The Supply Side: Retailers seek market share amid record back-to-school spending

Retailers seek to grow market share as consumers are expected to spend a record $37.1 billion on back-to-school items.

The National Retail Federation anticipates families with children in grades K-12 will spend an average of $848.90 on school items this year, up $59 per household spending from a year ago, totaling $33.9 billion.

“The pandemic forced parents and their school-aged children to adapt to virtual learning quickly, and they did it with an incredible amount of resolve and flexibility,” said NRF President and CEO Matthew Shay. “We enter the new school year with plans to return to the classroom, and retailers are prepared to help Americans find and purchase whatever they need to make this transition as seamless as possible.”

A record savings rate supports increased spending in the U.S. as consumers hunkered down at home for most of last year during the COVID-19 pandemic. Deloitte anticipates 2021 will be a record year for back-to-school budgets. The Deloitte survey predicts average spending of $612 per student K-12, up from $529 a year ago.

Despite the two surveys predicting record spending levels this year, retailers like Target and Walmart and others are working with Ibotta, the mobile rewards program, to give every student in America some back-to-school supplies for free. The retailers and some analysts agree that while many families are sitting on increased savings, there has also been an exodus of women from the workplace that has pressured family budgets now that stimulus has primarily halted.

The Ibotta partnership with Walmart and Target provides households one free box of Kleenex tissues, a free loaf of Nature’s Own bread, a container of Skippy Peanut Butter and Smucker’s grape jelly, a three-subject spiral notebook, a pack of pencils and erasers and highlighters. The items can be obtained for free with the Ibotta shopping app.

“After a complicated 2020, we know this year will be met with great enthusiasm from our guests as they prepare for a new school year, and we’re ready to meet every family’s needs,” said Jill Sando, the chief merchandising officer at Target. “Target is prepared to help our guests with everything they need for the season — with the best assortment, shopping experience and value all in one convenient click or trip.”

Target said it has priced almost everything in the back-to-school collection at less than $10 per item.

Walmart has already set up school supply bus displays in its aisles and is focusing on promotional offers. The big-box giant also recently announced preteen apparel and accessory brand Justice is making a comeback just in time for back-to-school shopping. Walmart will sell 140 Justice products in 2,400 stores across the nation and online by the end of July. The collection includes clothing, jewelry, accessories, bedding, backpack, stationery, skateboard and tech accessories. Justice closed all of its 826 stores last year with the bankruptcy of parent company Ascena Retail Group. The brand is geared toward girls between the ages of 6 and 12.

“We think customers will be excited that Justice is back and at a much broader scale,” said Denise Incandela, Walmart executive vice president of apparel and private brands. “It’s the same quality that parents and girls have come to trust — now at Walmart’s accessible prices.”

Incandela said Justice apparel ranges in price from $8 to $18, with bedding and bath products at $20 and $40, respectively. She said Walmart tested Justice in the spring with a curated collection at 1,200 stores and online. She said most of the spring assortment sold out on Walmart.com in just a few days.

Carol Spieckerman, CEO of consulting firm Spieckerman Retail, said it’s great to see Walmart giving attention to fashion and apparel in advance of the back-to-school shopping season. She said the key to the success of this deal would be ensuring the product development and Justice brand don’t get watered down in Walmart’s massive apparel business.

“The Justice hookup by no means marks the end of Walmart’s opportunistic brand adventures,” Spieckerman said. “Retailers have a real opportunity to revive struggling, high-equity brands before they get musty. Walmart, Kohl’s, Simon Properties and others are wisely taking full advantage.”

NRF found that consumers plan to increase spending in every category this year, with electronics and clothing seeing the most significant increases. Back-to-school shoppers plan to spend $21 more on average on electronics this year compared with 2020 and $19 more on clothes. Of those planning to purchase electronics, 49% plan to buy a laptop, followed by 32% purchasing a calculator and 31% purchasing a tablet.

The survey found as of early July that 51% of K-12 shoppers have begun shopping for the items they will need when classes resume. And 39% said they took advantage of recent sale events such as Prime Day, Target Deal Days and Walmart’s Deals for Days to shop specifically for school items.

On average, consumers reported that they had completed only 18% of their back-to-class purchases so far by early July. Among those with at least half of their shopping left to complete, 51% said it was because they did not yet know what they will need, and 48% said they were still waiting for the best deals.

Additionally, 43% of all back-to-class shoppers say they plan to use the money they received from government stimulus to purchase items for the upcoming school year.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.