Deloitte: Back-to-School Spending Expected to Be Less Than Last Year

By Chris Morris, Fast Company (TNS)

Back-to-school shopping is underway for many parents, but overall spending for the season likely won’t see much of a bump in 2024.

Deloitte’s annual back-to-school spending study predicts families will spend approximately $586 per student this year, which is a bit less than last year (when the average was $597 per student). All totaled, the financial services firm says Americans will spend $31.3 billion on school supplies this year, compared to $39.9 billion in 2023. It is, for most families, the second-biggest expenditure of the year, according to the National Retail Federation.

Middle- and low-income families will be spending less (9% and 4%, respectively), while high-income households, making $100,000 or more, plan to spend 5% more than they did in 2023.

Part of the reason for the majority of consumers’ reduced spending is growing concern among Americans about the November election. More than half, or 57% of the people surveyed said they were anxious about the election, and 37% said they are being cautious with their household spending as a result. Should budgets get too tight, parents say they will cut back spending on school supplies and clothing.

Inflationary fears are at the heart of those election concerns. The cost of school supplies has increased 24.5% over the past four years, per the Bureau of Labor Statistics’ Consumer Price Index—and 73% of the people Deloitte spoke with said they were worried about rising prices for everyday purchases. (The survey was conducted in late May 2024. On Thursday, the Labor Department reported the first monthly decline in overall inflation since May 2020. The Wall Street Journal, meanwhile, reported this week that economists fear inflation could move higher should Trump win in November.)

Those budgetary concerns could be good news for Amazon as it gears up for Prime Day 2024, as well as discount stores. That’s as parents will be more focused than ever on price this year, shopping across 4.7 retail formats (whether online or at brick-and-mortar locations), compared to 3.9 last year.

“Retailers can expect headwinds to volume and loyalty as consumers seek to save money,” said Stephen Rogers, a managing director at Deloitte Insights Consumer Industry Center, Deloitte Services, in a statement. “However, wanting to please their kids, retailers will likely have opportunities to harness the indulgences parents are willing to make.”

Gen Alpha shoppers rising

Many parents tend to splurge a bit in back-to-school shopping, if for no other reason than to get their child excited about the idea of returning to the classroom. This year, Deloitte says, kids might have more influence than ever on their parents, with 85% of guardians saying they can be influenced to spend more by their children. (Of course, many of those high-demand items are likely to be what’s trending on TikTok at the time.)

While it’s technically once-removed spending on their part, it’s an early peek at how Generation Alpha (those born between 2010 and now) will act as consumers as they age and begin to become more directly involved in the day-to-day economy. The youngest generation already has a tremendous amount of financial influence. The typical Gen Alpha kid spends $45 of their own money each week, or about $2,340 per year. When you put all the Gen Alphas together, that comes out to about $50 billion.

Clothing and school supplies will account for most of the back-to-school spending this year, together covering about $20 billion. Spending on technology is expected to dip by 11%, likely a result of pandemic tech spending, as replacements won’t be needed just yet.

To afford these things, most parents say they will cut back on other expenses, with 64% of low-income earners, 57% of middle-income earners, and 39% of high-income earners adjusting their outlay. Big-box retailers like Walmart and Target are likely to get a sizable percentage of the consumers, with 77% of shoppers saying they prefer mass merchants for back-to-school spending. Amazon and other online retailers were second with 65%.

Ultimately, Deloitte said, shopper behavior will come down to two factors.

“Families are searching for deals and prioritizing value and convenience to save wherever possible,” said Brian McCarthy, a principal of retail strategy at Deloitte Consulting. “This dynamic creates an opportunity for retailers to take some of the anxiety out of the season by extending loyalty programs and incentives. In addition, building a seamless omnichannel approach could better position retailers to see consumers coming back throughout the season.”

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