Who’s ready for another “unprecedented” back-to-school season? While most students will be putting aside virtual learning and instead returning to their classrooms, high inflation is now throwing a wrench into what parents, teachers and students alike hope will be a normal year.
Not only will school supplies and fall wardrobes cost more this year, but parents also don’t have stimulus checks or advance child tax credit payments to lean on this time. Even so, the back-to-school market is estimated to be up 24% since 2019, reaching $34.4 billion this year.
So what can we expect from this shopping season, and what back-to-school pricing trends are we already seeing? Here’s a look at some major consumer shopping behaviors this back-to-school season, and what pricing strategies retailers can use to maximize sales and market share.
Although more than half (57%) of shoppers are worried about inflation, the need for back-to-school supplies supersedes these concerns, as we can see with per-student spending up 8% year over year. That’s because families consider this an essential category: One-third of consumers (38%) state they are cutting back on spending in other areas to cover the cost of items for the upcoming school year.
To capture these cost-conscious yet determined consumers, retailers will have to have a strong competitive pricing presence in the market. “Retailers should develop a strong message and provide deep discounts on essential items during these times, even if it means passing along the cost increases in other areas,” said Aditya Rastogi, VP of sales enablement at Revionics.
And yet, back-to-school spending categories will look a little different from the way they looked in recent years. With a return to in-person instruction, the 2022-2023 school year will feature less emphasis on the digital products that were essential for at-home learning. But at this point, retailers are no strangers to shifting consumer behaviors. Those with good demand analytics have already been preparing for changes in back-to-school shoppers’ needs this year.
The NRF also found that, given this year’s inflationary pressure, traditional sales events may play an even larger role for back-to-school and college shoppers. But as with any major retail season, retailers should use the best analytics possible to identify which promotions are effective and which ones are ineffective.
“Ineffective promotions not only hurt the retailer financially, but they are also a large drain on operational resources at a time when labor is still uncertain in many markets,” said Matthew Pavich, senior director of retail innovation at Revionics. “It’s also a time when students are reducing their work availability to go back to school themselves — thus exacerbating the issue and making ineffective promotions particularly wasteful.”
This hunt for the best deals resulted in many consumers starting their back-to-school shopping earlier. Big sales events like Prime Day and Walmart+ week were largely fueled this year by shoppers looking for bargains on essentials, including school supplies. And yet, it’s not just an earlier back-to-school shopping season, but an extended one.
“Many retailers are starting back-to-school campaigns a lot earlier than in previous years,” Rastogi said. “Similar to the extension of Black Friday, the back-to-school event is now extended to deal with supply challenges.”
NRF also reported two additional leading reasons why consumers are dragging out their back-to-school shopping: Many shoppers are still holding out for the best deals, and they have yet to receive a full list of required school supplies.
Whether capturing early demand, driving everyday sales, or moving out seasonal items, retailers that leverage advanced analytics to inform their promotions and markdown plans will see better results. Not only will they improve market share, sell-through, or unit sales on individual promotions and discounts but also on their back-to-school pricing approach as a whole.
According to Pavich, “Superior analytics consider the affinity and cannibalization of a given promotion and how it impacts the business rather than just evaluating the lifts of individual products. This allows retailers to build strategic campaigns rather than a collection of tactics that may offset each other.”
We’ve talked before about how economic dips translate to both shifting loyalty and price sensitivity. During this back-to-school season, consumers will not only be looking for the best promotional deals to save money but also shopping for cheaper brands.
This is yet another opportunity for retailers to get their private label products into more carts. In fact, recent data from Barclaycard shows nearly half of U.K. consumers are opting for own-branded items to save money in the cost-of-living crisis.
However, this doesn’t mean only the lowest-cost brand will win. Retailers need the right data to know where to price competitively and where quality wins over price. If a retailer’s private label can meet consumer expectations for value in this crucial time, they can build long-term loyalty with customers.
“The retailers with the best analytics should know which items are most important to consumers and which items are able to be priced higher or promoted at a lower discount due to superior quality,” Pavich added. “This holistic shopping experience is critical for back-to-school — particularly for families who need to provide essentials for multiple children.”
It’s important to note and prepare for the impacts geography has on timing and demand during the back-to-school shopping season.
Unlike fixed-date holidays, back-to-school dates vary by country, region, state or even school district. This rolling start to the school year means larger retailers will be dealing with differences in demand across different store locations.
Another major impact on timing across state lines is U.S. tax holidays. Tax-free weekends around the back-to-school season typically lead to massive demand and sales spikes within a small window. This can make a national retailer’s back-to-school strategy more complex as they try to offer the right products and promotions at the right time across numerous different school schedules and tax-break events.
This is where a strong localized pricing strategy really comes into play, allowing retailers to optimize pricing for demand patterns by zone or location. “AI helps retailers understand what consumers expect at the right time, increasing profitability and customer satisfaction,” said Rastogi.
While a crucial selling season like back-to-school can have retailers hyperfocused on driving more sales, AI-driven pricing helps maximize results all year long. With AI, retailers can understand and anticipate customer purchasing behaviors, market trends, demand shifts and competitive pricing moves to make the right pricing decisions for their customers and their organizational goals.
At Revionics, we help retailers take their pricing strategies and processes from a passing grade to an A+, and we’ve been doing it for more than 20 years. To learn more, click here to contact us to schedule a session with one of our pricing experts.
Maisie is a content marketer and copywriter specializing in B2B SaaS, ecommerce and retail. She's constantly in pursuit of the perfect combination of words, and a good donut.