Article

Back-to-School: Generational needs, budget-conscious shoppers present retail challenges

Shoppers are investing in electronic gadgets and keeping an eye on the school spending budget this year.

July 29, 2015 by Judy Mottl — Editor, RetailCustomerExperience.com & DigitalSignageToday.com

This is the sixth installment of a 10-part series Retail Customer Experience will be publishing this summer to help retailers shape and hone the all-important back-to-school sales strategy. We’re looking for some great ideas and efforts from the retailers for the final parts of series, so if you have a back-to-school retail experience to share, emailus!

Retail Customer Experience tapped a data and analytics expert for his insight on new trends as well as the challenges retailers are facing this year when it comes to Back-to-School sales. Anil Kaul, CEO of Absolutdata, is a CPG data and analytics expert, and in the following interview he explains what’s driving those challenges and offers guidance on how retailers can hurdle the obstacles while maintaining a high quality consumer experience. Kaul has over 20 years of experience in marketing, strategic consulting and quantitative modeling. Before starting Absolutdata in 2001, he worked at Personify and McKinsey & Company. He holds a PhD in quantitative marketing from Cornell University.
 

RCE: In the past few years the rush for back-to-school shopping has declined across the board, according to the National Retail Federation, which recently reported U.S. consumers will spend about $68 billion on back-to-school and back-to-college items this year. That's a dip of 9.3 percent as compared to $75 billion last year. Why are consumers spending less?

Kaul: Back-to-School has been retail’s second most important selling period and was considered to be the harbinger for the most-important Christmas holiday season. One of the main reasons associated with this decline is the changing needs and aspirations of this generation. Instead of restocking apparels, parents are investing a good sum of money in high-end electronic gadgets and school supplies keeping in mind the fluctuating economic conditions. Another study on the shopping behavior suggests that this year parents are planning to repurpose school supplies and merchandise as they are constrained by tight budgets.

RCE:Is there any specific segment that is better or worse than another (i.e. girl accessories, boys sneakers)

Kaul: Published reports reveal shoppers will plan their shopping judiciously, with 19 percent planning to shop online (for better discounts) and 37 percent intending to use the Internet for comparative shopping. This year, shoppers are spending prudently, with the main motive of repurposing. Having said that, there are certain categories which are seeing an upward swing like backpacks, study materials, school supplies and useful electronic gadgets. Apparel and fashion accessories, on the other hand, are witnessing a decline in sales in comparison to the past two years.

RCE:Given the less spend expectation what can retailers do to spur more consumer activity?

Kaul: In order to get the most out of this shopping season, retailers will have to plan for an all-inclusive marketing strategy which should focus on web, social, and mobile channels. Creating a good e-commerce website along with online paid advertisement, can help retailers beat the competition and drive sales. The use of a variety of online-only features — such as personal recommendations, product reviews from other customers, huge product assortments and availability — will lead to greater level of customer satisfaction and higher sales. Online discount coupons and offers bundled with other benefits will affect the business for retailers significantly.

Location targeting is a new phenomenon and is being adopted by many retailers for improved identification of potential customers with intent to purchase. It can help businesses assess when customers stop going to a particular store and start going elsewhere, as well as give them a sense of shifting shopping patterns. Big retailers can use geo-location to target customers real-time. However, retailers can benefit from this tool only if, they back their actions with detailed research and a well thought out strategy, otherwise it could create an impression of violating privacy. 

RCE:Is price the main market strategy with Back to School spending or are parents more inclined to go with what brand or student's 'want' rather than the cheapest or most affordable in attire?

Kaul: According to Huntington Bank’s annual Backpack Index, it's becoming increasingly expensive for families to fill up student backpacks and send them back to school each fall. The cost of school-related spending – including pen-and-paper supplies, electronics and other school fees — has increased by 20 percent in just one year, far outpacing wage increases and the rate of inflation. In the light of above, parents have become smart shoppers, they are creating a shopping list of necessities, budgeting their purchases, and they are including their children in planning all of this. This is helping them improve their child’s financial literacy and passing on ownership. The child now is making tough decisions about over-budget items, finding bargains, reading reviews, going to thrift stores etc. Thus, emphasizing the ever growing importance of digital channels.

About Judy Mottl

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Judy Mottl is editor of Retail Customer Experience and Digital Signage Today. She has decades of experience as a reporter, writer and editor covering technology and business for top media including AOL, InformationWeek, InternetNews and Food Truck Operator.

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