The Back-to-School Sales Surge: Price is Top of Mind for Shoppers
After the whiplash of store closures, supply chain havoc, and demand see-saws of the pandemic era, retailers are relieved to see that consumers are enthusiastic about back-to-school shopping in 2021. In fact, a recent Mastercard SpendingPulse study found that U.S. retail sales during the back-to-school shopping period in 2021 are expected to be up 5.5 percent compared to the same July 15-Sept. 6 period in 2020, and up 6.7 percent compared to the same period in 2019. And consumers are focused on shopping earlier than usual as well, with recent research commissioned by Microsoft revealing that nearly half of back-to-school shoppers plan to shop earlier this year than in previous years — and 44 percent plan to spend more than they did in 2010.
With many students participating in remote learning during much of the 2020-2021 school year, the need for school supplies and clothing had dropped significantly. At the same time, the economic stress and uncertainty created by the pandemic caused shoppers to carefully monitor their discretionary spending. With the majority of U.S. schoolchildren expected to return to in-class learning in 2021-2022, shoppers are undoubtedly armed with lengthy wish lists for school supplies, electronics, clothing and more.
Retailers jockeying for their share of the back-to-school wallet face a critical imperative to present shoppers with engaging prices and offers — or risk alienating shoppers and losing that spend to competitors. Fortunately, today’s sophisticated price and promotion science enable progressive retailers to identify with precision which items’ prices are most critical to shoppers. They can then use that data to craft prices that resonate with consumers on these key value items. At the same time, the science’s ability to not only detect true demand signals but accurately measure elasticity enables price recommendations that let retailers safely recover margin elsewhere in the assortment, delivering a win-win for shoppers and retailers alike.
The risks for retailers that rely blindly on past pricing habits rather than turning to science for real-time insights are significant. Shoppers are even more vigilant than usual in their scrutiny of retailer prices this back-to-school season. During the pandemic, 74 percent of shoppers reported encountering what they perceived as unfair or arbitrary prices from retailers, and 56 percent of those who perceived unfair prices will not commit to returning to shop at that retailer. A third of consumers (32 percent) flatly state that they will not shop at that retailer again.
The hotly contested back-to-school market promises fierce competition this year, with big-box retailers, office supply stores, off-price retailers, and — yes — Amazon.com all jockeying for eyeballs and dollars. With shoppers having moved en masse to online channels during the pandemic, they're well-armed with the ability to monitor competitors’ prices with a smart device in the palm of their hand. Fortunately, retailers that tap into today’s machine learning science can respond intelligently and with greater agility to competitive and demand signals by channel, all the way to the item-store level. Retailers can utilize proven price optimization capabilities to craft and deliver pricing that's flexible, adaptable and efficient — all while creating measurable bottom line impact.
Craig Marion is vice president of global products for DemandTec, a lifecycle retail pricing solutions company.
Related story: An Inside Look at Zulily's Back-to-School Strategy