2021 Deloitte back-to-school survey has been saved
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In the past when my kids have come home with those lists, you’re sort of almost like on a scavenger hunt trying to find the exact colors of pens and pencils and notebooks that they want. Sometimes that can be a challenge. —Kate Ferrara, US Retail, Wholesale & Distribution practice leader, Deloitte &. Touche LLP
Tanya Ott: Shopping for school supplies can be challenging even in normal times. But with some kids going back [to] the classroom, some learning virtually at home, and some not really sure what they’re doing … we’ve got a lot to talk about today on the Press Room.
Tanya: I’m Tanya Ott. This time last year there was a whole lot more uncertainty about starting back to school. Some school districts hadn’t decided whether they’d be teaching in person. Others were scrambling to get technology in place to handle another semester of remote learning. And parents and kids were dealing with a lot of anxiety.
But this year is a little different. The vaccine rollout and subsequent reduction in COVID-19 cases is giving parents and students hope for a return to normalcy. In a recent Deloitte survey of 1,200 parents of school-aged children, 62% of respondents said they expect their kids to be back in the classroom full-time. Nineteen percent said their kids would be hybrid—partly classroom and partly virtual. Eleven percent said they’ll be virtual all the time and the rest just weren’t sure yet.
But there’s one thing they are sure of. They’ll be spending more on back-to-school shopping.
Rod Sides: We were expecting a lot of parents to roar back in with their wallets and be able to try to make up for the last year, and that’s exactly what we’re finding.
Tanya: That’s Rod Sides. He’s vice-chairman and leader of Deloitte’s Retail practice. Kate Ferrara leads the US Retail, Wholesale & Distribution practice. With their team, Rod and Kate produced this year’s annual back-to-school survey.
Kate Ferrara: So overall, we see spending up about 16% year-over-year from last year, which is a big jump. The average back-to-school spend per child is about $612 per student. And 40% of the households that we surveyed expect to spend more on back-to-school items than they did last year.
Tanya: When you did your survey last year, just 17% of respondents said they were more confident in the economy’s prospects. That number is up dramatically this year. I was surprised to see that 78% said they were in either a similar or better shape than they were last year. What did you make of that number?
Rod: A lot of it has to do with the stimulus packages that were put in place. A lot of folks have stockpiled some cash along the way. So they believe that they’re at least poised to return to the school year with a little more in their pocket and the prospects of seeing things like retail sales, et cetera, pick up in the back half of the year. Many economists and probably many consumers felt like that once we were able to raise the controls or what have you from allowing people back in the marketplace that we would see that kind of a rebound. That’s why the prospects are up so much year over year.
Kate: I also think this time last year, again, so much uncertainty of what the school year was going to look like. With the economy and questions about the economy, people just were spending less as well. I mean, didn’t perhaps need as much apparel or shoes, some of the traditional back-to-school items that we typically see. There was a lot of remote learning going on or being planned for, too. So it’s also a combination of less spend last year as well as people just feeling a lot more positive about their own personal financial situation, as well as the economy.
Tanya: The apparel question in particular. I have nieces and nephews that have basically been wearing basketball shorts every single day, if we’re lucky, sometimes it’s pajamas to virtual school.
We all relied way more on tech devices and digital services over the last year, whether we are professionals or we were students in the classroom virtually. What does that mean for back-to-school shopping in terms of tech spend?
Kate: The absolute biggest percentage jump was technology. So while there was sort of a modest, like 2% growth in more traditional products, things like school supplies, your pens, your pencils and apparel, the biggest jump was in electronics, computers, hardware. We saw a 37% year-over-year jump in things around technology products and only a 2% jump in the traditional products. So that’s a trend that it is not surprising, given, again, the fact that we still could have some hybrid learning next year. Even if students are fully in the classroom, a lot of these students are just used to a more digital learning experience. So using the portals, using some apps that they use last year. For my own children, they’re really using the technology more and more. They’ve gotten used to that. So that was probably one of the biggest changes that we saw this year in the survey and how much the digital learning has really propelled the technology spending this year.
Rod: The other things that’s kind of interesting in that space is that a lot of the elementary schools started to really use technology in a way that we hadn’t seen before. So I have friends and colleagues who talked about the fact that tech was being now integrated even at the kindergarten level, which is quite amazing when you think about it. However, a lot of kids are really ready to use it at this point because we do expose them so early.
Tanya: What I found, maybe a little bit surprising, at least to me, was that the tech spend was up so dramatically or is expected to be up so dramatically this year. I would have thought that people would have already purchased the laptops or tablets or other technology that they needed last year.
Rod: They probably did make some of those purchases, but at that point we didn’t know how permanent this change would really be. So there was some of that that rebounded. I also believe that we’re seeing a major growth in the middleincome folks making those investments. We looked at the pickup of tech spend among kind of that middle cohort, which is $50,00 to $100,000 [annual income] and we saw that grow dramatically. So what that told us is that that group of individuals didn’t necessarily invest last year, but they know they’re going to have to this year. That really propelled a lot of the growth as well.
Tanya: So maybe they just were sort of getting by with what they had, maybe they had some of cast off piece of technology that had been sitting in a closet or something like that that they pulled out and made do with for the past year and then are now upgrading.
Rod: The other thing that’s interesting as well is that when we look at things like digital subscriptions for learning aids, et cetera, that also continues to stay high and has continued to grow year over year. The interesting thing about that is that you would expect that to subside as we go back to, quote unquote, normal classrooms. If you remember, last year, there was a fair amount of anxiety around the quality of education that perhaps the kids were getting. What that says is that parents were able to supplement some of those online learning, they have stayed with that. And so they continue to make those investments on behalf of their kids so they get the extra help they need, but in a digital environment.
Tanya: We have also faced some real issues with supply chain. What types of school supplies are being most affected by supply chain issues?
Rod: There’s been interesting shortages that we see across a number of products, not just what we’re dealing with paper products last year. But shelves themselves are not quite as full as they’ve been in the past. That’s really driving a lot of the parents to start to shop earlier.
Kate: One of the things that could be a bright spot for some of our retailers, 59% of the spend is going to happen before the end of July. You know, any time you can get a customer to start shopping earlier, generally they’re going to spend more. So to the extent that you get people in the stores, get a promotional early, get people starting to shop early, that could also be a bright spot for retailers in terms of overall spend.
Rod: That’s a move forward of about two to three weeks from what we normally see. Tt’s just interesting how shoppers are pretty attuned to the challenges they’re seeing manifest themselves that a lot of retailers have had to deal with.
Tanya: So let’s dig into the individual categories. Tech, what’s the most interesting thing that you saw there?
Kate: So when we look at tech, it’s much broader than just a laptop that you might bring to school. It’s some of the software that goes along with its subscriptions, as well as just kind of the manifestation of wearables, of mobile and everything that goes along with that. That’s getting younger and younger. I mean, we’re certainly seeing that driving down even to the elementary levels and the type of technology that students are using during the learning process.
Rod: Just put a fine point on the wearable technologies, we’re expecting it to be up over 100%, actually 129% year over year, which is quite remarkable in terms of what you would expect to see. So Kate’s absolutely right. It’s interesting to see how that’s now permeating really the entire experience that students are having.
Tanya: So the tech and particularly the wearables are seeing a dramatic increase year over year, and then when you go down into more traditional things like backpacks and lunchboxes and pens and pencils and paper and all that sort of stuff, it’s still up over last year.
Rod: It is. It’s up 2%, but it’s interesting because it does get fairly choppy if you look at the performance at a lower level. So those things are up, but things like casualwear we expect to be down 10% year over year. But uniforms and shoes, we expect to be up. So it really is an interesting look at subcategories in terms of how we expect them to perform. So in general, the spending across every category is going to be up, but they’re going to be pockets of winners and losers like we always see.
Kate: There’s a couple of key insights that came from the survey. One is this real movement toward athleisure, which is not a new thing. The leggings and the comfortable clothes, but certainly most people who have spent most of the past year or so at home have gotten used to a much more casual attire. But I also think there is a bit of pent-up demand with some of the apparel. Some of those students that maybe didn’t get a new wardrobe last year because they weren’t back in school or get those new shoes that they’re going to wear on the first day of school last year, I do think that we’ll certainly see an uptick in that. The other piece that came out of our survey, which is interesting, is with some of our higher income respondents, they’re certainly interested in fashion and spending more money in particular on that athleisure concept that I talked about and kind of moving more toward fashion. We saw that, again, a little bit more with the higher income respondents, but certainly something for retailers to keep an eye on because people are out there, and they’re ready to spend for their kids to go hopefully back to the classroom in September.
Tanya: I have three daughters, all of whom are the queens of thrifting, so I found it really interesting that thrift stores are gaining popularity.
Rod: It’s interesting that thrift in general has made that kind of return, and I do think it’s something in the generation. But when we looked at who was going to use the thrift channel this year, we were up to about 22% of folks looking for fast fashion there. Again, 19% of the folks said they expected to be in those stores on a regular basis. That was up from 9% last year. And you might have thought about, given the economic uncertainty last year, that that probably would have flipped. But perhaps it’s because there were so many places that were on lockdown and you really couldn’t get out to get to the thrift store. So I do think we’re going to see more and more folks shop at that particular area. My son who just graduated from college, that was his favorite place to shop during college.
Tanya: When it comes to more broadly how people are doing their shopping, of course many of us did significantly more online shopping or buying online and picking up at the store over the last year. Is that theme going to hold long term? Have we started to see a fundamental shift in the way people are going to be shopping in the future?
Rod: I think we have. So what you’ll find this year is that when we asked folks about preferred channel, certainly stores continue to be No. 1, but close on the heels are online. So we saw this movement last year with all the challenges were those two lines started to converge, but what we’re finding this year is about 43% of the total spend is expected to be in store. Thirty-nine percent is expected to be online. That’s up 2% from last year. It was 37 last year. So we have seen a fundamental shift here. What we were watching for a number of years was that the back-to-school season was one that was predominately in store just because it was easier, etc. What has happened is parents have figured out that, yeah, I can shop for my kids online. It’s easier. It’s faster, in certain respects. And we’re seeing a permanent shift here. I don’t see it going back. What we normally find in a downturn is that behaviors that were trending tend to accelerate. And in this instance, we found the acceleration of online over the last 18 months. And it’s here to stay.
Tanya: One that’s kind of worth mentioning, I found it interesting, my kids’ schools have always offered these preconfigured kits based on future requirements for classes and all the necessary supplies were in there. And you could walk in and pay for it and walk out with it without having to shop. And sometimes I bought them, sometimes I didn’t buy them. But the number of families in your survey who said they planned to buy these kits of school supplies this year doubled. And I’m wondering if you think that convenience, if its concerns about health, if it’s just exhaustion from last year and not wanting to go out and hunt for things?
Kate: What’s driving that trend is probably all of the above. Even some of the supply chain issues. I know in the past when my kids have come home with those lists, you’re sort of almost like on a scavenger hunt trying to find the exact colors of pens and pencils and notebooks that they want. Sometimes that can be a challenge, too. So it’s a combination of convenience. There’s always the element of is this stuff actually going to be in the stores when I need it, as well as certainly the convenience aspect of it is probably first and foremost. So it’s a mixed bag there in terms of how retailers are dealing with some of these reconfigured school supplies. For me they’re personally a life saver. I’m a big fan, but 50% of our respondents said they were also going to plan to use them. I think it’s certainly a trend that we’re seeing.
Rod: They also give you a chance to support the school system. So, in a lot of cases, you will find that any kind of profit or markup goes to support your school. So there’s a general sense that it’s kind of giving back to the community and we know how important community has been for us in the last year or so. That’s also a factor.
Tanya: Families are increasingly relying on social media to assist in the shopping process. How are they using it?
Rod: That’s an interesting discussion. So for the back-to-school school aged parents, we find that they are going to use social media really in a few ways this year that maybe they haven’t in the past. Certainly they want to be able to check out prices and offers, et cetera. But recommendations are also a big part of what they are looking for around that. So we’re finding that the use of social has continued to rise this year, probably more than we’ve seen in the past. So that one is kind of interesting as we’re looking at how things have evolved in the market. Now, one of the things that we’re doing with our back to college is we’re comparing and contrasting how much social media use is there for that group of parents who are typically a little bit older and they don’t rely on that nearly as much.
So, for instance, about 44% of our respondents for back to school said they would use social media, but only about 22% in the back to college. So that just tells you there’s a little bit of a generational gap and we’re a little bit in transition in terms of how folks are using the technology to find the right products, find the right price, et cetera. So to me, that was a really interesting finding.
Tanya: You break it down to not only social media, but are they using virtual assistants? Are they using augmented reality? What are the kinds of shopping experiences and technology that they’re using to shop? You’ve got some interesting findings there.
Rod: When we get into emerging technologies, what we find is use of digital wallets about the same. OK, so roughly 15%, 17% of total respondents said they would use that. But when we get into things like using voice assistance, “back-to-school” parents are much more comfortable using voice assistance than are the “back to college.” When we look at buy buttons on social media posts, again by two to one, the “back-to-school” parent is much more comfortable with that than the “back to college.” Using augmented reality and virtual reality, same thing. It’s almost a two to one advantage for those who are “back to school.” So, again, it’s a little bit generational in terms of what we’re seeing here, but that to me is one of the most fascinating things that came out of these two studies we did this year.
Kate: I would just add to what Rod said. The leap in use of technology in the shopping experience went up from 26% of people that thought they’d use it last year to 44% of our respondents [who] plan to use some type of technology in their shopping experience. So things like use of voice assistance for anything from get directions to somewhere to looking for promotions or coupons, et cetera. Digital wallet went up from 8% of [what] people thought they would use last year to 17%. Buy buttons on social media has almost doubled as well. So this past year, with just people getting more used to using technology, sort of being forced to use it, and we’ve had this technology component to our survey for the last few years, and it’s slowly starting to, we’ve seen at least a trend that it’s slowly started to increase in terms of people actually using it in a meaningful way during their shopping experience. But this year was a really big leap. And that’s really good news, but something that the retailers should be paying attention to as they start thinking about how to modify their shopping experience, both in-store and online.
Tanya: There are a lot of takeaways in this research for retailers, and I’d love for you to give us your perspective on what do they need to be really thinking about as they walk into the season?
Rod: We know that the shift to digital is here to stay, at least for the foreseeable future. So being able to meet the demands of the consumer at that level, I think are super important for retailers to think about as they go into the holiday. This shift generationally is probably the other big story around understanding the use of social and new technologies that is starting to take root with parents who have kids in elementary and probably middle and some high schools. And we’re seeing the older generation whose kids are in college now, they may have not been adopters or late adopters. We know that the college age parents of the future are only 10 years out. So being able to meet the needs of both sets of customers is a big challenge for retailers. But those who do it will have a great chance to win.
Kate: I would agree with everything that Rod said, and I would just add that supply chain just continues to be something that a lot of retailers are focused on. Our parents are ready to spend. They’re ready to spend on back to school, whether it’s in-store or whether it’s online. So really just continuing to make sure that the products are there, they’re ready for people to be able to purchase. So things like stock outs and unavailability of product that certainly does frustrate consumers. And there’s lots of choices of where parents can shop, so also being laser focused on making sure that the products are available that people want to buy—the tech, the apparel, the back-to-school products—and those that get that right will also certainly be winners in this back-to-school season.
Tanya: Rod, Kate, great to talk to you again. We’ll see how the season flushes out and then hopefully talk to you again next year.
Rod: Sounds great. Happy shopping.
Tanya: Rod Sides is the vice chairman and leader of the Retail, Wholesale & Distribution practice at Deloitte and Kate Ferrara is the US Retail, Wholesale & Distribution leader [for] Deloitte’s risk and Financial Advisory practice.
The annual back-to-school and back-to-college shopping surveys are chock full of data — lots of graphics, lots of numbers. It’s a virtual playbook for retailers and you can find it all at deloitte.com/insights.
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I’m Tanya Ott. Thanks for joining us and be well.
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