Friday, August 05, 2011

Back To School Spending

Is your business stocked up on Back to School items?

Do you have a marketing plan in place to let people know to visit you and not the Big Box Stores?

Here's what parents and grandparents are buying RIGHT NOW:

Top 10 Back-to-School Trends for 2011

Though many kids have only had a few weeks to enjoy the summer sun, parents are already checking retailers' weekly advertisements, websites and social media to find the best deals.

It's back-to-school time, and the National Retail Federation's latest Back-to-School and College surveys, conducted by BIGresearch, feature an in-depth look at current consumer trends. Here are a few insights living within the numbers:

#1: This year’s theme for parents: "Spend where you need to, save where you can." Though the economy is still impacting shoppers (see Trend #3), parents are willing to spend on things their kids actually need. According to the survey, fewer people will be spending in specific categories, but those who are buying in individual categories are spending more than a year ago.

Sound confusing? It's not. What this means is that parents are actually taking inventory of last year's items -- asking kids to get out the backpacks to see if their pencils are still sharp, try on those "old" jeans, and check if the tennis shoes still fit. If there are items children need, parents are certainly receptive to spending. But if last year's clothes still fit or the school supplies haven't totally run out, parents might be holding off on purchases until later this fall or for Christmas.

The moral of the story, kids: It's not going to be as easy to talk mom or dad into things this year -- unless last year's backpack has a broken strap, you'll be bringing it to school this year, too.

#2: It's not about the best price. It's about the best deal. In 2009, it was all about the Benjamins. This year, we continue to see a trend that emerged during last year's back-to-school season: Value matters more than price.

Instead of looking for the lowest common denominator, parents may be swayed to purchase a laptop if it comes with a free one-year warranty or buy the lunchbox that comes with a matching thermos. Today's back-to-school shopper is including factors like quality and service when deciding where to shop.

#3: The economy is still impacting spending. We're all well aware that slumping home values and high unemployment have put a damper on consumer sentiment in recent years, so it's not surprising that families heading out to buy school items are looking to cut costs where they can.

With the extra burden of tuition, college students and their parents are slightly more likely to change their spending plans this year because of the economy and will compensate by buying more store brand and generic products (38%) and doing more comparative shopping online (31%).

Families with students in K-12th grades will curtail expenses by spending less overall (44%) and shopping for sales more often (50%).

#4: In case you missed the memo, department stores are back. When my mom used to take me shopping for school clothes, we went straight to her favorite department store. These days, when moms and dads head out for their school shopping trip, they head straight to their child's favorite department stores. Having done their own homework in recent years, department stores know what their shoppers want and are among the primary shopping destinations for pre-teens, teenagers and college students.

The survey found 47.6% of college shoppers and 57.0% of K-12 shoppers will head to department stores -- the highest percentage for both groups in NRF's eight-year survey history.

Thanks to smart merchandising, creative social media campaigns and a new concept of "private label loyalty" among teen and college-aged shoppers, department stores have an added advantage when it comes to back-to-school shopping. Labels like LC by Lauren Conrad and Madonna's Material Girl are among the labels driving kids to department stores these days.

#5: Electronics. They're not just for classrooms anymore. There was a time when scientific calculators were the only high-tech gadgets on a parent's school shopping list. These days, parents are splurging on everything from mp3 players and smartphones to tablets and laptops for their school-aged children. But this year, the number of people who are planning to buy electronics decreased in both surveys, bucking a trend of steady growth over the last few years.

How? Why? No need to worry. Electronics aren't losing popularity -- just look at the crowd of people hovering around the tablet devices and laptops at any large retailer. The decline in electronics spending for back to school can be explained in several ways. For starters, today's students are incredibly tech-savvy. This year's sixth graders were born in 2000; there's no piece of technology today's students don't know about, haven't used or don't already own.

Also, many parents and college students with their own money to spend don't necessarily view these purchases as "seasonal" anymore -- they are simply buying them when they can or when they want it, all year long. And finally, I would be surprised if many shoppers are waiting for the release of newer models (iPhone 5, anyone?) or until holiday gift-giving rolls around.

#6: This year, it all comes down to crunch time. One of the trends NRF's Ellen Davis wrote about last year was that "the early bird gets the deal." Though we're definitely seeing our share of shoppers who want to start early, many back-to-school shoppers this year are waiting until the last minute. Nearly one-third (31.2%) of parents of K-12th grade students will shop one to two weeks before school starts, up from 24.8% last year.

For retailers, it will be important to move merchandise around in the supply chain, when possible, to take advantage of sales peaks as school bells start ringing in different areas of the country.

#7: Everyone's a winner. This year's back-to-school season has something for everyone. Discounters, who have long touted low prices and one-stop-shopping convenience, will continue to be the most popular shopping destination. Department stores, as mentioned earlier, will see more shoppers than anytime in our eight-year survey history.

But a decent chunk of shoppers will also be visiting electronics stores, clothing stores and drugstores. The Internet also continues to be a force to be reckoned with, as people who shop in multiple channels will spend 40% more than those who only shop in stores -- another reason why retailers should be paying close attention to their websites and mobile apps when thinking about ways to grow their business.

#8: Think beyond denim and crayons. Though you might think first of jeans, tennis shoes and scissors, there's plenty of opportunity in the back-to-school market for a variety of different retailers. Case in point? Before heading to campus, college students will spend a collective $5.4 billion on food -- which boils down to a not-too-shabby $94.60 a student. (That's a lot of granola bars.) They're also plunking down $3.7 billion on personal care items like toothpaste, Tylenol and body wash.

Prepaid cards are also popular among many in this crowd, as parents plan to spend $3.4 billion on gift cards or prepaid cards they can reload when their kids are away from home and need to head to the stores. A variety of retailers can capitalize on this trend, including grocery stores, warehouse clubs and drugstores.

Who takes the cake as the company thinking outside the box the most for back to school this year? It could be Tuffy Auto Service Centers, who is offering free back-to-school maintenance inspections. Every parent wants to make sure their kids' cars are running smoothly before they head out by themselves to college, further proof that there really is a part every retailer can play when it comes to the back-to-school season.

#9: As they prepare for the "real world," college seniors pull back. When you look at how the state of the economy has impacted college seniors, the numbers are staggering. Four in 10 say they will buy more store brand and generic products this year, up from 28.6% last year. When it comes to school items, 38.5% will make do with last year's items, up from 30.6% last year.

And who says 21-year-olds aren't frugal? This year, 44.5% say they will shop for sales more often, up from 35.8% last year. More will shop online as a way to save money (25.1% vs. 18.7% in 2010) and will share or borrow textbooks instead of buying them (21.3% vs. 15.8% in 2010).

Whether these students are pulling back because they didn't make as much from a summer job or whether they're trying to save up for their foray into the real world remains unclear. What we do know is that the oldest in the college crowd are feeling the pinch.

#10: Coming soon to a phone near you -- back-to-school and college shopping. In the next few weeks, NRF will be releasing brand-new data that evaluates how people will use their smartphones and tablets for back-to-school shopping this year. Let's just say there are a lot of people who may buy their school or college needs without ever leaving their house -- and those who plan to venture to the stores will be bringing their Droids and iPhones with them.

(Source: Kathy Grannis, National Retail Federation, 07/29/11)

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