Keith Jelinek, managing director in the retail practice at Berkeley Research Group (BRG).
Retailers must adapt to a unique set of supply chain, technology and consumer demand circumstances for the 2022 back-to-school season.
Chain Store Age recently spoke with Keith Jelinek, managing director in the retail practice at Berkeley Research Group (BRG), about how they can best ensure profitability and customer satisfaction in their back-to-school campaigns.
What sales trends do you see for back-to-school season this year? On a positive note, this looks to be a back-to-school season in line with 2019, when parents anticipate being able to send their children to school for the full year, not one that is interrupted with start and stops due to the pandemic, as experienced the past two years. With inflation pushing the total basket up, parents anticipate spending more than $600 per child.
As for product trends, denim will be the main element of the wardrobe since it is timeless and versatile. We will see a blend of some retro styles, high top sneakers, long sleeve pullovers with hoodies, with a splash of flowers and cartoon prints, as kids want their wardrobes to have some pizazz. Ultimately, this will be a back-to-basics as parents and teens work together to make the clothing budget stretch as far as possible.
Regarding specific products, backpacks are always a large contributor of the spend, and this year we see more schools requiring see-thru backpacks. Among other supplies, sustainability continues to gain momentum, and we will see more products made from recycled materials.
What supply chain trends do you see for back-to-school season this year? The supply chain is still in the process of recovering, and some bottlenecks still exist. In order to avoid out-of-stocks, many retailers began landing products 45-60 days earlier than previous years. Even though many products are not yet back up to their previous service levels, I think most retailers have done a nice job overall, and consumers should have plenty of options to choose from.
How can retailers use technology and strategy to maximize their back-to-school performance? Retailers must continue to offer a 360-degree omnichannel consumer experience across bricks and mortar, BOPIS, digital and ship-from-store. Many have fallen short and are still relying on the patchwork of fixes that were put into place during the pandemic. Consumers have high expectations and want a seamless experience.
Focusing on how all of this is integrated, with the consumer top of mind, is the best starting place to determine where technology gaps remain. Additionally, the supply chain has shown chinks in the armor, and many retailers continue to struggle. In order to maintain brand loyalty, companies need to be agile, be able to flow smaller shipments to stores, and provide ‘one click’ ordering and pushed notifications of tracking updates.
Looking ahead, what trends do you see shaping up for the holiday season? We see five trends shaping the holiday shopping season. These are digital, meaning retailers should expect high volumes and carrier constraints, plus rate increases; as well as promotions, where stores should anticipate significant discounting from competition. this will not be like the past two years that experienced high sell-through and low discounts.
Other trends include inventory. It is critical that retailers address bloated inventory positions now. Distribution centers have been stretched with early arrivals and slower sales volumes. And in the labor area, It is going to be very difficult to compete. Companies should plan on hiring bonuses for stores and distribution centers, eliminate unnecessary tasks at stores to shift more labor to customer-facing tasks, and don’t shortchange required time needed for BOPIS and ship from store orders.
Finally, retailers need to prepare for a growing trend in selling, general and administrative costs (SG&A) where operating profits have been and will continue to take a hit. Now is a good time to review the organizational structure and indirect non-cost of goods sold) items.