Omnichannel

Back-to-school 2021: Spike in spend, permanent shift in consumer patterns

Melanie Batley shares insight from KPMG’s retail consumer survey, "Welcome to the new “back to school," which polled consumers on spend and expectations and assesses the continuing impact from the COVID-19 pandemic.

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August 20, 2021 | Melanie Batley

The 2021 school year will see a return to normalcy with in-person school finally resuming across the country. But what will consumer behavior look like? KPMG's most recent retail consumer survey, "Welcome to the new 'back to school,'" provides some answers.

The survey of 1000 consumers found that average spend per student will be up to $268 per student compared to $247 in 2020, with meaningful change in category spend and variation in educational cohort spending. Additionally, consumers are expecting higher costs due to inflationary pressures.

"The jury is still out on where retail pricing will be for back-to-school merchandise. Although consumers expect net prices to go up, they also think there will be more competition for their dollars, potentially increasing promotional activities," said Scott Rankin, KPMG U.S principal, national sdvisory and strategy leader, consumer and retail.

Spending for pre-school and college students, in particular, is expected to spike, up 32% and 13% respectively compared to 2020. Spending for students in middle school and high school is only expected to be up 3 and 4% respectively.

The survey indicated that, in some ways, the 2021 back-to-school season will be a return to traditional in-person learning categories, with increased spending in key retail categories: footwear (up 21%), apparel (up 14%) and school supplies (up 16%). Respondents expect to spend less on computers and study-related furniture in 2021 than they did in 2020 during the COVID-19 pandemic.

"The prior back-to-school season was a bright spot for retailers concentrated in virtual learning categories, including electronics, computers and furniture. This year the composition of spend is pivoting, with parents once again buying categories aligned with in-person learning and social interaction," said Matt Kramer, KPMG U.S. national sector leader, consumer and retail.

Meanwhile, the connected learning experience is here to stay and will supplement in-person learning with digital and online experiences.

"As COVID-19 counts drop, few school districts will stick to 100% virtual formats in the fall. Yet, with so many schools deploying some sort of digital content or learning, digital equipment will be a lasting component of back-to-school spend," said Julia Wilson, KPMG U.S. advisory managing director, strategy.

This year will set a new baseline of consumer behaviors that preview of future retail trends. Expected trends include the continued growth of online shopping which, while down slightly from 2020, will outpace 2019 (a 30% growth); the continued relevance of digital technology in retail spend composition; and increased spending in categories related to in-person interactions, such as footwear and apparel.

The paper also outlines some key advice:

• Think strategically about promotions: Retailers cannot ignore how inflation is affecting margin structure. Consumers are also expecting to pay more; however they are also looking for good deals. Retailers can navigate both the supply and demand challenges to inflation by taking a strategic approach to revenue growth management. They can use analytics to understand what pricing decisions can increase revenue while limiting impact to unit volumes.
• Stock strategically: Retailers facing capacity issues and shortages left over from pandemic-era supply chain challenges remain concerned about adequate inventory. Back-to-school shoppers give themselves little lead time to make purchases and will go elsewhere for supplies if shelves are not stocked. Retailers should focus efforts on the categories that have the biggest impact, using consumer insights to inform strategy.
• Double down on digital: The new delivery models that were rapidly adopted during COVID-19 — (ordering online for pick up in-store and curbside pickup or shipping from store) — are not going away. Retailers must optimize a multichannel approach to meet customers where, when, and how they want to shop, while carefully monitoring the profitability impact of fulfillment in a multichannel environment. Retailers can leverage data and analytics to understand true profitability at the product, customer, and channel level to ensure margin stability.