Are Discounters and Mass Merchants Poised to Win Back to School?

— July 13, 2017

Consumers have their eye on different retailers and items to fill their carts this back-to-school season, according to Deloitte's "2017 Back-to-School Survey" of parents with children in grades K-12. Parents expect to spend an average $501 per student on back-to-school this year, on par with last year, reaching an estimated $27 billion.

Mass merchants and off-price retailers may get all A's at the expense of traditional department stores and specialty clothing retailers this back-to-school season. The majority of survey respondents (81 percent) plan to shop at mass merchants, a 24 percentage point jump from last year. Off-price stores also gained fans, climbing to 28 percent from 10 percent in 2016. While the same number (28 percent) say they'll shop traditional department stores, that's down significantly from 54 percent last year. Just 8 percent of parents plan to visit specialty clothing stores, falling from 25 percent in 2016.

The survey also reveals a category shift among the items respondents intend to buy for their children: Clothing and accessories are expected to account for 55 percent of families' spending – up 10 percentage points from last year – pulling primarily from school supplies and computers.

"With today's technology-based education system there is less need for traditional school supplies, likely contributing to the shift toward more spending on clothing and accessories before children head back to school," said Rod Sides, vice chairman, Deloitte LLP and U.S. retail, wholesale and distribution practice leader. "Part of this shift may also come from the popularity of preconfigured school supply kits, which 30 percent of families plan to use. Shoppers can now get their supplies all at once leaving more time and budget for spending in other categories such as clothing and accessories."

Undecided but ready to spend
Retailers that hit the books to study the "undecided" back-to-school shopper – those who don't know whether they will shop online or in-store – may score higher marks this year. "Undecided" shoppers are more likely to choose retailers that offer free shipping (68 percent), buy online and return to store (52 percent), and offer loyalty programs that provide faster or cheaper discounts when shopping online (49 percent).

"Retailers should aggressively pursue the 'undecided' consumer because they collectively represent nearly $5.4 billion this back-to-school shopping season," added Sides. "This segment is up for grabs but likely to go to retailers that draw customers in early with promotions and digital experiences that make store visits even more attractive, like inventory visibility, order tracking or buy online/pick up in store."

Retailers that bring shoppers in early get an A+ for back-to-school sales
Retailers that attract shoppers to their stores earlier this summer may earn a greater portion of back-to-school sales. Deloitte's survey found that the 60 percent of shoppers hitting stores before August likely to spend an average of $532, 16 percent higher than the remaining 40 percent of parents who start shopping in August or later ($458). As a result of different school start dates across the country, shopping trends also vary greatly by regional location with the highest average spent $554 (44 percent) in the South region this back-to-school season.

This annual Deloitte survey was conducted online using an independent research panel between May 31 and June 6, 2017. The survey polled a sample of 1,200 parents of school-aged children and has a margin of error for the entire sample of plus or minus three percentage points. All respondents had at least one child attending school in grades K – 12 this fall.

Deloitte is a leading presence in the retail and distribution industry, providing audit, consulting, risk management, financial advisory and tax services to more than 75 percent of the Fortune 500 retailers. With more than 2,400 professionals, Deloitte's retail and distribution practice provides insights, services and approaches designed to assist retailers across all major subsectors including apparel, grocery, food and drug, wholesale and distribution and online.


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