Lessons Learned from Back-to-School Shopping: Three Trends Driving Peak Season Strategies

By Leela Rao-Kataria, GT Nexus



When most people are asked what the busiest holiday for retailers’ is they immediately cite the traditional holiday season. But most consumers don’t realize back-to-school shopping is the second biggest shopping season in the United States. And unlike the winter holidays, back-to-school has an additional challenge for retailers: it’s the longest running holiday season, extending over three months.



This year’s back-to-school shopping has officially come to a close and most retailers couldn’t be happier with the increase of year-over-year sales growth. In July and August alone, the retail sector experienced roughly five percent growth beating out Christmas holiday sales, which experienced 3.8% growth, according to the National Retail Federation. September sales will be released soon and could be the biggest growth month of the season, as many shoppers wait to go back to school before making the bulk of their purchases. Between last minute supply lists from teachers and teens holding out to see what back-to-school fashion trends made the cut, shoppers rushed back online and in-store to take final advantage of stores’ excessive markdowns and promotional items.



The tide has turned since the 2009 fiscal depression where consumers weren’t willing to spend--especially when it came to “nice-to-have” back-to-school items like fashion. In fact, 2013 retail sales exceeded forecasts that left many retailers with out of stock inventory instead of untouched stock on the shelves. Some CFOs are argue that excess inventory hits the bottom line of financial statements so hard that they’re better off selling out on items and disappointing customers than bleeding profits.



Here we explore three trends driving change in retailers’ inventory strategies during peak seasons.



Consumers are shopping smarter



Consumers are more educated than ever on prices so retailers need to work harder to deploy attractive promotions. According to an Accenture survey, 74% of apparel shoppers are willing to wait for a sale to purchase an item. That statistic is music to a retailer’s ear – in turn, retailers create “anytime, anywhere” product offerings to capture the loyalty of customers who are accustomed to discount shopping. At the heart of this is the ability to provide high service levels and cater to omnichannel shopping preferences.



The ability to shop on any mobile device, tablet, and online and to easily comparison shop using various apps like Favado or Shopsavvy also fuels the importance of using smart promotions. In the same Accenture survey, it was revealed that more than half of 6,000 consumers said they were open to shopping around for better deals, while 63 percent said that switching retailers was convenient. As such, retailers will also need to ensure they are creating competitive pricing models and providing a clean e-commerce experience.



Retailers are Innovating to address back-to-school needs



In response to anywhere, anytime purchasing, retailers are challenged to maintain inventory across all channels. Retail winners understand the importance of balancing customer service levels with inventory across channels, and managing financial pressures associated with out-of-stock or excess inventory issues, which run rampant during limited life offerings or promotional seasons. As a result, retailers have invested in technology systems that enhance visibility across all channels so that a customer doesn’t leave the store empty handed. For example, Nordstrom has armed its sales associates with touch screen mobile devices so that if a product is out-of-stock, they can simply tap the product on their screen and have it directly shipped to the customer free of charge. Ralph Lauren was one of the first retailers to bridge online ecommerce with in-store experience. The luxury giant was one of the initial users of QR codes on its advertising materials and it also created customized t-shirt options for millennial audiences and pioneered the shop-the-window model.



Fast fashion retailers like Zara, Forever21 and H&M have figured out the formula by improving speed to market, offering hot-off-the-runway trends, which appeal to back-to-school demographics. These retailers are able to quickly respond to the latest styles and the apparel is viewed as exclusive with minimal production cycle of goods.



Free shipping attracts consumers



Going back to school is stressful enough so the last thing on a student’s or parent’s mind is dealing with expensive shipping charges or elongated shipping times. According to Deloitte’s Back to College 2014 Report, 79% of consumers are more likely to purchase from online retailers who offer free shipping during the back-to-college season. Therefore, retailers must find the balance between excess inventory and out-of-stock scenarios despite limited life promotions.



Most retailers know that while it will be impossible to predict forecasts across the omnichannel, almost all can achieve visibility across channels and the supply chain to optimize inventory and respond quickly to change with the help of the right technology.



Leela Rao-Kataria is the retail marketing manager at GT Nexus. She can be reached at [email protected].