Consumer spending on back-to-school and back-to-college shopping is projected to break previous records, crossing the significant $40 billion milestone this year, according to two major surveys. However, rising inflationary pressures are tightening budgets, prompting parents to seek bargains and deals to maximize their purchasing power.

Traditionally, the back-to-school season is the second-largest family spending event after the holiday season, and shoppers are particularly motivated by discounts, given that prices for school supplies have surged by 23.7% over the past two years, as reported by Deloitte.

With this forecasted surge in spending, retailers are anticipating a welcome boost in sales across both online platforms, department stores, and discount stores.

Back-to-School Records ExpectedThe National Retail Federation (NRF) and Prosper Insights & Analytics conducted an annual survey, revealing that back-to-school spending is estimated to reach $41.5 billion, marking a substantial increase from $36.9 billion spent last year and surpassing the previous high of $37.1 billion in 2021. Simultaneously, back-to-college spending is expected to surge to $94 billion, a $20 billion increase from the previous year's record.

NRF President and CEO Matthew Shay emphasized the significance of back-to-class shopping, stating, "Our research for 2023 shows American consumers are eager to jumpstart their back-to-school and college purchases early."

Deloitte's separate survey indicated that despite parents' willingness to accept higher prices last year due to the pandemic, 18 months of inflation have altered their perspective. Concerns about the economic situation have led to increased price sensitivity, causing parents to reassess their approach to shopping for the upcoming school year.

Parents Cautious with SpendingDeloitte suggests that parents across all income groups plan to reduce their spending this year, contrasting with the NRF survey. The study predicts a 10% year-over-year drop in total spending as parents prioritize essential items like school supplies while delaying non-essential purchases such as technology and apparel.

Deloitte also highlights that parents will focus on finding ways to economize, diligently researching for the best deals, starting their shopping earlier, and seeking the most affordable purchasing options.

Value-Oriented Shopping UnderwayIn line with the emphasis on value, the NRF reports that preparations for the return to school are already in full swing. By early July, over half (55%) of consumers purchasing back-to-school items indicated they had already commenced their shopping. This figure matches the previous year but represents an increase from 44% in 2019, reflecting the trend of consumers initiating their shopping earlier for major spending events.

Electronics Drive SpendingFamilies with children in elementary through high school are expected to spend an average of $890.07 this year, approximately $25 more than last year's record of $864.35, setting a new high. The NRF attributes this primarily to increased demand for electronics. A staggering 69% of back-to-school shoppers anticipate purchasing electronics or computer-related accessories, surpassing last year's 65% and marking the highest level in the survey's history.

Total spending on electronics is anticipated to reach a record $15.2 billion, with laptops (51%), tablets (36%), and calculators (29%) ranking as the top electronics purchases.

Meanwhile, college students and their families are projected to spend an average of $1,366.95 per person, surpassing last year's figure of $1,199.43 and setting a new record, surpassing the previous high of $1,200.32 in 2021. Back-to-college spending has nearly doubled since 2019.

Prosper Executive Vice President of Strategy Phil Rist noted that consumers are stretching their budgets by comparing prices, considering off-brand or store-brand items, and showing a greater inclination toward shopping at discount stores compared to the previous year.

Sources: https://www.forbes.com/sites/markfaithfull/2023/07/14/back-to-school-spending-to-hit-record-high-as-parents-hunt-deals/