Mid-July is usually when shopping for necessities such as clothes, shoes, backpacks, school supplies and gadgets for the new school year begins in earnest.
“This back-to-school, we’re going to see price take precedence over brand,” said Kathy Gramling, head of consumer markets for the Americas at EY. “The importance of the brand or label in overall purchase decisions fell from 24% in February to 17% in June.”
“As consumers worried about rising living costs, they cut spending on new fashions and the latest gadgets and technology,” Gramling said.
Parents are expected to spend an average of $864 on school supplies this year, about $15 more than last year, according to the National Retail Federation, the industry’s largest trade group. For those with kids in college, they’re expected to shell out an average of $1,199 this year, on par with 2021.
“Families view back-to-school and college items as an essential category, and they are taking all possible measures, including reducing discretionary spending, shopping sales and buying in-store or off-brand items. , to buy what they need for the upcoming school year,” said NRF President and CEO Matthew Shay.
Struggling to cover the costs
Even as they cut back on discretionary purchases, parents say they still bear a heavier burden to pay for essentials.
An NRF back-to-school spending survey of 7,830 consumers conducted between June 30 and July 7 showed that 68% are experiencing higher prices for the most popular school and college purchases, such as clothing, supplies school bags, shoes, electronics and furniture.
How do they budget for these purchases?
The survey showed that 38% are reducing their spending in other areas. Nearly 50% of households with incomes below $50,000 pass this stage, while a third of households with incomes above $50,000 do the same.
Many families report a dramatic change in behavior: 18% of parents surveyed report working overtime or taking overtime at work, 17% use buy now, pay later options, 14% take additional credit cards and 12% borrow money or go into debt, according to the NRF report.
“We surveyed consumers every two weeks, and the first thing that struck alarm bells for me was the increase in parents who don’t feel like they can afford all the school supplies this year,” said Claire Tassin, a retail and e-commerce analyst with market data intelligence firm Morning Consult.
“It’s a steep drop,” Tassin said.
The report is based on surveys conducted in May and June of 2,178 parents of school-aged children planning to go shopping for the 2022-2023 school year.
“Each month, families are making more and more compromises,” Tassin said. “So their financial pressure becomes more urgent.”
“For parents right now, back-to-school shopping is inevitable, but consumers more broadly will eventually reach a breaking point,” she added. “Ongoing economic difficulties, particularly inflation, are putting increasing pressure on household budgets and could lead to reduced spending just in time for the holidays.”