Retailers pin high hopes on back-to-school shopping season
As students dip their toes back into the classroom, millions of American families have been loading up on clothes, supplies, electronics and other essential items for the new school year. This annual shopping extravaganza encompasses both back-to-school spending (for children in elementary school through high school) and back-to-college spending. It is the retail industry’s second largest shopping season, trailing only the behemoth November-December holiday shopping season. Last year, Christmas shoppers loaded up on a record-high $923.6 billion on gifts and related items, up 5.3% from the prior year.
This year, retailers will soon be wrapping up what they hope to be a record-setting season. According to the National Retail Federation (NRF), back-to-school spending is expected to reach a record-high $41.5 billion, up 12.5% from 2022. Back-to-college spending is expected to reach a record-high $94 billion, a massive 27% increase from last year.
Families are expected to spend an average of $890.07 on back-to-school items, about $25 more than last year. The top-spending category is electronics, which includes computers, phones, calculators and related accessories. Roughly 37% ($326) of a family’s back-to-school spending will be on electronics. The second largest spending category is clothing & accessories ($257) followed by shoes ($167).
For their older kids, families are expected to spend an average of $1,366.95 on back-to-college items, roughly $168 more than last year. Once again, the top-spending category is electronics, with families spending an average $337. The second largest spending category for back-to-college shoppers is dorm and apartment furnishing ($191). Aah, yes, the days when you could “furnish” your entire residence for just $191! Rounding out the Top 3 for college shoppers is clothing & accessories ($182).
Another trend this year is that families are starting their shopping a lot earlier. According to the NRF, 56% started their shopping by early July, likely in connection with Amazon Prime Day. Prime Day is Amazon’s signature annual event that offers online shoppers significant discounts and promotions. This year’s Prime event was held on July 11-12. The NRF cites that 66% of shoppers used Prime Day exclusively for back-to-school and back-to-college deals. According to Adobe Analytics, Amazon captured a record-high $12.7 billion in sales during its two-day Prime sales event.
Shoppers are also expecting to pay much higher prices this season. The NRF states that 67% of shoppers have seen higher prices on back-to-school and back-to-college items, most notably in clothing & accessories. To help counter higher prices, most shoppers say they are taking advantage of sales, buying more store brand or generic products and doing more comparative shopping to seek out the best value.
The retail industry has set lofty expectations for this year’s shopping season. It projects back-to-school spending to increase by 12.5% and back-to-college spending to increase by 27%. Indeed, highly ambitious goals. Whether these goals can be achieved is too early to tell but a lot of pressure is being placed on an already-burdened consumer. High inflation and rising interest rates have forced savings accounts to dwindle while household debt has soared to a record-high $17.05 trillion. Within this household debt is a record-high $1.03 trillion in credit card debt. Hoping families can dig even deeper this back-to-class season may be a challenging request.
Mark M. Grywacheski, Investment Advisor
Quad Cities Investment Group is a Registered Investment Adviser.
This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Quad Cities Investment Group and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Quad Cities Investment Group unless a client service agreement is in place
