While the term ‘back to school’ often invokes anxiety and fear amongst kids, it almost always brings smile on the face of retailers. And why not! It’s the time parents start back-to-school shopping, and that’s when retailers are busy and fruitful. That’s how the story has been every year, but this time it is different. It could be bigger and longer now!
After more than 15 months of ‘Zoom’ schooling, children are now getting ready to be back to school in this vaccinated ‘new world order’. Colleges are also now planning to bring students back to campuses and with the back-to-school shopping season already beginning, there isn’t a better time for retailers than now. There is a lot of optimism this time as the season has been extended owing to uncontrollable factors. The retailers are now hoping that school-related spending may strengthen and stretch over next few months. Interestingly, the predictions too complement the expectations.
If a survey by National Retail Federation (NRF) and Prosper Insights & Analytics is anything to go by, then back-to-school spending is expected to reach an all-time high in 2021.
What’s the forecast!
The NRF has estimated that families will spend, on an average, US $ 849 on back-to-school items, and if that happens then it will be nearly US $ 60 more than what it was in 2020. It also says that college students and their families are expected to spend around US $ 1,200 on an average this year.
In fact, according to a recent KPMG survey, conducted amongst 1,000 consumers, back-to-school shopping may increase by 9 per cent in 2021. This survey clearly stated that shoppers intend to spend US $ 268 per child this year, whereas the number stood at US $ 247 in 2020. Now that’s a 9 per cent jump! As far as retail categories are concerned, shoppers are expected to spend more on footwear (21 per cent) and apparels (14 per cent) in 2021.
Similar to what KPMG survey says, Mastercard SpendingPulse has predicted the year-over-year (Y-o-Y) sales to grow by 5.5 per cent from mid-July to early September this year, and 6.7 per cent when compared to 2019. Notably, clothing sales, in particular, are expected to soar as adults and kids are all set to return to offices and schools, respectively.
Besides, another survey by Deloitte distinctly tells that parents are expecting to spend 16 per cent more on back-to-school shopping this year, a marked uptick from the 1 to 3 per cent growth rate seen in recent years. To be more precise, the spending is expected to reach US $ 32.5 billion (for K-12 students), or approximately US $ 612 per student. Another US $ 26.7 billion will be spent by back-to-college shoppers, or approximately US $ 1,459 per student.
Overall K-12 spending will increase across categories, with 40 per cent of K-12 households intending to spend more on back-to-school items (up from 22 per cent in 2020), and these majorly include apparels. The forecasts are varying, but what’s common in all the predictions is that back-to-school shopping is definitely going to be on rise in 2021.
Yes, 2021 will be different…
One of the major factors attributed to an extraordinary selling season this year has been the pent-up demand. Last year’s college freshers will be setting up their dorm rooms for the first time this year along with a fresh batch of students. It’s been almost two years’ worth pent-up needs and that’s going to come out in a big way.
For the school kids, parents will be rushing to buy majorly apparels and backpacks – and this year they have some extra money to buy them. As per NRF’s Annual 2021 Back-to-School Survey, about 43 per cent of all back-to-class shoppers said they plan to use money received from Government stimulus to purchase back-to-school products. July has already seen the expanded child tax credits reach bank accounts – and that’s somewhere around US $ 250 every month for kids aged between 6 and 17, or US $ 83 extra (a month) compared to previous-year levels.
In fact the Biden Government has said that US $ 15 billion has already been sent to the families of nearly 60 million children as a part of the expanded child tax credit through direct deposit or cheque. Now, how much one gets depends on both income and the number of eligible children.
Retailers hold onto their hopes…
The season has already begun! If Amazon’s earlier-than-usual Prime Day this year is anything to go by, then 2021’s back-to-school shopping season is all set to be longer, bigger and more lucrative than it has ever been in the recent past.
Most analysts don’t mark the beginning of the back-to-school season until the middle of July. According to one estimate, only 17.1 per cent of back-to-school shopping happens in June, compared to 42.2 per cent in August. However, this didn’t stop Amazon from displaying on its main Prime Day deals page, a collection of back-to-school products under the label ‘School & College’ products.
This year’s Prime Day alone has already been up to expectations. While the event still saw Y-o-Y sales gains of 7.6 per cent, it was short of the double-digit numbers that the shopping event has been witnessing over the last few years. Though a bit disappointing, the US $ 11.19 billion in spending it represents is still good enough to kickstart a shopping season such as back-to-school.
Apparel retailers across the board could use this as a good push. Expectations are skyrocketing, and a wide basket of retail stocks have shot up by almost 49 per cent this year, beating the S&P 500 by almost 32 percentage points. “We are planning for one of our biggest back-to-school and college seasons ever,” says Christina Hennington, Chief Growth Officer, Target.
Apparels, indeed, are likely to make the biggest resurgence as students will no longer be on Zoom calls. And retailers are confident of exploiting this situation. Walmart, the American retail pioneer, has joined hands with tween brand Justice as back-to-school shopping season nears. The US fashion retailer in July announced that the partnership would now see 140 of Justice’s assortment, which includes apparels, fashion accessories, beddings and backpacks, on walmart.com – in addition to these being available on 2,400 Walmart locations across the globe. Reportedly, shoes and pet accessories will be unveiled sometime in September this year, while new products from Justice will be launched seasonally.
With back-to-school shopping season all set to begin, both Walmart and Justice are geared up. Notably, prices for Justice products at Walmart begin at US $ 8 for leggings. While joggers and tie-dye sweatshirts will be available at US $ 13, oversized hoodies are going to cost US $ 18. More on this, Denise Incandela, Executive VP, Apparel and Private Brands, Walmart US, said “It’s the same designs and quality girls know and love, now more accessible than ever.” Even during 2020, Walmart remained America’s top retailer with profits of US $ 550 billion, which is more than 8 per cent from 2019.
Much like the shift in search behaviour, back-to-school product assortments are evolving. American fashion bigwig Gap and its brand Old Navy are replacing school uniforms with playground-friendly face masks printed with kids’ favourite characters. Old Navy will also highlight its active apparel and stretch denim, conceding that the comfort trend will still rule the roost during the fall. The American brand is all set to dress students in comfort-first loungewear paired with inspirational T-shirts.
Fashion retailer Macy’s is up there too with tonnes of incredible deals and discounts for the season, and that includes 65 per cent off on clothes, shoes and more. Kohl’s, under its casual category, is offering basics, denim and footwear from brands like Sonoma Goods for Life, Jumping Beans, SO, Hurley and Vans amongst others for back-to-school season. Its active and athleisure section has comfortable and stylish apparels from well-known brands like Nike NKE, Under Armour UAA, adidas and Champion, amongst many.
Then there’s the renowned shoe and fashion accessory retailer DSW that has ordered lots of adidas backpacks and fewer cartoon backpacks this year, living up to the changing trends. Bed Bath & Beyond Inc., the American retail biggie, too recently unveiled a private label line featuring bedding and bathroom items aimed at college students. The company has also begun offering Klarna and AfterPay, installment-payment options that younger, Gen Z shoppers are more likely to use.
But there will be challenges
Orders for back-to-school inventories are generally placed months in advance, a process that was complicated this year due to shortage of shipping containers and continuous delays at ports. Accordingly, DSW factored in 120 days in shipment time, compared to the usual 90 days. Kohl’s Corp. also moved to bring in merchandise early because of industry-wide supply chain issues.
In this regard, Bed Bath & Beyond said it’s being mindful of inflation on raw materials, labour and freight, and is managing the shipping costs and delays for products coming from Asian ports. In some cases, it might raise prices on consumers, which could leave shoppers disappointed, as more than half of parents said in Deloitte’s survey that they look for discounts.
Retailers have used the pandemic to rebuild their relationship through promotions; many started offering them less frequently and were more comfortable buying less inventory. But that’s going to be tested now as shoppers are trained to expect discounts and schemes.
The season has already begun and it is going to be bigger and longer this time….
The convergence of statewide reopenings followed by overlaying the timing of Prime Day has shown that the season is in for an extension. Consequently, retailers are still placing the orders and business is gaining momentum. That’s much to the delight of suppliers.
Echoing the sentiments, Sanjay Shukla of Triburg, avers, “The Back-to-School orders have been very limited so far and last year the season was bigger. But with inventories piling up last year, the buyers were very cautious. However, now that the picture is clearer and schools and campuses are opening up, we do see that orders can come in by mid-August as enquires on new possibilities for the season are coming in, though very slowly.” Triburg, notably, is big on the back-to-school season for Aeropostale brand.
It’s been a great start to the season, and if the current scenario is anything to go by, then the retail industry is all set for its biggest back-to-school shopping season in at least five years, buoyed by parents and kids fully ready for the in-person classroom experience after a year of virtual learning.
The 2021 back-to-school season is surely going to bring back the lost smile on the face of retailers.
There is no great future without great hope!