Back-to-school shoppers are expected to spend a record amount this year, with consumers facing higher prices and fretting over economic conditions.

Sales for the season are expected to total $34.4 billion, according to a survey released Thursday by Deloitte LLP. That breaks down to $661 per student -- an increase of 8% from a year earlier -- with 37% expecting to spend more than last year. 

Respondents voiced concern about the economy, with 54% saying they expect it to weaken in the next six months, while 57% are worried about inflation. One in three households say they are worse off compared with a year ago.

“Despite a pretty challenging economic outlook, parents plan to make this shopping event happen for their kids,” said Stephen Rogers, managing director of Deloitte’s Consumer Industry Center.

Back-to-school sales are crucial for retailers, and competition has intensified with Amazon.com Inc.’s midsummer Prime Day sale. This year, retailers may use the season to try and offload excess inventory that has built up in recent quarters.

Apparel and school supplies will be the most sought-after items this year as students move away from remote learning and go back into the classroom, according to Deloitte. Clothing spending is expected to rise 18%, while technology spending is set to decline 8%.

Shoppers are bracing for difficulties finding what they’re looking for, with 63% expecting to encounter out-of-stock items. More than three quarters said they’ll switch brands if their preferred choice isn’t available -- a warning that companies have to get inventory right or risk losing sales. 

Companies bulked up stockpiles last year to hedge against transportation bottlenecks, which now has left them with too much merchandise. Walmart Inc. has said it needs “another couple quarters” to sell through its bloated inventory. Meanwhile, Target Corp. said in June it was aggressively clearing out excess products with markdowns, in part so it could refresh offerings in time for the back-to-school season.

‘More Consideration’

Some retailers, such as Kohl’s Corp., are marketing their value brands among their back-to-school offerings as shoppers contend with rising prices and a falling stock market.

“Inflation is causing consumers to put more consideration into where and how they spend their money, and are looking for ways to save where they can,” Kohl’s said in an emailed statement.

The Menomonee Falls, Wisconsin-based chain is highlighting its suite of affordable private-label brands, along with its coupons and customer loyalty program. Gap Inc.’s Old Navy, meanwhile, has pledged to freeze prices on kids clothing during the back-to-school season.

Credit Use

For parents of college students, 77% said they plan to use credit to finance expenses -- up from 70% a year earlier. That’s another sign that inflation is starting to erode the purchasing power of some consumers.

The back-to-school shopping season is expected to peak by the end of July, as usual. The Deloitte survey took place from May 20 to June 2 and polled 1,200 parents with at least one child in grade school in the US. It polled 950 parents of college students.

Source:
courtesy of BLOOMBERG

by Allison Nicole Smith

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