores and online channels are all battling for a share of the $100 billion+ sales windfall that includes not just pens, notebooks, a ruler and erasers, but also clothing, home decor (for students) and increasingly, electronics.

This year, the grocery channel will have to fight especially hard to gain market share, given the pressures inflation is placing on many families.

“Inflation will have a big impact on how parents and students shop for back to school and how retailers approach the season,” said Brittany Steiger, principal analyst for Retail Reports and e-commerce in the United States at Mintel, at Supermarket News.

Consumers will adopt value-driven behaviors, which could include picking the best deals and lower spending on discretionary items, she noted.

“Earlier purchase times are also becoming common, and some retailers will turn to big summer sale events to start promoting back-to-school items,” Steiger said.

Meijer

The National Retail Federation estimates overall back-to-school spending, including K-12 and college shopping, at $111 billion for 2022, up from $108 billion last year.

Retailers will likely focus on merchandising basic supplies and prioritize essential items, she said. Private label offerings will also likely be an important part of retailers’ assortments this year.

“Retailers would be wise to offer low-cost options alongside popular brands so parents can easily make substitutions when working from a school supply list,” Steiger said. Other keys to retail success this season that she recommended include transparent price communication and alternative forms of value, such as free shipping for online purchases.

The National Retail Federation (NRF) estimated total back-to-school spending last year at about $108 billion, including sales of back-to-school items such as apparel, laptops, and school supplies. furnishing. Not counting back-to-college sales, spending for K-12 students was estimated at a record $37.1 billion in 2021, according to the survey conducted annually by NRF and Prosper. Insights.

For 2022, the NRF projects total back-to-school spending, including K-12 and college purchases, of $111 billion. Families with children in K-12 plan to spend an average of $864 on school supplies, about $15 more than last year. College students and their families are expected to spend an average of $1,199 on college or university items, matching the 2021 record high of $1,200. Compared to 2019, K-12 shoppers are expected to spend $168 more on average, with college and university consumers spending an average of $223 more.

NRF noted that K-12 and college shoppers plan to focus their purchases this year instead of spreading them across multiple retail destinations as they typically did before the pandemic. Based on its 2022 back-to-school survey of 7,830 consumers, NRF said the top five shopping locations cited by K-12 shoppers were online (50%), department stores ( 45%), discount retailers (40%), clothing stores (37%) and electronics stores (28%). The top back-to-school shopping destinations cited were online (43%), department stores (36%), discount stores (29%), office supply stores (27%) and college bookstores (26%).

Data from NielsenIQ illustrates how back-to-school sales have rebounded over the past year as students across the country have returned to in-person learning. For example, pencil sales across all retail channels increased 21.3% for the 52 weeks ending April 30 after declining 22.2% in the time of year. former. Other common school supplies followed a similar trend, with sales of personal planners and binders rising 16.4% in the past 52 weeks, after falling 24.7% a year ago; highlighters up 20.8% vs. a 14.4% drop a year ago, and sales of manual pencil sharpeners up 24% after a 7.6% drop the previous year.

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Mintel senior analyst Brittany Steiger predicted this year’s back-to-school season will extend beyond the typical late summer months.

Group for convenience

Supermarkets have adopted a range of strategies to capture some of this seasonal category, including boosting the convenience of their online back-to-school offerings. Some have waived click and collect fees to encourage online shopping, and others have bundled supplies into promotional packages.

In recent years, Cincinnati-based Kroger has promoted one-click school supply kits that included pencils, notebooks, crayons and other supplies, based on grade level, to make shopping more convenient and economical. . The retailer’s One Click School Supply Kits included pre-bundled items for grades K-2, 3-5, 6-8 and 9-12, as well as a One-Click School Supply Starter Kit for Preschool .

Notably, Kroger made a more aggressive play for the broader back-to-college market, with a dedicated “college shop” area on its website. Deals include big-ticket items like desks, small appliances like coffee makers and slow cookers, and “essentials” like hangers and plastic storage boxes.

Back-to-school also presents an opportunity for tie-ins throughout the store, and retailers often look to pair items from other categories with non-food supply purchases.

In fact, Minneapolis-based Target has become known for back-to-school departments in its stores that combine apparel, home furnishings and basic supplies in a one-stop format. The retailer also takes an aggressive stance on value, including promotions such as its Teach Prep event, which offers teachers 15% off select school supplies.

Target is also looking to make shopping as convenient as possible with its School List Assist program, which lets shoppers purchase their entire school-specific supply lists online or in-app with just one click. or buy the items individually.

The company credited its back-to-school and back-to-university seasons with a strong start last year with better-than-expected second-quarter sales.

The back-to-school period extends

Mintel’s Steiger predicted that the back-to-school season will extend beyond the typical late summer months.

“Back-to-school shopping will still have a pre-season peak, but consumers will expect a stronger promotional calendar that balances spending on tech, school supplies and apparel with shopping cycles at different times throughout the season. ‘year,” she said in a statement. report.

Steiger also cited a shift in consumer attitudes around topics such as diversity and inclusion, as well as support for schools and teachers.

“Consumers today are increasingly calling for authenticity, inclusivity and community support from brands and retailers,” she said. “When it comes to back to school, more and more retailers are doing their part to support the community at large through charitable giving programs that support teachers, students and teachers in one way or another. schools.”

Next-level e-commerce poised to boost BTS

Emerging digital platforms such as live streaming and social commerce are expected to capture a growing share of the back-to-school market, according to Brittany Steiger, principal analyst for US Trade and Retail Reports. United with the research firm Mintel.

“The rise of e-commerce and digital shopping options has been a game-changer for busy parents, who have enjoyed the convenience of doing their school shopping from the comfort of their own home,” she explained.

Retailers and brands have the opportunity to leverage live streaming and social commerce as a way to complement and add convenience to in-store and online shopping experiences, Steiger said.

“The college market is particularly ripe with opportunities for live streaming and social commerce,” she noted, adding that Mintel research shows that students primarily look to social media and their friends to guide their studies. purchase choice.

“Retailers and brands should use short-form video platforms like TikTok to connect authentically with students, perhaps inviting them to share their moving-in day shopping preparations,” Steiger said. “User-centric content puts students in the creator’s seat and allows them to connect with their friends and share the products and brands they buy when they return to campus.”

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