Back-To-School 2019 Profiler Parents and Students Are Ready to Spend Brought to you by Media Group Online, Inc. © 2019 Media Group Online, Inc. All rights reserved.

Current Economic Conditions Should Drive a Robust Spending Season Although April 2019 retail sales decreased an unexpected 0.2%, it was largely because of slower light-vehicle sales. April did follow March’s 1.7% increase, the best since September 2017, and April was 3.1% better than April 2018. The major consumer confidence indices are increasing, with The Conference Board’s April reading at 129.2, compared to 124.2 during March. The University of Michigan’s index was 102.4 for May, compared to 97.2 for April, and the highest since 2004. Gallup’s April 2019 survey data revealed 56% of Americans consider their current financial situation as either “excellent,” 12%, or “good,” 44%, compared to just 15%, “poor.” The total positive rating (excellent/good) is the highest since 2002.

Small-Business Owners Like Their Prospects Three major small business indices are also surging, with the National Federation of Independent Businesses (NFIB) Small Business Optimism Index increasing 1.7 points during April, to 103.5, as inventory sell-down, profits and hiring increased. Of the small-business owners (SMBs) participating in the April 2019 Wells Fargo/Gallup Small Business Survey, 70% said they were more optimistic than pessimistic about their financial situation during the next 12 months. Although conducted during 2018, the National Retail Federation’s Small Business Owners’ Survey found 67% of SMBs said they expected to be “better off” during the next 12 months, with 27% “about the same” and 6% “worst off.”

2018 School-Age Spending and Trends, Part 1 As is the case with most of these “retail holiday” Profilers, the forecast for Back-to-School 2019 spending isn’t yet available and is provided too late for you to help your clients plan for the season, so 2018 data must serve as a guide. With many school systems starting classes during August, 62% of parents who participated in Deloitte’s 2018 Back-to-School survey said they started shopping before August, and those who did spent approximately $100 more than late- season shoppers. Of the approximately $28 billion in total Back-to- School spending, shoppers said they were anticipating spending $18 billion of that total from mid-July to mid-August.

2018 School-Age Spending and Trends, Part 2 Physical stores had the largest share of 2018 Back-to-School shopper spending, or 57% ($15.7 billion). Online continued to grab a significant share, or 23% ($6.3 billion); however, 20% of shoppers were undecided where to shop. Mass merchants continued their dominance as the #1 Back-to-School shopping destination for 2016, 2017 and 2018, where 83% of shoppers said they planned to visit. Dollar stores were second, at 38%, and online-only retailers third, at 36%. Although the majority, or 49%, said they would make online Back-to-School purchases via a desktop/laptop, it was 8 points less than 2017, while mobile purchasing increased from 49% during 2017 to 53% for 2018.

2018 College-Age Spending and Trends, Part 1 Although school-age children also influence their parents’ Back-to-School spending, Deloitte’s 2018 Back-to-College survey found “more than 80% of parents expect to collaborate with their students on budgeting and shopping.” In 42% of high-income households ($100K+), students were expected to use parents’/family’s credit cards while 39% of those from low-income households (<$50K) would fund their purchases, and 37% in middle-income households ($50K–$99K). Back-to-College spending is more diverse: college supplies, $8.2 billion; computers & hardware, $4.4 B; clothing & accessories, $4.2 B; dorm/apartment furniture & supplies, $3.5 B; household appliances & supplies, $3.0 B; digital devices & subscriptions, $2.2 B.

2018 College-Age Spending and Trends, Part 2 Mass merchants, 75% share of Back-to-College shopping; on-campus bookstores, 61%; and online- only retailers, 51%, were shoppers top 3 destinations; however, low-income shoppers preferred dollar stores, off-campus bookstores and consignment/thrift shops. Back-to-college shopping via a desktop/laptop decreased significantly from 2017 to 2018, or 80% and 69%, respectively; however, the mobile channel only increased 1 percentage point, from 44% to 45%, respectively. As with most purchases from online retailers, 75% of Back-to-College shoppers said it remained the #1 driver of preferred online shopping, with buy online, return to store second, at 53%, and buy online, pick up in-store third, at 45%.

Advertising Strategies Although physical stores are still all shoppers and Back-to-School shoppers’ preferred destinations, online shopping continues to increase, and at a faster rate, which makes it imperative for local retailers to develop and promote their online presence. According to Deloitte, there is an opportunity for local consignment and thrift shops to increase their share of Back-to-School spending and not necessarily with lower-income households, as many college-age students understand the benefits of “thrift” shopping. Local advertisers may be able to compete with major Back-to-School retailers by promoting a very early (late June) weekend of specials, and a post-Labor Day sale to grab a larger share of late shoppers.

New Media Strategies A Website and/or social media photo/video catalog is another opportunity for local retailers to attract a larger share of Back-to-School shoppers. A catalog could specifically feature not only standard clothing, etc., but also show some “edgier” items. Influence marketing can work well for Back-to- School, so retailers should consider asking local school-age children and/or their parents and college-age students to be a Back-to-School shopping influencer for the season in exchange for a significant discount. Another way to use influence marketing is to ask customers (students, specifically) to share their purchases on social media, especially if they found an unexpected bargain/special. Ask them to create short videos showing and explaining why they bought a specific item(s).