Back-to-school Shopping Sees Shift to Value and Brick-and-mortar Preference

Three recent consumer behavior research reports reveal key trends for the back-to-school shopping season. The findings echoed similar reports over the past two weeks that showed shoppers being more price-sensitive due to inflation, which also has households expecting to spend more this year.

Another important find is that when consumers plan to shop, they prefer brick-and-mortar. But it is inflation and its impact on spending that is dominating the consumer mindset.

“Anticipating higher prices for their shopping list than a year ago, consumers expect to spend 14 percent more on average on back-to-school shopping per child this year,” said KPMG in its latest consumer survey, which was conducted in July. “Broadly, consumers are also preparing to spend more this fall on not only essential goods and services, but also on apparel, personal care and restaurants, among other discretionary categories.”

KPMG said the data showed that 42 percent of bts shoppers “anticipate spending more per student, as three-fourths of them expect higher prices.” The report revealed that mass retailers “remain the top choice for back-to-school shopping, [and are] expected to capture a 34 percent share of the wallet.”

Researchers at the firm said lower-income families are shifting their spending from online-only retailers, dollar stores and specialty apparel retailers to mass retailers — which include stores such as Walmart and Target.

KPMG found that households are doling out a higher percentage of income “on monthly living expenses and placing a lower percentage of their income in savings and investments.” According to the U.S. Bureau of Economic Analysis, the personal savings rate was 3.4 percent as of June, which compares to about 5.3 percent in the same period last year.

Duleep Rodrigo, KPMG U.S. Consumer and Retail Sector leader, said despite the financial strains many families are facing and the reshaping of consumer spending patterns due to inflation, “the anticipated increase in back-to-school spending highlights a resilience and adaptability among consumers.”

Rodrigo said understanding these shifting priorities and spending patterns for discretionary items “will be crucial for both retailers and consumers as they navigate a challenging economic environment.” Rodrigo went on to say that shoppers are prioritizing value and adjusting their spending in response to financial pressures. “Businesses must navigate these changing dynamics to effectively connect with their customers,” Rodrigo added.

Looking at overall spending trends, the survey found that more than 80 percent of those polled said they plan to spend more on groceries. “Over half of consumers expect to spend more on discretionary items such as apparel, restaurants, travel, personal services and entertainment this fall.”

Digging deeper into the findings showed that the percentage of monthly income spent on monthly living expenses jumped to 42 percent from 40 percent last year. And 76 percent of respondents said their cost of living has increased by more than 5 percent.

Due to Inflation, Shoppers Turn Savvy

Regarding the total household spending on b-t-s, consumer research from HubBox (the e-commerce software provider), said 77 percent of those polled said they plan to make bts or back-to-college purchases this year, “with the average household intending to spend $1,196.20 during back-to-school 2024 across fashion, stationery, electronics and other academic accessories.”

Due to inflation, HubBox said 73 percent of respondents who are making bts purchases said they’re trying to limit their spending. And 73 percent of consumers polled said they’re trying “to reuse items bought in back-to-school 2023 for this academic year to save money.” Consumers are also being more frugal.

Of shoppers polled, 65 percent said they will only buy discounted bts items, “which is making U.S. shoppers prioritize making purchases during retailers’ discounting days or events,” the report’s authors said, adding that 66 percent of respondents said they held off making bts purchases until Amazon’s Prime Day this past July “to capitalize on deals, while 73 percent plan to hunt for further discounts on additional back-to-school purchases over the Labor Day sales period in September.”

The research showed that customers are calling for faster fulfillment alternatives as 63 percent of last-minute orders for b-t-s supplies are made. And 84 percent of respondents said prompt fulfillment is essential for their b-t-s purchases. Back-to-school shoppers are also seeking convenience, with more than half (55 percent) preferring to be able to pick up their online orders at a convenient location, such as a nearby store or UPS Access Point. A quarter (25 percent) of respondents to the survey said they would return things if deliveries were delayed, further demonstrating the huge impact late deliveries have on consumer loyalty.

Sam Jarvis, chief executive officer of HubBox, said after a prolonged period of price rises, “U.S. shoppers have become much savvier in how, where and when they spend, meaning brands need to fight harder for share of wallet. With shoppers trying to make back-to-school budgets go further, this has put increased emphasis on discounting events, which means the extended back-to-school season is now bookended by Prime Day in July right through to September’s Labor Day sales. And that’s putting extra pressure on retailers’ delivery networks over a longer period, especially when consumers increasingly demand fast, but also convenient fulfillment options.”

Jarvis said due to this extended season, “retailers must prioritize reliable fulfillment to maintain customer trust. And that means offering flexible delivery options that meet consumers’ need for speed as well as ensuring deliveries are made on time and to the most convenient location for each consumer.”

Brick-and-mortar Is Back

In regard to shopping in physical stores, the most recent bts consumer research from the Retail Council of Canada found that “nearly three out of four consumers prefer to purchase school items in-store rather than online, reversing the trend observed during the pandemic, when only 40 percent of purchases were made in-store.”

In a soon-to-be-released consumer and retail executive survey conducted by WWD with support from Placer.ai, the role of physical stores was shown to be critical for retail success. The survey showed that 54 percent of retail executives polled cite space for brand engagement and to connect consumers to retail brands as the primary purpose and value of a physical retail store. And 96 percent of consumers agree that when they visit a store, they look at products even if they were not in the main reason for their visit. The survey also revealed that 23 percent of retail executives are planning to open stores in the next year.

“There is no longer any doubt that the retail apocalypse narrative bubble has burst with a clear recognition that brick-and-mortar retail is experiencing a transformational renaissance,” said Ethan Chernofsky, senior vice president of marketing at Placer.ai. “Importantly, this isn’t because of any single trend, but the understanding by retailers, brands and customers that there is something unique and positive about the in-store experience. The onus is now on the retailers and brands to lean into this opportunity and shape a future of physical retail that expands reach into new revenue channels and embraces the powerful advantages of the store while simultaneously enabling a more streamlined connection with digital channels.”

For more WWD business news, see:

Study Reveals Retailers Miss Out on 85% of Potential Customers Due to Low Identification Rates

These Are the Most Googled Royal Wedding Dresses

How Brands Can Cash In on the Booming Secondhand Market