The two key trends for back-to-school selling that could prove combustible for stores: consumers are shopping later and later, and retailers are continuing to ramp up discounting.
“As retailers gear up for the b-t-s season, they are continuing to pull their discounting lever more than ever in 2016,” said Dynamic Action, a retail consultancy.
The b-t-s period is forecast to account for 17.2 percent of full-year sales for many retailers, which is consistent with the last three years.
Retailers are continuing to rely heavily on promotions in the second quarter, with the percentage of orders using a promotion in April up 75 percent over 2015, and up 77.3 percent so far in the second quarter versus the same period last year, Dynamic Action said.
“The antiquated strategy of retailers relying exclusively on their promotional calendars to run their operations has fostered an ingrained need for discounts by consumers, who are increasingly being trained to wait for promotions or discounts prior to making a purchase,” said John Squire, ceo and cofounder of Dynamic Action. “The very best retailers are preparing to answer customers’ needs and beat shareholders’ expectations by focusing on curbing the promotional addiction and utilizing their full data set to better manage inventory and operations.”
With Amazon’s Prime Day scheduled for July 12, which Yory Wurmser, retail analyst at eMarketer, said coincides with the traditional start of the b-t-s season, “I would expect to see a lot of promotions as retailers try to stem Amazon’s sales,” he said.
The promotional frenzy has continued since the Christmas holiday. March, according to Dynamic Action, was an especially promotional month with an 86 percent increase in orders using promotions compared with 2015.
The 2016 b-t-s season will follow a disappointing holiday and winter for many retailers. According to eMarketer, the core back-to-school months of July and August will register a 2.6 percent increase this year, compared with a 1.6 percent gain in the 2015 period. Still, it’s not as robust as the 2012, 2013 and 2014 back-to-school seasons when sales increased 4.5 percent, 5.8 percent and 3.6 percent, respectively.
EMarketer’s Wurmser said there’s been a strong shift online for b-t-s purchases. “Online is pushing some of the shopping season later in the year,” he said. “It creates extra costs and lower margins for traditional retailers. Last year was a big year for buy online and ship to store, or buy in one store and have it shipped to campus or a nearby store. We’re seeing that accelerate this year. Amazon’s one and two-day delivery capability is putting a lot of pressure on retail fulfillment.”
According to eMarketer, $65.42 billion will be spent online during the 2016 b-t-s season, a 15.3 percent increase over 2015, when sales were $56.74 billion, and a 15.2 jump over the previous year.
“E-commerce is pulling up overall retail: 43.3 percent of retail sales growth will come from e-commerce sales in 2016,” eMarketer said. “Although that share will slow from 66.7 percent in 2015, the projected $53.76 billion in additional e-commerce sales this year will represent an absolute increase over the 2015 figure.”
Last year, a b-t-s survey conducted by Prosper Insights & Analytics found that more people in both school and college surveys were waiting to shop until later in the season.
“The trend is continuing on to this year with many parents delaying b-t-s shopping trips until they find the right deal,” said Ana Serafin Smith, National Retail Federation.
The NRF said it recently polled more than 6,800 adults with children in Kindergarten through 12th grade and college and found that 54 percent of households with school-age kids — six to 17 — plan to spend the same as last year, slightly down from the 57 percent who said the same thing last year.
About 37 percent of parents of children heading to college said they plan to spend the same as last year, up slightly from 35 percent who answered the question in 2015.
The NRF study found that of those shopping for school-age children, 37.1 will shop for sales more often and 28.4 percent plan to use coupons more, while 26.2 percent will be buying more store brand or generic products. About 19.8 percent of survey respondents said they’ll spend less overall, with almost the same percentage saying they’ll shop more online.
The numbers aren’t drastically different for back-to-college students. Nearly 31 percent said they’ll shop for sales more often, about 27.5 percent will buy more store brands or generic products. About 20.9 percent plan to spend less, while 17.9 percent will shop more online.
“Even though many parents are planning to spend about the same as last year, they are getting savvy about how they will complete their b-t-s shopping lists,” Serafin Smith said. In addition to using more coupons than last year, “Twenty-five percent of parents will be putting their heads down and studying ad circulars and newspapers for the best back-to-school deals. Parents with college students are pulling out all the tricks from their magic hats, from buying more store brands and generic products, shopping for sales more often and using more coupons.”