Back-to-School May be Slower This Year, But New Trends Are Emerging

We’re only about a month into the summer, but the back-to school shopping season is already upon us. The National Retail Federation recently released their projections for back-to-school sales, and overall they expect a slower 2013 after a strong 2012. The NRF suggests that many parents are dialing back their spending this year, having purchased items in 2012 that they expect to withstand another year of wear and tear (with apparel being an exception). This has been something of a standard trend since the financial crisis hit in 2008, forcing families to tighten their belts; the back-to-school season has seen ebbs and flows as parents delay purchases to the following year.

But while we won’t have an accurate picture of sales results until after Labor Day, many interesting retail trends have begun to emerge in this year’s back-to-school ramp up that are worth analyzing:
  1. Digital promotion is creating the next generation of price-savvy shoppers. This year, many retailers are hoping to reach teens and preteens via mobile in an effort to influence the way parents shop. The proliferation of tablets and smartphones represents a new frontier for many retailers looking for innovative ways to reach consumers, but at the same time, these devices make price comparison easier than ever for shoppers. Children and teens, while not actively making purchases, are growing increasingly used to seeing prices and being able to easily browse merchandise across multiple retailers. The growing popularity of mobile and online commerce is preparing future consumers to hunt for the best deals, and price competitiveness is going to be a top priority for this generation when they start spending their own dollars.
  2. Department stores are gaining a competitive advantage, but discount retailers remain strong.Unlike their niche, specialty retailer counterparts, department stores serve as a one-stop shop for much of a family’s back-to-school needs. These stores carry apparel, office supplies, backpacks and dorm gear under one roof, in addition to carrying products for a wide age range, from preschool to college. However, price consciousness is still a substantial driver of consumer behavior, and we can expect discount stores to continue to do well long after the back-to-school promotions end.
  3. Back-to-school sales trends are diverging from holiday sales trends. The holiday season has grown increasingly polarized over the past few years, with a burst of strong sales to kick off the season, and then a slowing of sales again until post-holiday markdowns.  Unlike the holiday season, though, this year’s back-to-school season will likely see a steady stream of sales and foot traffic throughout. Many retailers, such as Walmart, are eschewing heavy promotional periods in favor of consistent low price guarantees. However, we may see some spikes. Some states are extending tax holidays throughout the summer, encouraging parents to complete their shopping before these holidays expire. Additionally, we may see a small jump in sales at the end of the season, especially in the apparel segment, as retailers clear their inventories for holiday merchandise.
As the economy continues its slow recovery, we can expect to see cautious pocketbooks influencing back-to-school results in the short- to medium-term. However, this does not necessarily mean we won’t see a strong holiday season to close out 2013. At the end of the day, the incentives driving shoppers to make purchases during these two promotional periods are quite different—the “need” versus the “want”—and the back-to-school season  provides a helpful proving ground for some of the marketing initiatives retailers hope to deploy by the time Black Friday rolls around.