Every 7 Days

We’re all aware of the economic factors affecting back-to-school shopping sales estimates this year. But the way people shop, who is shopping and a redefined back-to-school season may also play a role in the predicted decline of sales.

A recent article on b2c.com goes beyond the typical look at economic data when assessing the sluggishness of back-to-school sales. The points made in the piece are worth considering because they assess the change in consumer shopping habits and change in school calendars.

Following is a list of the five trends changing back-to-school shopping habits:

  1. More schools are moving to a year-round calendar, so supplies aren’t simply needed one time of the year. In addition, more students now attend summer school which means supplies need to be on hand.
  2. The recession has led to a just-in-time shopping habit — with families budgeting their expenses by spreading out what they spend and when they spend. Rather than buying all of the necessary school supplies at once, families may wait to buy fall and winter clothing, backpacks and shoes when they’re needed — not in August. The article notes that 50 percent of working moms plan on reusing school supplies from last year. And teens are also more likely to shop just-in-time, buying their clothing in fits and starts throughout the year as fashion trends change.
  3. Price sensitive shoppers can shop around. Online shopping allows consumers to compare prices and to buy what they need, when they need it. No longer does a consumer have to visit a brick-and-mortar store to prepare for the school year.
  4. The spend on electronics is decreasing. More families already have tablets and phones, so those sales figures are down. Add to that the fact that the devices don’t need to be replaced and the prices on the devices are decreasing, and it’s clear why electronics sales continue to drop.
  5. Teen unemployment and/or underemployment has affected sales figures. With a nearly 24% unemployment rate, teens have less money to spend. During the recession, more teens have tried to help contribute to the family’s income and the article notes that 35% of teens help pay for their back-to-school supplies.

Does your POS data back up these trends? Are you seeing a general rise in sales of school-related items (supplies, electronics, clothing, backpacks, dorm furniture, etc) throughout the year, rather than just during the back-to-school season? What promotions are most successful for this audience? Do your promotions cannibalize sales? Are your brands being passed over for more price-conscious private label offerings? Is your inventory meeting their needs year-round? Keep the above trends in mind the next time you review your POS data and be open to the fact that while end-of-summer back-to-school sales may be down, you may in fact be selling more of these same supplies at a different time of year.

Like it or not, online shopping trends have an effect on brick-and-mortar shopping trends. According to the NRF, there are five online holiday trends that will play a role in holiday 2013 shopping.

According to the 2013 Shop.org Pre-Holiday Retailer Survey, retailers will be integrating mobile and digital strategies in order to maximize their fourth quarter sales. These trends include:

  • Retailers are working to ensure their online sites and promotions are all mobile friendly. The more consumer touchpoints, the better.
  • Forty-six percent of retailers plan on using Google product listing ads while another 38 percent plan on using consumer emails with a specific focus on customizing the message — a great way to capture mobile consumer interest no matter where they ar.
  • Thirty-eight percent of retailers plan on offering free shipping (with a minimum purchase level) in order to keep pace with the free shipping offer of online retailers like Amazon.
  • Product pages will become even more important as a means of capturing consumer interest and cross-selling. Look for more customer reviews, suggested products and cross-selling functionality on these key pages.
  • Video is king — everything from product demos and how-tos, to new products and behind-the-scenes videos. 

Rising gas prices, economic uncertainty and the back-to-school season... Is now a good time for your team to consider coupons? During the first six months of 2013, CPG companies offered 168 billion coupons.

According to the CPG Coupon Industry Facts report, coupons are showing a modest recovery of late. Digital coupons, in particular, are increasing in distribution and redemption. Digital coupon redemption was at 6.1% for print-at-home coupons and 2.5% for paperless. Free standing insert coupons still represent the majority of the sector (over 90%).

As for CPG trends in coupons?

  • Non-food coupons were in the majority (62.5%) for the first half of 2013. 
  • The lifetime of coupons has been shortened, on average, to 9 weeks. 
  • There's a rise in coupons that have a consumer buy two or more items. 

This year, shoppers are expected to spend less on back-to-school shopping — and they'll most likely stick to the necessities, according to the NRF. In some states, shoppers will even receive a tax break on back-to-school supplies.

According to the NRF's chief executive, Matthew Shay, surges in gas priced and continued economic uncertainty will lead to a dip in back-to-school sales — an average of $635 spent on clothing, supplies, electronics and shoes, as compared to $688 last year.

Some states are offering tax breaks on back-to-school items this year — the trick, for consumers, is knowing what breaks their state is offering and what the limits are on those tax breaks. CNN offers a table of back-to-school tax breaks that demonstrates the variability. In general, all 17 states offer a tax break on clothing, but for variable amounts. Some states are offering a tax break up to $3,500 for a computer, while other states put the limit at $700. 

How will the tax breaks affect shopping? It remains to be seen. Will stores promote these tax breaks? And, if so, will it drive sales? And how will it affect the consumer? Some argue that the tax breaks are ineffective because the limits imposed often "force" consumers to choose a cheaper item, rather than the one they would have chosen.

Avoid instocks during the promotional back-to-school season — read our Insight Series on the key metrics that can help you avoid instocks.

The more information you can provide consumers, the better — as long as you're clearly communicating your message. There are some important lessons for CPG marketers from  a fascinating sales linguistic study, summarized in Harvard Business Review (HBR).

The study divided people into three groups — those who received a photo and brief written description of the product; those that received a photo and had the description read to them with emphasis on certain wording; and a those that received the above, and were able to touch and inspect the product. Each group then had to estimate the price of the item and ranked how certain they were of that price.

The results showed that group three — those with the most information — were most comfortable with their pricing estimates. Price estimates were also totaled for each group and group three had the lowest total estimates for the products ($17,000) while group two had the highest ($325,000). 

What can marketers learn from the study? According to HBR:

  •  Marketers need to clearly communicate their information. One of the items the respondents had to estimate the value of was a baseball hit by Manny Ramirez (known for his home runs) of the Cleveland Indians. Respondents assumed the ball was a home run hit — it was not — and they based the value of the ball on that assumption.
  • Group two was clearly influenced by the tone and manner in which the product description was read — their total estimated product value was 20 times that of group three and seven times higher than group one. Delivery, not just words on the paper, matter. Something to consider for tv and radio ads. You may also want to consider picking up the phone or making an in-person rather than simply sending an email the next time you need to convince someone of something.
  • Hands-on evaluation of a product led to lower price evaluations of the item.