Back-to-school retail spending showed that consumers remain cautious, value-driven and strategic with their budgets amid persistent inflation and tariff-driven cost pressures. The data and trends revealed during the summer provide business leaders with a preview of how the upcoming holiday season may unfold, while also offering insight into how to win over shoppers and capture sales in an uncertain market.
A look back on back-to-school
Consumers started early, made fewer trips, but spent more per visit this back-to-school season, according to RetailNext. Retail stores experienced a 2% to 3% decline in foot traffic in July and August compared to the same period last year. Sales remained steady, and spending per shopper increased, despite a decrease in the number of items per basket.
These were strategic decisions aimed at avoiding potential price increases caused by tariffs and taking advantage of promotions, private-label products and bundles to further stretch their budgets. But these declines in traffic were smaller compared to earlier in the year, demonstrating the importance shoppers place on the back-to-school season.
Still, overall back-to-school spending, including online spending, is expected to reach $39.4 billion for K-12 education and $88.8 billion for college, both of which are up slightly from last year, according to the National Retail Federation. The top destinations for back-to-school shopping remain online, as well as department stores, discount stores and clothing stores.
Implications for holiday spending
Higher prices and fewer items purchased correlate with slower growth in holiday sales, as shoppers trade down from premium gifts and weigh every purchase carefully. Shoppers are expected to continue consolidating purchases, splurging selectively on high-value gifts, and actively seeking promotions.
These spending patterns observed during back-to-school can provide actionable insights for the upcoming holiday season and put businesses in the best position to capture sales.
Lessons for retailers
Early promotional strategies capture early budget allocations: Longer and earlier competitive discounts online from major retailers led price-sensitive shoppers to spend more. Back-to-school showed families shopped earlier than ever before. Therefore, holiday campaigns should also start early to capture planned spend before it is diverted. Reward loyalty with VIP events and tiered loyalty perks.
Tiered discounting and bundles drive basket size: Retailers can incentivize consumers to spend more per trip and per transaction with escalating discounts and product bundles that align with budget-conscious shoppers’ desires. Bundles are especially effective for gift buyers looking for value and convenience.
Targeted price reductions are more effective than blanket discounts: Broad markdowns can harm margins, particularly when tariffs have already increased costs. Instead, data-driven pricing that leverages multiple affordability options and higher-margin private label products enables retailers to compete without eroding profitability. Tiered products help customers understand quality differences while offering choices that fit various budgets and demographics.
Convenience is a priority: While price sensitivity has increased, consumers continue to prioritize convenience. Retailers that offer fast and easy ordering options through digital apps, along with flexible delivery options, such as buy online, pick up in-store, curbside, and same-day delivery, save customers valuable time. During the holidays, time-pressed shoppers value convenience and are willing to pay higher prices for time-saving options.
Additionally, provide multiple payment options to break down barriers for customers to spend. Customers are increasingly using credit cards to make purchases.
Monitor potential tariff changes: Consumers have demonstrated their awareness of tariffs’ potential to cause increased prices by pulling forward spending before tariffs take effect. Retailers who track upcoming trade policies and anticipate demand fluctuations can plan their inventory, marketing, and pricing strategies accordingly to maximize sales.
Adapt to changing product search: Artificial-intelligence-driven search is transforming the way consumers discover products. Consumers are increasingly relying on AI platforms, including those built into some retail apps, to provide more personalized, fast, and relevant product search results. These platforms are changing the landscape of traditional ad-based promotions. Voice and visual-based searches, such as uploading a photo to find similar products, provide a more intuitive and interactive process.
Social media influencers converted shoppers 10 times more than social media overall, and deeper discounts in categories such as electronics, appliances, sporting goods, personal care, and apparel caused many shoppers to trade up to higher-end items, according to Adobe.
With over half of Gen Z and 39% of all consumers using AI for product discovery, according to Salesforce, retailers that ensure their products are shown effectively will benefit from higher conversion rates.
Key takeaways
The interplay of economic uncertainty, changing trade policies, a cooling job market and shifting consumer priorities makes 2025 one of the most complex retail environments in recent years. The back-to-school season has shown businesses how consumers are adapting, and these insights enable more innovative planning for holiday campaigns. The holiday season will be less about volume and more about precision.
Businesses should carefully manage their prices and product mix with discipline and targeted promotions, integrate seamless omnichannel shopping journeys, and invest in technology-driven personalization. The winners will tailor their offers to meet cautious yet ready-to-spend consumers and deliver value through every touchpoint.
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