Retailers expected to ace the back-to-school sales test
Sources: Macy’s, Kohl’s, Target

Back-to-school spending hit a record high last year as parents spent more on items such as laptops and desks for the millions of kids across America forced to attend school virtually due to the spread of the novel coronavirus pandemic. This year, according to a new study, they will spend even more as their kids go back to classrooms, hopefully, full time.

U.S. retail sales are expected to grow 5.5 percent over last year during the July 15 through September 6 back-to-school period, according to Mastercard SpendingPulse. Sales are expected to post a 6.7 percent gain over 2019’s numbers.

“Back to school has always been a prime season for retailers. This year, the broader reopening brings an exciting wave of optimism as children prepare for another school year, and the grown-ups in their lives approach a similar ‘return to office’ scenario,” said Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks. “This back-to-school season will be defined by choice as online sales remain robust, brick and mortar browsing regains momentum and strong promotions help retailers compete for shoppers’ wallets.”

Mastercard sees the growth during the back-to-school season as a continuation of a resurgence in retail over the past eight months. Online will remain a critical component of retailers’ selling toolboxes during the season, even as digital numbers fall 6.6 percent over last year, which still represents a 53.2 percent increase over 2019.

The move towards greater use of technology that gained a hold during the early days of the pandemic will continue this year with spending expected to jump another 13 percent.

What kids wear to go back to their classrooms full-time will also change from 2020. Apparel sales are expected to rocket up 78.2 percent year-over-year and 11.3 percent over 2019, which offers a better point of comparison.

Kids’ clothing needs are expected to benefit department stores. Mastercard is looking for sales in the vertical to improve 25.3 percent over last year and 9.5 percent over 2019. The research emphasizes that, while foot traffic will increase, it remains important for retailers to continue offering buy online and store pickup options as well as other low- or no-contact experiences.

BrainTrust

“As the enthusiasm for a return to ‘normal’ increases and pent-up demand rules spending, the back-to-school season will benefit. “

Kathleen Fischer

Director of Marketing, Körber


“My guess is that every store in every city, and a flood of internet sites, will witness great sales volumes if they are are prepared!”

Rich Kizer

Principal, KIZER & BENDER Speaking


“This year back-to-school season will have the unusual element of parents buying back to work clothes as well as clothing for their children.”

Steve Montgomery

President, b2b Solutions, LLC

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DISCUSSION QUESTIONS: How do you see the 2021 back-to-school season shaping up for retailers? Should retailers go back to their 2019 playbooks for the new year, translate lessons learned in 2020 or come up with a completely new approach for back-to-school?

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9 responses to “Retailers expected to ace the back-to-school sales test”

  1. Dave Bruno Avatar
    Dave Bruno

    Wach for apparel categories for adults and kids to jump in the coming weeks. Parents that can afford it will overindulge kids that will be back to school for the first time in a while, and as the kids get back in school, parents will be able to go back to the office. And their wardrobes will need a refresh as well, after a year in athleisurewear.

  2. Michael La Kier Avatar
    Michael La Kier

    Pent-up demand will likely push Back to School 2021 over the top in terms of sales. That being said, it’s likely we all have a closet full of hand sanitizer and wipes so we won’t be buying those this season.

  3. Jeff Sward Avatar
    Jeff Sward

    Back-to-school will provide a very real window into the current performance of some of the recently weaker players versus those retailers that have been well managed over the last several years. It’s not tough to predict good things for Target and Best Buy. But the retailers that really need to bounce back from weaker performances, both before and during the pandemic, really need to demonstrate that they have learned a couple solid lessons and solid implementations in place. Gap, Macy’s and J.C. Penney come to mind.

    The stock market seems to be reflecting a kind of euphoria around recent valuations assigned to some retailers. BTS is enough of a surge and deep enough into our recovery to give us a good barometer on the real health of the industry. Inflation and supply chain issues may complicate that read, but hey, it’s never easy.

  4. Kathleen Fischer Avatar
    Kathleen Fischer

    As the enthusiasm for a return to “normal” increases and pent-up demand rules spending, the back-to-school season will benefit. Many students will be back in classrooms again and will be outfitted and supplied to the hilt by parents who are thrilled that they are finally back in school.

  5. Steve Montgomery Avatar
    Steve Montgomery

    There will be a lot of demand for back-to-school products ranging from traditional store supplies to clothing. This year back-to-school season will have the unusual element of parents buying back to work clothes as well as clothing for their children. Business casual may be more of the norm in the office today but what they wore for Zooming may not be appropriate for the office.

  6. Rich Kizer Avatar
    Rich Kizer

    I know why BTS purchases will be aggressive and exactly what the retailers want. My niece called last night and told me that all the clothes the three kids had in the house, purchased sometime last year, are now way too small or not “in,” as far as the children were concerned. (Make a note, that’s important.) I know it’s only one customer with three kids, but her purchases will be large, and I think she represents what we will see in stores. My guess is that every store in every city, and a flood of internet sites, will witness great sales volumes if they are are prepared! Happy days are here again — kinda.

  7. Venky Ramesh Avatar
    Venky Ramesh

    Back-to-school season will put additional pressure on the already stressed supply chain – since most apparel is manufactured outside the country. It will be interesting to see how the second-hand market scales up to fill the demand gap.

  8. Gary Sankary Avatar
    Gary Sankary

    I expect a very robust back-to-school season as things return to “normal.” The real trick to successful BTS and back-to-college, which is also a big deal, is understanding when to peak inventories by location based on school/college openings. Peaking too early eats up a lot of valuable floor space that might be better used for other product. Peak even a week to late and you risk missed sales. If I were still planning back-to-school I would certainly look at 2019 and older sales trends to try to forecast item velocity. I’d want to understand local school openings to understand the right weeks. I suspect at least some of the dates will change this year, so a quick poll of local store teams to understand these dates will be important.

  9. Ananda Chakravarty Avatar
    Ananda Chakravarty

    Will definitely echo my colleagues on this thread. Bounce back in apparel, office supplies and electronics. We’ll see sporting goods doing well too. What might be a little different is the nature of clothing and returns. Lots of stockpiling went on, followed by dumping clothes to discounters and liquidators. So the market cycle begins again, but apparel will be buying less as discounters are paying less and either the retailer has stowed away last years apparel or has sold it off at high discounts, so there’s excess clothing inventory in the market. The demand has shifted as well towards WFH apparel so formal wear will be far less a focus. That said, everyone’s anticipating the bounce back and it becomes self-fulfilling at that point for retailers. Watch the TJ Maxx’s of the world doing especially well as they’ve sourced at fire sale prices.

Share Your Opinion

DISCUSSION QUESTIONS: How do you see the 2021 back-to-school season shaping up for retailers? Should retailers go back to their 2019 playbooks for the new year, translate lessons learned in 2020 or come up with a completely new approach for back-to-school?

Leave a Reply

How do you expect retail sales to grade out when the 2021 back-to-school season is done?

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9 Comments
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Dave Bruno
Dave Bruno
Member
2 years ago

Wach for apparel categories for adults and kids to jump in the coming weeks. Parents that can afford it will overindulge kids that will be back to school for the first time in a while, and as the kids get back in school, parents will be able to go back to the office. And their wardrobes will need a refresh as well, after a year in athleisurewear.

1
Michael La Kier
Michael La Kier
2 years ago

Pent-up demand will likely push Back to School 2021 over the top in terms of sales. That being said, it’s likely we all have a closet full of hand sanitizer and wipes so we won’t be buying those this season.

1
Jeff Sward
Jeff Sward
Active Member
2 years ago

Back-to-school will provide a very real window into the current performance of some of the recently weaker players versus those retailers that have been well managed over the last several years. It’s not tough to predict good things for Target and Best Buy. But the retailers that really need to bounce back from weaker performances, both before and during the pandemic, really need to demonstrate that they have learned a couple solid lessons and solid implementations in place. Gap, Macy’s and J.C. Penney come to mind.

The stock market seems to be reflecting a kind of euphoria around recent valuations assigned to some retailers. BTS is enough of a surge and deep enough into our recovery to give us a good barometer on the real health of the industry. Inflation and supply chain issues may complicate that read, but hey, it’s never easy.

2
Kathleen Fischer
Kathleen Fischer
Member
2 years ago

As the enthusiasm for a return to “normal” increases and pent-up demand rules spending, the back-to-school season will benefit. Many students will be back in classrooms again and will be outfitted and supplied to the hilt by parents who are thrilled that they are finally back in school.

1
Steve Montgomery
Steve Montgomery
Member
2 years ago

There will be a lot of demand for back-to-school products ranging from traditional store supplies to clothing. This year back-to-school season will have the unusual element of parents buying back to work clothes as well as clothing for their children. Business casual may be more of the norm in the office today but what they wore for Zooming may not be appropriate for the office.

1
Rich Kizer
Rich Kizer
Member
2 years ago

I know why BTS purchases will be aggressive and exactly what the retailers want. My niece called last night and told me that all the clothes the three kids had in the house, purchased sometime last year, are now way too small or not “in,” as far as the children were concerned. (Make a note, that’s important.) I know it’s only one customer with three kids, but her purchases will be large, and I think she represents what we will see in stores. My guess is that every store in every city, and a flood of internet sites, will witness great sales volumes if they are are prepared! Happy days are here again — kinda.

3
Venky Ramesh
Venky Ramesh
2 years ago

Back-to-school season will put additional pressure on the already stressed supply chain – since most apparel is manufactured outside the country. It will be interesting to see how the second-hand market scales up to fill the demand gap.

3
Gary Sankary
Gary Sankary
Active Member
2 years ago

I expect a very robust back-to-school season as things return to “normal.” The real trick to successful BTS and back-to-college, which is also a big deal, is understanding when to peak inventories by location based on school/college openings. Peaking too early eats up a lot of valuable floor space that might be better used for other product. Peak even a week to late and you risk missed sales. If I were still planning back-to-school I would certainly look at 2019 and older sales trends to try to forecast item velocity. I’d want to understand local school openings to understand the right weeks. I suspect at least some of the dates will change this year, so a quick poll of local store teams to understand these dates will be important.

1
Ananda Chakravarty
Ananda Chakravarty
Member
2 years ago

Will definitely echo my colleagues on this thread. Bounce back in apparel, office supplies and electronics. We’ll see sporting goods doing well too. What might be a little different is the nature of clothing and returns. Lots of stockpiling went on, followed by dumping clothes to discounters and liquidators. So the market cycle begins again, but apparel will be buying less as discounters are paying less and either the retailer has stowed away last years apparel or has sold it off at high discounts, so there’s excess clothing inventory in the market. The demand has shifted as well towards WFH apparel so formal wear will be far less a focus. That said, everyone’s anticipating the bounce back and it becomes self-fulfilling at that point for retailers. Watch the TJ Maxx’s of the world doing especially well as they’ve sourced at fire sale prices.

0