In our four-part blog series, RSM’s senior industry analysts explore back-to-school shopping trends and the impact on consumer businesses. This week we focus on how consumers are adjusting shopping habits this season.
With consumers feeling the tightening of their monthly budgets and impact to their savings, more are searching for discounted inventory as they shop for back-to-school items. Going into the season, consumers already had a clear understanding that they would be required to alter purchasing habits as they adjusted to the lack of no enhanced child tax credit this year.
Three areas where this season’s consumers are adjusting from previous years include:
- Buying store brand/generic products.
- Shopping more comparatively online.
- Re-using last year’s school items.
Over a third of consumers, 35%, shared in a National Retail Federation survey in early July that they would be buying more store brands/generic products, up from 24% in 2019 and 2020, and 27% in 2021. Stores and manufacturing who have innovated during the pandemic creating their own value products are set to gain market share this back-to-school season.
And, as price-constrained consumers in the lower two quartiles are faced with increased inflation pressure, they are turning back to comparative shopping online. This includes not only searching for and comparing deals while in store but also includes shopping online earlier in the season to secure known items that will be needed. The largest example of this is Amazon Prime day, held in mid-July, which saw other retailers lowering prices to maintain market share.
Finally, as consumers working to cover the cost of back-to-school spending, some will make do with already purchased items. Respondents to the NRF survey who noted that they would make do with last year’s school items nearly doubled from 2019 at 13% to 24% in 2022. Consumers’ willingness to go without will put pressure on retailers which have seen a higher impact on inflation over the last year.
We are not expecting these trends to reverse as the consumer shifts from back-to-school into the holiday season as they will start shopping in October.
- Investment into product development and increase of shelf space for value items for consumers will see return on investment.
- Retailers and brands with an online or mobile application presence should work to target value-focused consumers in order to move inventory and retain margin.
- Consumers are demonstrating now how they will shop during the holiday season.