Retailers Eye Millennials for Growth as Back-to-School Projections Come in Flat
With August now upon us, retailers are now fully immersed in the back-to-school rush. The National Retail Federation released their projections
for back-to-school sales in mid-July, and the estimates point to combined sales of $74.9 billion this year—a roughly three percent rise compared to last year’s final numbers. Excluding back-to-college purchases, however, spending is projected to decrease slightly; the NRF suggests that individual family spending is forecasted to increase compared to 2013, but at the same time, there are fewer students in U.S. households this year, which should keep overall growth lower than what would otherwise be expected.
With that in mind, a number of trends and strategies will likely combine to shape retailers’ strategies and success in the coming weeks:
Shopping sprees are in the rearview:
As was solidified in 2013 and supported
by this year’s NRF projections, day-long back-to-school shopping blitzes are no longer the norm
. Instead, families approach the season with strategic patience, waiting for promotions, comparing prices and spreading out their major purchases. Amid intense competition to lure customers, this new trend in consumer behavior forces retailers to distinguish their product offerings, while also prompting more promotions throughout the summer. In 2013, this led to a surge of early promotional activity during July, followed by a lull in August, and then a brief spike in spending before Labor Day. We’ll see in the month ahead if retailers have learned how to reduce these peaks and valleys, which contributed to sluggish growth from discounted prices last year.
Retailers court Millennials to drive growth:
With their increased exposure to products and promotions via social media, smartphones and other digital channels, the Millennial age group has emerged as a demographic with their own burgeoning buying power. In fact, the NRF projects that Millennials will spend $913 million of their own money on school items this year alone. Now that this generation entirely comprises the back-to-college crowd, they are a driving force in spurring summer sales growth, especially due to their proclivity for major purchases, including electronics and furniture. In addition to Millennials spending their own money this season, retailers understand that this group has considerable input and sway regarding their parents’ purchases, as well.
Online and mobile offer impressive potential:
As retailers look to engage these Millennials and fully bridge the gap between their buying input
and their parents’ buying power
, digital platforms could be the key differentiator for this year’s most successful companies. According to the NRF, more than one-third of back-to-school shoppers and 45 percent of back-to-college shoppers plan to make online purchases. Meanwhile, about 37 percent of smartphone owners surveyed plan to browse with their phone, and roughly one-in-five will make a mobile purchase. With shoppers strategically extending their purchases throughout July and August, it’s the fully integrated omnichannel experience, as well as engagement via digital promotions, that will boost accessibility, provide consistent engagement and ultimately help convert sales during this peak season.
So far this year, the economy as a whole has continued to improve at a slow clip. As consumer confidence levels have trended higher in recent months and hit their highest mark since 2007 in July
, the NRF projections for this year’s back-to-school season indicate that parents may be more comfortable than in 2013, but are still discretionary with their spending. With any hope, the moderate momentum that these initial projections indicate will both materialize and carry forward to the holiday shopping season, when the consumers’ focus shifts dramatically from “the need” to “the want.”