Lupine Skelly: What stands out to me is that these parents make it happen for their children, and they want them to be in the best position they can going into the new school year. It’s pretty apparent that our consumers and the retailers as well are extremely resilient in the way they address these uncertainties.
Tanya Ott: This is the Press Room, I’m Tanya Ott. Thanks for joining us. It is that time of year again—back-to-school shopping. It can be challenging even in normal times, but right now we’re still in a pandemic, gas prices are high, food prices are high … things just feel a little unsettled for many parents.
We know that in part because, every year, Deloitte surveys parents about their back-to-school shopping plans. And joining us today with the latest I’ve got two new guests making their debut on the podcast. I’ll have them introduce themselves.
Lupine Skelly: I’m Lupine Skelly. I am the retail research leader for the Consumer Industry Center. And that means I run a lot of consumer-facing surveys and try to get the pulse of what’s going on with the consumers—whether that’s through back-to-school trends or how people are planning for holiday.
Alex Vaz: My name is Alex Vaz. I am a senior manager in the Cyber practice, primarily focused on retail and consumer-product clients.
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Tanya Ott: Alex, Lupine … this is the 15th annual survey. [So] what’s the big picture?
Lupine Skelly: I think it’s helpful to have a little bit of context from last year when we look at these findings. So, if you remember, we had vaccines rolling out and businesses were opening back up, [and] schools were going to be in person again. There was this collective feeling of hope going on. And, this year, we’ve got a pretty heavy news cycle. We’ve got war [and] climate change, and inflation is definitely on our news feeds nonstop. So, in our survey, we found that 54% expect the economy to weaken in the next six months, and that’s versus 28% in 2021—so a pretty steep change there. And then if you remember last year, we also had stimulus checks flowing through. We don't have those now, obviously. And we had 33% say they’re in a worse financial shape versus 22% last year.
Tanya Ott: Those are pretty dramatic numbers. And I know I cannot look at a social media feed these days without someone posting something about the price of gas or something like that.
Lupine Skelly: Right. So clearly, it’s front of mind. Inflation definitely is impacting the way people are planning for this event. We had three in five say [that] they were concerned about higher back-to-school prices. People are dealing with higher grocery and gas prices and for back to school, which means you’re really going to have to budget because this is typically the second largest spending event for families in a year behind what they spend for holiday. Back to school is sort of like this replenishment event, meaning that kids grew from last year or they they’ve got new activities, they’re doing new types of courses, so parents really have to find ways to make it happen and make sure their kids are prepared for the upcoming year.
Tanya Ott: What does that mean, Alex, for the spend? Are people just going to be tightening the belt and telling their kids, “No, sorry, you’re just going to have to make do with one pair of sneakers?”
Alex Vaz: Parents, they’re still super focused on their kids. I know [that] for my son, I’m looking forward to going shopping this year more from a brick-and-mortar type of outlook. Even though the prices have gone up, we’ve noticed that about 8% of costs have risen—it’s not that people are really buying more, it’s just [that] the costs have truly changed in this past year, based on our survey.
Tanya Ott: So, we expect continued growth in clothing and accessories, but probably because kids grow so fast, they can’t just keep wearing the same thing. At the same time, we’re paying more for everything. Are parents going to be buying less in other categories?
Lupine Skelly: You know, [in] the past couple of years, digital really accelerated, and what we found was that parents had already purchased a lot of tech items. So, whether it was for their own work-at-home environment, but also for their children’s at-home learning experience, tech really drove sales in the past couple of years—[but] we did see that fall a little bit. It was down 8% year over year.
Tanya Ott: How much growth do we expect, say, in the top growth category?
Lupine Skelly: For clothing and accessories, that’s up 18% year over year, which is a really healthy jump. I think part of that is because parents are going back to the office and kids are going to more [in-person] events, and so there’s definitely a need to replenish the clothing side. And then, school supplies are up 7%. We also saw COVID-19–related items up 7% year over year.
Tanya Ott: Tell me a little bit more about the COVID-related items, because it seems like the world that I’m walking around in has thrown off the masks and I don’t see cleaning supplies like we did maybe the last time we had that conversation around the back-to-school shop. What are we seeing this year?
Lupine Skelly: We were a little bit surprised by it too. I’m not sure if it’s driven by perhaps classroom lists. A lot of times, kids need to bring in their [own] hand sanitizer or perhaps some sort of disinfectant wipes, that sort of thing—so that could be driving it. And, like you said, masks have come off largely, so we see it probably more on cleaning- and sanitation-type items.
Tanya Ott: Alex, you mentioned really looking forward to going to back to brick-and-mortar stores for your shopping with your son. Is that something that we’re seeing other parents excited about?
Alex Vaz: We are. Yes. So, from a COVID-19 perspective, we shifted to [the] digital platform[s] and we’re spending more and more time buying online. That’s not going to go away. But people are looking forward to going to brick-and-mortar stores. And we are noticing that there is a higher demand for clothing [and] accessories especially—people trying on clothing and especially kids looking forward to trying [on] new outfits. You’re going to be at school, no longer into that remote learning. But then from a digital perspective, people have already spent big budgets on laptops, tablets, [and] extra monitors. So really the focus this year from what we’ve noticed, is that technological tools will continue, but demand from digital learning is really decreasing. People are looking forward to being more at school, being present, and really visiting those stores to perform their shopping.
Tanya Ott: It’s that sense of normalcy we feel coming back. One of the trends that we saw, particularly in the beginning of the pandemic, was a lot more people doing the buy online, [then] pickup outside the store. Do you anticipate that to continue?
Lupine Skelly: We definitely think that convenience is still top of mind for parents. Those buy-online-pickup-in-store sort of digital app–type ways to get merchandise are still very popular. We did see that drop a little bit compared to last year. And again, I think it’s because people are going back into the store and they’re excited to shop in person. So, I think that’s just the natural little bit of fatigue or saturation that we’re seeing there.
Tanya Ott: Speaking of fatigue, parents have a lot of things they’re balancing right now ... are you seeing new priorities arise as they prepare to send their kids back to school?
Alex Vaz: Yes. One of the new priorities that we noticed, Tanya, is that parents are concerned about their kids’ mental health and well-being, and they’re willing to spend a little bit more to address it. So, for example, 51% of parents have purchased some type of extracurricular activity, such as music or guitar classes, sports or some type of arts to really complement this well-being and mental health priorities. And then, we also noticed that 32% have purchased some type of a wellness-related product.
Lupine Skelly: And I think that’s really interesting for retailers to understand that these priorities are shifting for consumers. The mental health [-aware], the wellness-type customer spends 8% more on average. There really is an opportunity for retailers if they’re able to address those changing priorities.
Tanya Ott: How does a retailer translate that focus that parents have on mental health and wellness for their kids into what the retailer can offer?
Lupine Skelly: Well, I think, as Alex mentioned, parents are trying to get their kids involved in activities. We’ve been very home-centric for the last two years—so kind of getting them to resocialize. For retailers that might be [like], hey, kids are joining activities; they’re going to need those types of merchandise to support those activities, whether it’s dance or that sort of thing. From a merchandizing perspective, there are certainly opportunities there.
Tanya Ott: One of the other themes that comes out in your research is the idea of sustainability being pretty important for parents right now. Talk us through that one.
Alex Vaz: Sustainability is definitely a bigger priority that we’ve noticed, and about 50%, they responded that they would choose a sustainable back-to-school product wherever possible, trying to perhaps buy a used or refurbished product, for example. It’s about 29% [that] prefer to buy those used or refurbished products. They tend to spend about 22% more than an average buyer.
Tanya Ott: Are they buying used and refurbished products because they’re sustainable or because they’re worried about the economy like we talked about? Do you have a sense with those who are prioritizing sustainability if those are higher-income parents versus lower-income parents?
Lupine Skelly: Actually, we were sort of surprised when we looked at the data. It’s across the board. All income groups are interested in this. I think that shows a lot about the generations that we have parenting right now and this idea that we want to leave the planet in a little better shape as we pass it along to our children.
Tanya Ott: What about brand loyalty? I have friends who are very, very loyal to particular brands, and I am not one of those people generally. I’m more of an economy shopper. I’m wondering what you see on that front.
Lupine Skelly: It’s interesting—when we talk about brand loyalty for back to school, it’s really tied to stockouts.
Tanya Ott: What average people call empty shelves—they’re out of the item we want to buy.
Lupine Skelly: Right. There’s a theme of how that plays out for timing and brand loyalty. We had 63% expecting stockouts for back-to-school products. That’s pretty high, but last year, we also had a lot of concern around this, and we saw that change the timing behavior. People planned to shop heavily before July last year because of it. What I think is going on now though is that we’ve kind of figured out how to navigate supply chain issues. We know that we’re not going to get things delivered to our door in two days anymore. We’ve been retrained to wait several days or a week. This year, we saw that 53% of planned spending is going to occur by the end of July, and that’s down from 59% last year. But still, it’s earlier than what we saw in 2020. So, it’s normalizing again, I think, because we’re navigating those supply chain issues.
The other thing is just the nature of back to school. It’s parents trying to check things off the list. When we talk about brand loyalty, that falls off really quick when you’re just trying to get these items in the backpack. We had 77% say that they will switch to a different brand if their preferred brand is not in stock or if it’s too expensive.
Tanya Ott: What about homeschooling? Obviously, over the last two-and-a-half years or so, of the pandemic, we’ve had a lot of people that were homeschooling because that was the option they had. And now the classrooms are opening back up. There are still, I think, higher numbers of people homeschooling. How is that impacting the back-to-school shopping situation?
Lupine Skelly: Yes, it’s really an interesting development. In our survey, we found that 8% are homeschooling their children this year and that’s versus 4% in 2021. Keep in mind, those are the findings from our survey. The census also tracks that and also noted a doubling back in 2020. But I think if you step back and look at the larger picture, we talked about how parents’ priorities have shifted. And, as you pointed out, many people were forced to try home learning for their kids because of the pandemic, so they’ve gotten more comfortable with it. For retailers, I think it’s really something to keep an eye on. The landscape is shifting. This is a potential trend that could grow or stay at these elevated levels. And it’s important because these parents spend 15% less than the average back-to-school shopper.
Tanya Ott: So that could be significant then. One of the things that I want to touch on before we wrap up is consumer sentiment in general. And I know that I have heard people looking at prices go up and really wondering why and questioning whether they really need to go up or this is, you know, retailers just doing what they can do because they can do it. What are parents saying about that?
Lupine Skelly: I think it’s important for retailers just to be aware that there is some distrust among consumers about why prices are increasing. In our findings, 64% said they believe companies are profiting off of inflation. So that’s concerning for retailers and definitely an opportunity to maybe message a little bit clearer about how they’re attacking inflation and price increases.
Tanya Ott: What can retailers do to address that?
Lupine Skelly: I think there’s an opportunity for retailers to just message clearly to consumers. Probably many of them purchased these back-to-school supplies before inflation was really mounting, so they may not even be raising [the] prices on these back-to-school items. So, there’s definitely an opportunity to improve messaging there to gain some of that trust back.
Alex Vaz: Yes, absolutely. I think the key word here, Lupine, is trust, and we all know in watching the news, right, about inflation—so many parents are concerned about it. And we know that prices have gone up, so it’s really being transparent and showing that trust to the consumer. It is an opportunity for you to perhaps bring back that brand loyalty to a particular retailer. But I feel that trust and that transparency have the opportunity to really catch the consumer’s interest to go into your particular store.
Tanya Ott: Alex and Lupine. I just have this vision of you tracking all this stuff, you know, in some big space or something. And I understand you have something called the consumer tracker. What is it? How does it work?
Lupine Skelly: Our Consumer Industry Center has been doing a Global State of the Consumer tracker since 2020, [that is] the spring of 2020. We pulse countries across the globe every month and we look at spending intentions, but we also dive into some specific modules, such as sustainability, to understand, from a global perspective, how people are approaching those trends.
Tanya Ott: So, this is like a dashboard or something like that you can watch and look at obsessively in all your all your free time, right?
Lupine Skelly: Yes. We have a website and it’s really great. You can look by country [and] you can filter by several different aspects. We look at auto, consumer products, retail and travel, and hospitality.
Tanya Ott: Interesting. That is like heaven land for data geeks like you.
Lupine Skelly: Absolutely. You know, it’s interesting when we look back like 15 years, there’s always disruption, right? There are always concerns and uncertainty. I feel like every year we have some new uncertainty that we’re calling out. But what stands out to me is that these parents make it happen for their children, and they want them to be in the best position they can going into the new school year. It’s pretty apparent that our consumers and the retailers as well are extremely resilient in the way they address these uncertainties.
Tanya Ott: Lupine. Alex, it’s been great talking to you today. Thank you so much for joining us.
Lupine Skelly: Thanks for having us.
Alex Vaz: Thank you. And happy shopping.
Tanya Ott: Alex Vaz is a senior manager is the Cyber practice, focused on retail and consumer products for Deloitte & Touche LLP. Lupine Skelly leads research into retail, wholesale, and distribution at Deloitte Services LP’s Consumer Industry Center.
The annual back-to-school and back-to-college shopping surveys are chock full of data—lots of graphics, lots of numbers. It’s a virtual playbook for retailers and you can find it all at deloitte.com/insights.
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