Photo: iStock | Drazen Zigic
Will Inflation Weigh Less On Back-To-School Spending?
A number of surveys are predicting significant upticks in back-to-school (BTS) spending as parents have grown accustomed to and savvier about inflationary pressures.
“After moderating spending plans last year, parents have a different approach this year – spending more per child despite inflation concerns,” said Naveen Jaggi, president of Retail Advisory Services, JLL, in a statement.
JLL’s BTS survey predicted spending will increase 15.7 percent with over half of parents (55.2 percent) planning to budget more to accommodate higher prices for the same number of items they bought last year. About 69.5 percent will look for sales and deals this year to save money.
KPMG’s 2023 BTS Spending Survey predicted spending, on average, of $377 per child – 21 percent more than a year ago – ranging from $212 per preschooler to $640 for a first-year college student. Over 50 percent plan to spend more per student, primarily due to the expectation of rising prices (82 percent).
“Inflation is pressing consumers to start early and find the deals from retailers willing to offer the door buster promotions that will drive traffic and excitement in a challenging environment,” said Matt Kramer, KPMG consumer and retail sector leader, in a press release.
LTK’s BTS Shopper Study found 81 percent of BTS shoppers plan to spend the same or more as last year with purchase decisions driven by price and quality. Gen Z and Millennials place an even higher emphasis on price than the general population, with 53 percent intending to compare prices across multiple stores, 40 percent waiting for significant sales events and 31 percent ready to switch brands for better-priced items.
Recent data from consumer polling company CivicScience found that beyond inflation, learning loss stemming from the pandemic is a potential driver of BTS spend. Fifty-four percent of parents with school-aged children say a student in their household is struggling in at least one subject.
The Commerce Department reported on June 30 that inflation in May declined to its slowest year over year pace, up 3.8 percent, since April 2021, although it remains twice as fast as the Fed’s target of 2 percent.
Discussion Questions
Discussion questions: What’s your expectations for back-to-school selling and the role inflation will play in the season? Do you see 2023 BTS being any more or less price driven versus 2022 selling?
Poll
Loading …BrainTrust
Ken Morris
Managing Partner Cambridge Retail Advisors
Lisa Goller
B2B Content Strategist
I believe the drivers here are learning loss and parental attempts to make this coming year the best it can be. The pandemic has really impacted students’ academic and social development, and this is an opportunity to modify that learning curve. Parents will almost always reach deeper into their pockets for their kids. We may see some drop in shopping in other segments that are associated with back to school, but not directly related to schoolwork, like clothing, backpacks, etc.
First, what people say in surveys does not always materialize – so I take the views on spending uplifts with a grain of salt. However, a couple of underlying dynamics suggest more will be spend on back to school this year. First, inflation has pushed the price of many back to school goods higher, Second, we’re in a much more normalized environment for school attendance and parents are pulling out the stops to get kids what they need. All that said, most families are still extremely price sensitive and so will be on the hunt for bargains.
Savvy shoppers will use next week’s blockbuster summer sales events to score the best deals on BTS items.
Inflationary pressures have made consumers even more price conscious in 2023 compared to last year.
I would expect spending to be flat or down a tick. “Grown accustomed to…” doesn’t mean that all of a sudden there are extra dollars available after paying for groceries, energy and mortgages. Oh, and rising debt levels. However accustomed people may have become, a wallet full of dollars doesn’t go as far as it did a year or two ago. And if BTS is up, what else is going to go down?
Consumers will be just as cautious this year as they were last. And the Supreme Court’s gutting of the student loan forgiveness plan will make parents even more cost-conscious.
There are back-to-school essentials that have to be purchased, regardless of the inflationary or economic impacts. We will see a far more purpose-driven and price-conscious approach to back-to-school shopping. Parents will find a way to balance their spending to ensure their kids have what they need for the coming school year.
Economic headwinds aside, our kids always come first, and there are essential items that they need. These will replace other discretionary categories, including travel and potentially luxury items. The by any means necessary principle sets in to ensure our kids are prepared for the upcoming school year.
I believe customers will be more price conscious this BTS season- looking for values.
I think retailers need to focus on what bang the customers can get for the value. Overall spending will be limited so the hunt for bargains will be a determining factor in the spend.
This year will be interesting because of the recent ruling to reinstate student loan repayment. Many parent are being put in a position of having to help older children make these loan payments, impacting how they spend on younger children. In addition, the rise of hyper-cheap marketplaces like Temu, Shein, Zara and more will shift spending away from traditional retailers. While parents will continue to buy back to school products, where and how much they spend will look very different.
Consumers will act similarly to 2022 when it comes to BTS spending. There are certain essentials that their children need and they will make sure that they have those regardless of price, but they will also look to find some options which are cheaper when available. There have already been significant channel/retail vertical shifts in the past several months (i.e. more share moving to discounters and lower priced providers) and this trend should continue with BTS. Even though we’ve officially transisitioned to disinflation and deflation in some categories, there is no doubt that the cost of living has increased and consumers will do what they can to spread their BTS budget.
As surveys are showing, back-to-school shopping will not slow down this year, despite inflation. Although consumers are generally looking for ways to save money through sales and promotional offers, parents often don’t skimp when it comes to ensuring their children have the necessary supplies to succeed in school. That said, with inflation increasing the cost of necessary school goods, we will likely see parents taking advantage of available deals to stretch their budgets as far as possible when opportunities allow.
Even is shoppers are cost conscious during BTS, certain things have to be purchased. Unfortunately if parents are in a crunch, the burden of purchasing supplies will fall on teachers/school staff, who many already spend their own money on supplies for their classroom due to small budgets.
Here at Datasembly the trends suggest that we will see continued inflation impacting many commonly purchased products for the BTS season. Last year we leveraged our Grocery Pricing Index to track prices for 37 nationally branded products commonly found in a packed school lunch and saw an average increase of 20.3% year over year. While inflation has curtailed in certain categories, overall pricing will remain elevated. We also recognize that the pricing impacts from the last 2 years have shifted consumer’s shopping behaviors and they are making different product and retailer choices to balance today’s conditions. As manufacturers continue to work hard to navigate post-pandemic inflation and supply issues, consumers will be working harder to compare local pricing and will expect new promotional opportunities to help navigate the BTS season.