Deloitte: Inflation has major impact on back-to-school shopping

7/11/2023

School supplies will be a big back-to-school seller.

How much consumers spend on back-to-school – and on what products – will be shaped by the effects of ongoing financial uncertainty.

According to the new Deloitte “Back to School Survey,” back-to-school spending for K-12 students is expected to decrease by 10% year-over-year to $597 per student. Deloitte expects the overall back-to-school market to decrease year-over-year to $31.2 billion.

This overall decrease includes a 14% year-over-year drop in spending on clothing and 13% year-over-year decline in technology spending. Almost seven in 10 (68%) surveyed parents expect to spend the same or less on back-to-school year-over-year.

Among respondents spending less, 51% attribute it to reduced disposable income (up from 45% in 2022), while 75% of those spending more point to increased prices (up from 60% in 2022).

However, Deloitte projects that spending on school supplies will soar 20% year-over-year. Fifty-nine percent of all back-to-school spending is expected to occur by the end of July, up from 53% in 2022.

And despite a generally negative year-over-year spending shift, the overall back-to-school market is still above pre-pandemic levels, increasing 12.2% since 2019.

Other parent survey findings

Surveyed parents will shop at mass merchants (80%), online retailers (60%), and off-price retailers and dollar stores (both at 33%).
With interest rates up, more respondents plan to use cash (77%, up from 72% in 2022) than credit cards (52%) for back-to-school purchases.
Three in 10 (31%) respondents say their households are in a worse financial situation than last year, and half (51%) expect the economy to weaken in the next six months. One-third (34%) of respondents are postponing nonessential back-to-school purchases, up from 31% in 2022.
More than one-third (35%) of respondents believe better deals occur earlier in the season, while 26% believe they occur later.
Only 34% of respondents say they often find lower prices online. As a result, 74% plan to shop in-store, while 56% plan to shop online for most back-to-school shopping. In-store shopping is preferred for traditional categories, while those shopping for technology largely shop online. One in five respondents are undecided about whether to purchase back-to-school items in-store or online, representing a $6.3 billion opportunity for retailers.
Among respondents who will shop online, 88% are willing to meet a minimum order value (average of $32) to receive free shipping. Six in 10 (59%) restrict their shopping to retailers with free returns, and 68% prefer returning in-store to avoid paying return fees.
Only 21% of respondents plan to leverage social platforms for shopping this year, compared to 35% in 2022.

“Parents are likely to be strategic about their spending to help ensure children are set up for success at the start of the school year by renewing school supplies, but perhaps holding off on new clothing until needed,” said Nick Handrinos, vice chair, Deloitte LLP, and U.S. retail, wholesale and distribution and consumer products leader. “It's not all bad news for retailers with many parents willing to splurge on certain items to treat their children, which may provide an opportunity for retailers."

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