When it comes to back-to-school, brick-and-mortar stores still rule — but at a price.
While digital and online are playing a bigger role in influencing purchasing decisions, the mainstay of where parents and students will buy still occurs in the physical store. But there’s a hitch: Forget full-price selling now that b-t-s sets have been unveiled as more families are shopping later in the season. So after a tough first half at retail, the amount of discounting during the b-t-s season could place further pressure on firms’ margins in the second half.
The trends were revealed in surveys by Accenture, Brand Keys and Deloitte on how the b-t-s selling season could shape up.
The conclusions regarding the general role of brick-and-mortar are similar to the ones reached by A.T. Kearney last month in its survey “On Solid Ground: Brick-and-Mortar Is the Foundation of Omnichannel Retailing.” The survey noted that while omnichannel might be the buzz word, it’s still brick-and-mortar that plays the pivotal role in value creation. The survey differentiated value creation — brand-building and product awareness — from value capture, the channel where the sales transaction occurs.
The Accenture study, conducted between June 25 and June 30, surveyed 500 U.S. parents of children entering kindergarten through college. The findings show that 89 percent of parents plan to do “most” of their b-t-s shopping in a physical store. Nearly eight out of 10, or 79 percent, plan to participate in “Webrooming,” or browsing online and then going to a store to make their purchase. This online-off-line scenario is what Accenture refers to as seamless retailing, another euphemism for omnichannel, with respondents wanting to check out what’s available and then going in the store to see the merchandise.
What’s up for debate is how much consumers plan to spend this year for b-t-s.
In the Deloitte study, parents with kids heading back to kindergarten and high school plan to scale back their spend to $543 on average, compared with $672 last year. Those with college-bound students planned to spend $1,223, also down from the $1,360 last year. It found that economic concerns and higher food prices were issues impacting discretionary spending.
In the Accenture study, 41 percent of parents said they plan to spend $500 or more, with 67 percent indicating their spend would be between $100 and $500. In general, 52 percent said they will spend more this year compared with last, while 37 percent plan to spend the same amount or less. According to Dave Richards, global managing director at Accenture Retail, the respondents said they were going to increase their spend either because costs have increased or because of school requirements.
A study by Brand Keys found that households with children in primary and secondary schools plan an average spend of $655 for b-t-s, an increase of 9 percent from last year.
By fashion category, the Brand Keys study found an average spend of $348 for apparel, an increase of 16 percent, and $127 for athletic and dress shoes, up 15 percent from last year.
As for which physical stores parents will be buying from, the Brand Keys survey of 8,300 households from nine U.S. Census regions found discount stores to be the preferred shopping platform at 99 percent, an increase of 2 percent from last year’s survey. Online was at 93 percent, a 30 percent rise, while department stores ranked third at 35 percent, a gain of 5 percent from last year. Office-supply stores rank fourth, while specialty retailers were fifth. Specialty retailers saw a 13 percent increase, or 34 percent of those surveyed stating that was a preferred retail platform.
Accenture found discounters and mass retailers, at 90 percent, are the number-one shopping destination. Office supply stores are second at 63 percent, followed by department stores at 49 percent.
With reports of online shopping growing each year, the focus on the physical store seems counterintuitive, acknowledged Richards. He had one explanation: “Clothing and accessories are still the second-largest category these folks are spending money on [for b-t-s] beyond general school supplies. They want to see and touch the clothes before they buy.”
Among the items to be purchased, the Accenture survey found general school supplies ranked first at 88 percent, followed by apparel and shoes at 87 percent, with accessories such as backpacks at 71 percent rounding out the top three categories.
And while parents may carry the wallet, it’s the children who carry the purchasing power, with 54 percent of parents stating their kids influence 50 percent or more of the b-t-s shopping decisions.
Of those who plan to shop online, 89 percent of parents will use their home computer, with nearly one-third planning to use a smartphone or tablet. About 65 percent who choose to shop online will do so to search for discounts, while 44 percent are relying on the convenience of having orders delivered to their homes.
Richards noted that many parents now are delaying their purchases as they wait for last-minute deals. Retailers can blame themselves for the later start. “Retailers are influencing the purchase decisions [for] later in the season when they start to advertise their promotions,” he said.
The Deloitte survey, which studied more than 1,000 parents with teens or younger kids, had similar findings regarding the preference for physical stores. It found that discount and value department stores were the top shopping destination, while online sites moved up to the number-two spot, tying with office supply/technology stores for the first time. Traditional department stores placed fourth in the destination ranking. The survey also asked more than 450 parents with college-bound students what their plans were, and again the discount and value department stores ranked first. They were followed by book stores/university stores, and then Web sites.
The Deloitte survey also noted that the number of shoppers who prefer to buy online and pick up in a store rose to 40 percent from 33 percent last year. It found nearly six in 10, or 57 percent of respondents, said they plan to conduct research online before buying in the physical store.
Nearly one in five parents with kids in primary or secondary school, or 18 percent, plan to check out social media sites, while two in five, or 44 percent, in college-bound households plan to use the sites for help in b-t-s shopping. The latter aren’t looking so much for discounts as they are checking for merchandise comments and reviews at the retailers’ sites.
In addition, 26 percent of parents expect to complete their shopping after the start of the school year. While 24 percent had planned to start shopping in mid- to late July, at least 34 percent said they will wait until mid-August to start and 17 percent will wait until September.
Alison Paul, Deloitte LLP’s vice chairman and its retail and distribution practice leader, said, “Rather than thinking solely in terms of e-commerce, retailers need to consider how consumers’ digital interactions — not exclusively purchases — influence what they do and don’t buy in the brick-and-mortar store.”
She explained that retailers should look at their online and mobile channels as an opportunity to “drive traffic and revenue at the physical store, rather than viewing it as merely a point of purchase, where it actually tends to deliver lower sales than the physical store as a whole.”
In a study from Baynote, which helps online brands personalize the customer experience, 70 percent of respondents — more than 1,000 consumers were surveyed — said they plan to shop in a physical store, with 36 percent stating they plan to shop online. Also, 25 percent plan to “preview” a retailer’s Web site to get ideas on what to buy, while 24 percent will check out catalogues and store circulars before heading to the stores.
Like the Deloitte finding, the Baynote survey concluded that online ratings and reviews were comparable influencers for both online purchasing and in-store, at 35 percent and 33 percent, respectively.