Back-to-School Budgets Getting Bigger for All the Wrong Reasons
A new study confirms what everyone’s saying about the back-to-school shopping season: People will spend more this year, but only because inflation’s making everything a little more expensive.
Data released Thursday by the International Council of Shopping Centers (ICSC) reveals that shoppers plan to spend an average of about $60 more getting kids geared up for classes this season than they did the year prior, with budgets totaling about $969 for apparel, electronics, furniture and school supplies.
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Three-quarters of the 1,008 consumers ICSC surveyed between July 14-16 said they planned to spend more than they did in 2022. Sixty percent of those who said their budgets would increase blamed inflation and higher prices, up from just 43 percent last year.
“Consumers are still incredibly aware of inflation,” ICSC vice president of research and public relations at Stephanie Cegielski told Sourcing Journal, even though it’s been 14 months since inflation spiked at 9.1-percent. While some prices have stabilized as supply chain issues improved, many consumer products are more expensive today than they were at inflation’s peak. “During June of last year, prices were 9 percent higher than they were the year before, and now they’re 4 percent above even that level,” she added.
Cegielski said many factors cause consumers to be cautious on spending. “We are seeing the reports that savings aren’t as strong as they were—people saved so much during the pandemic and some of that’s been depleted, in part due to inflation,” she said. They are also more wary about using credit cards to finance seasonal buying. “Consumers are cognizant of not just prices, but [rising] interest rates,” she added.
Groceries remain a significant essential expense, causing many families to look at cutting costs elsewhere, Cegielski said. Nearly three-quarters (72 percent) of consumers said they planned to stick to a strict budget this season, and 91 percent said their back-to-school purchases would be influenced by promotions.
Retailers that offer compelling deals will be best positioned to benefit from the shopping rush, Cegielski said. Seven out of 10 consumers said they planned to patronize discount stores—a 5-point increase from last year. “Target, Walmart, Marshalls and Burlington are all places people are going to be going to cut costs and look for the good deal,” she said. Meanwhile, 42 percent will visit dollar stores for back-to-school essentials. Almost half (45 percent) of respondents said they were looking to purchase items when they’re on sale, and 38 percent said they would gravitate to brands that are generally cheaper, some “trading down” from their usual favorites.
Electronics will eat up the largest slice of consumers’ back-to-school budgets, averaging $261, followed by apparel ($233), furniture ($205), school supplies ($168) and sporting goods ($102), according to ICSC data. Cegielski said the boom in spending on electronics is taking place after “a couple of rough years for the category.” The arrival of the pandemic and remote learning in 2020 saw many back-to-school shoppers investing in tablets, smartphones and computers that now need upgrades. Furniture spending tells a similar story, with shoppers looking to refresh the room redesigns they took on three years ago, she said. Those increases shouldn’t hurt apparel, which consistently sees a “big lift” during back-to-school season. “The great thing for the apparel industry is that kids grow all the time, and quickly,” she said. “They need clothes.”
With back-to-school sales running longer and holiday sales starting earlier, Cegielski said retailers must be strategic about maximizing margins over the coming months, striking a balance between satisfying shoppers with discounts and pushing full-price sales. “Retailers have to really think about how to run sales so they get consumers [into stores] multiple times,” she said. That may be a challenge given that 44 percent of shoppers plan to make their back-to-school purchases later than usual, likely to capitalize on the season’s deepest discounts.
While attitudes toward back-to-school spending will be influenced by inflation, Cegielski believes retailers have reasons to be optimistic about performance. “This will be a regular school year, which is a great thing when you consider what the past three years have looked like,” she said.
