Back-to-school has become one of the biggest shopping events of the year — second only to the holiday season. That means retailer competition to capitalize on seasonal spending is high, especially with average back-to-school sales growing 42 percent in the past 10 years. That’s why it behooves retailers to think strategically and move quickly to take advantage of this wave of consumer spending.
This year total sales are expected to reach $68 billion (K-12 and college), according to the National Retail Federation’s (NRF) Back-to-School Spending Survey, which is almost $7 billion less than the 2014 total. Despite improving consumer confidence, families remain budget-conscious, with relatively low wage growth and only 29 percent of families anticipating spending more on school supplies than in 2014.
At Citi Retail Services, we, along with our partners – which include some of the country’s most well-known retailers – understand the cyclical trends of back-to-shopping as parents splurge on new supplies one year and reuse the next.
The NRF notes that the average family with children grades K-12 plans to spend $630 in 2015, down from $669 last year. The average family with children in college plans to spend $899, down from $916 last year.
With more budget-conscious spending heading into the back-to-school season, competition will be fierce. Retailers need to be nimble to differentiate themselves and engage consumers.
Here are five tips to help retailers outpace their competition this back-to-school season:
1. Take advantage of digital tools to drive engagement and purchase behavior. Shoppers are increasingly using their mobile devices to research, source reviews and shop. In fact, eMarketer estimates that 74 percent of online shoppers use their mobile device to shop. Leveraging digital shopping tools will allow customers to save time and gain confidence that they received a good deal, improving their overall customer experience.
2. Conduct two waves of promotional deals to align with preferred shopping periods. While there will always be last-minute shoppers who wait for end-of-season sales, many retailers can leverage the transparency that comes with published school supply lists to target savvy shoppers with early-bird specials and incentives. Multiple promotional periods allow you to target early-bird and last-minute shoppers.
To underscore the importance of this time of year, which calls on millions of families and students to stock up, at least 17 states will offer shoppers temporary sales tax holidays throughout August and September on back-to-school merchandise. According to the NRF, nearly half of consumers (42.8 percent) will begin shopping three weeks to one month before school vs. the 30 percent of last-minute shoppers who will begin one week to two weeks prior.
3. Offer shipping deals to online shoppers. Shipping promotions are a great way to drive site traffic and increase overall spend per transaction. Nine in 10 online shoppers (92.1 percent) plan to take advantage of free shipping, and nearly half (48.4 percent) plan to use ship-to-store or in-store pickup services. Free shipping is the most important option during checkout, according to 77 percent of online shoppers. Furthermore, 60 percent of consumers said they've purchased additional items to qualify for free shipping, according to a joint survey between UPS and comScore.
4. Use social media to connect with consumers and influence behavior. For many students, back-to-school shopping is a social event. Integrating in-store and online events, product launches and promotions can fuel a “buzz” around shopping and encourage a virtual, if not physical, sense of community. Social media can help create that buzz and drive behavior more than other channels, including search engines and brand websites.
5. Don’t forget teachers! It’s not uncommon for teachers to spend their own money to supplement student supplies. Teacher appreciation programs have a strong influence on this demographic, who proactively seek stores offering exclusive discounts.
Molly McCombe is managing director and chief marketing officer of Citi Retail Services, a unit of Citi that provides consumer and commercial credit card products, services and insights to national and regional retailers and their customers across the U.S.