US retailers eye bumper sales from back-to-school shopping season

The retail industry is poised for its biggest back-to-school shopping season in at least five years, buoyed by parents and pupils who are primed to snap up gear for the in-person classroom experience after a year of virtual learning.

Spending is expected to reach $32.5 billion, up 16 per cent from 2020 and 17 per cent from 2019, Deloitte said. Retailers are bullish that they can benefit from shoppers’ increased comfort with online shopping, honed during the pandemic, and strong demand for everything from school uniforms to markers.

Still, retailers and brands have ample challenges to navigate to score strong sales. Delays at global ports could contribute to shortages of coveted products, and an elongated shopping season that stretches from June to late September makes it harder to plan inventory flow and promotions. Inflationary pressures abound and could alter shopper behaviour, making the season a test of how well the industry has adapted to a consumer landscape reshaped by the pandemic.

“Parents are desperate to get these kids back in school,” said Rod Sides, vice chairman and head of US retail and distribution at Deloitte. “And we’re seeing they’ll be willing to spend.”

Technology will be an important area for spending as parents and students continue to spring for gadgets. But apparel is likely to make a resurgence as students will, for the most part, no longer be floating heads on Zoom calls. That is a welcome change for retailers that saw clothing sales suffer amid stay-at-home living. A forecast from Customer Growth Partners predicts sales of apparel and accessories will soar 46 per cent from 2020 during the back-to-school season, stronger growth than it expects from other categories. Overall, CGP expects retail sales to increase 16 per cent from last year in the period from July through to the end of September.

Several retailers are expecting sales from this back-to-school season to outpace 2019. Some, including Lands’ End, are expecting shoppers to open their wallets early.

“Parents want to really prepare and be ready,” Lands’ End chief executive Jerome Griffith said. “I think your average consumer understands that there’s a supply chain issue in the US based on how quickly the economy has been heating up. They’re shopping earlier to be able to buy what they want.”

Newell Brands, the company behind the Elmer’s and Sharpie brands, is positioned to benefit from a return to the classroom. The company is “really optimistic” about a potential rush as students buy supplies they skipped over last year and parents spend a little extra on name-brand items for younger kids. For college students, larger class sizes due to deferred enrolment could contribute to pent-up demand, said Laurel Hurd, president of the company’s learning and development segment.

“We’re excited for a return to normal after all the craziness we’ve been through,” she said.

Shoe and accessories retailer DSW ordered more Adidas and fewer cartoon backpacks this year, catering to changing trends. Bed Bath & Beyond recently launched a private label line featuring bedding and bathroom items aimed at college students. The company has begun offering Klarna and AfterPay, instalment-payment options that younger, Gen Z shoppers are more likely to use. Old Navy, the cheap chic retailer owned by Gap, will highlight its active apparel and stretch denim, conceding that the comfort trend will still be king during the autumn. Dormify, a start-up that sells college decor, said headboards were selling out fast as incoming students looked to spruce up their dormitories.

Deloitte’s survey found that 62 per cent of students were expecting to return to in-person school this autumn, while 19 per cent of students said they would experience a hybrid model. The move away from mostly virtual learning bodes well for retailers like Lands’ End that sell uniforms and DSW, which sells hard-sole dress shoes, “Mary Jane” shoes and the boat shoes that some schools require.

“All of that stuff is exploding,” said Jim Weinberg, DSW’s chief merchandising officer.

Orders for back-to-school inventories are usually placed months in advance, a process that was complicated this year as a shortage of shipping containers and delays at ports disrupted global trade. Accordingly, DSW factored in 120 days in shipment time, compared to the usual 90. Kohl’s also moved to bring in merchandise early because of industrywide supply chain issues. Bed Bath & Beyond said it was mindful of inflation on raw materials, labour and freight, and is managing the shipping costs and delays for products coming from Asian ports. In some cases, it might raise prices on consumers.

Such moves could leave some shoppers disappointed, as more than half of parents said in Deloitte’s survey that they would hunt for discounts. Retailers have used the pandemic to reset their relationship with promotions; many started offering them less frequently and became more comfortable buying less inventory. That stance will now be tested during this time of year when customers have been trained to expect deals. Whether or not families will be able to catch a deal will largely come down to the timing of their shopping trips, Mr Sides said.

“Retailers are probably happy because they will get a higher price point,” he said.

The back-to-school season provides important clues about what products are hitting the mark with shoppers, Doug Howe, Kohl’s chief merchandising officer said.

This time of year "is one of the more exciting ones because it usually is the preview of what's going to happen for holiday, which is obviously our biggest season,” he said. “There are a lot of trends that will emerge that we'll be chasing into holiday."