The retail industry is poised for its biggest back-to-school shopping season in at least five years, buoyed by parents and students who are primed to snap up gear for the in-person classroom experience after a year of virtual learning.
Spending is expected to reach $32.5 billion, up 16% from 2020 and 17% from 2019, according to a forecast from Deloitte LLP. Retailers are bullish that they can benefit from shoppers’ increased comfort with online shopping, honed during the pandemic, and strong demand for everything from school uniforms to markers.
Still, retailers and brands have ample challenges to navigate in order to score strong sales. Delays at global ports could contribute to shortages of coveted products, and an elongated shopping season that stretches from June to late September makes it harder to plan inventory flow and promotions. Inflationary pressures abound and could alter shopper behaviour, making the season a key test of how well the industry has adapted to a consumer landscape reshaped by the pandemic.
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“Parents are desperate to get these kids back in school,” said Rod Sides, vice chairman and head of U.S. retail and distribution at Deloitte. “And we’re seeing they’ll be willing to spend.”
Technology will be a key area for spending as parents and students continue to spring for gadgets. But apparel is likely to make a resurgence as students will, for the most part, no longer be floating heads on Zoom calls. That’s a welcome change for retailers that saw clothing sales suffer amid stay-at-home living. According to a forecast from Customer Growth Partners, apparel and accessories sales will soar 46% from 2020 during the back-to-school season, stronger growth than it expects from other categories. Overall, CGP expects retail sales to increase 16% from last year in the period from July through September.
Several retailers are expecting sales from this back-to-school season to outpace 2019. Some, including Lands’ End Inc, are betting shoppers will open their wallets early.
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“Parents want to really prepare and be ready,” Lands’ End Chief Executive Officer Jerome Griffith said. “I think your average consumer understands that there’s a supply chain issue in the U.S. based on how quickly the economy has been heating up. They’re shopping earlier to be able to buy what they want.”
Newell Brands Inc., the company behind the Elmer’s and Sharpie brands, is positioned to benefit from a return to the classroom. The company is “really optimistic” about a potential rush as students buy supplies they skipped over last year and parents spend a little extra on name-brand items for younger kids. For college students, larger class sizes due to deferred enrolments could contribute to pent-up demand, said Laurel Hurd, president of the company’s learning and development segment. “We’re excited for a return to normal after all the craziness we’ve been through,” Hurd said.
Shoe and accessories retailer DSW ordered more Adidas backpacks and fewer cartoon backpacks this year, catering to changing trends. Bed Bath & Beyond Inc. recently launched a private label line featuring bedding and bathroom items aimed at college students. The company has begun offering Klarna and AfterPay, instalment-payment options that younger, Gen Z shoppers are more likely to use. Old Navy, the cheap chic retailer owned by Gap Inc, will highlight its active apparel and stretch denim, conceding that the comfort trend will still be king during the fall. Dormify, a startup that sells college decor, said headboards are selling out fast as incoming students look to spruce up their dorms.
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Deloitte’s survey found that 62% of students were expecting to return to in-person school this fall, while 19% of students said they’d experience a hybrid model. The move away from mostly virtual learning bodes well for retailers like Lands’ End that sell uniforms and DSW, which sells hard-sole dress shoes, “Mary Jane” shoes and the boat shoes that some schools require. “All of that stuff is exploding,” said Jim Weinberg, DSW’s chief merchandising officer.
Orders for back-to-school inventories are usually placed months in advance, a process that was complicated this year as a shortage of shipping containers and delays at ports disrupted global trade. 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 industrywide supply chain issues. Bed Bath & Beyond said it’s being mindful of inflation on raw materials, labor 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.
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Such moves could leave some shoppers disappointed, as more than half of parents said in Deloitte’s survey that they will hunt for discounts. Retailers have used the pandemic to reset their relationship with promotions; many started offering them less frequently and became more comfortable buying less inventory. That stance will now be tested during this time of year when customers have been trained to expect deals. Whether or not families will be able to catch a deal will largely come down to the timing of their shopping trips, according to Sides.
“Retailers are probably happy because they will get a higher price point,” he said. The back-to-school season provides important, actionable clues about what products are hitting the mark with shoppers, said Doug Howe, Kohl’s chief merchandising officer.
This time of year 'is one of the more exciting ones because it usually is the preview of what's going to happen for holiday, which is obviously our biggest season,” Howe said. “There are a lot of trends that will emerge that we'll be chasing into holiday.'