For retailers, back-to-school season is a race to the extremes

by Infor Retail September 1, 2016 Assortment Planning

Back to school season is a peak annual moment in the retail industry—drawing more customers than any other shopping period besides Christmas. But retailers may need to rethink their back-to-school strategies, mostly due to the growing financial rift in the back-to-school shopper base.

Back to school: The haves and the have-nots

Rachel Abrams observes in the New York Times that the number of students from low-income households is growing dramatically—up from 9 million in 2007 to 11 million in 2014. And in 2016 alone, parents of K-12 students were predicted to spend $27.3 billion on school supplies, up from $18.4 billion in 2007.

But there’s an increasing gap in the way people are spending their money on back-to-school gear. At one end of the spectrum, it’s not uncommon for parents to drop $30 on a luxury pen from retailers like Kate Spade. At the other end, parents are aiming to be as frugal as possible—relying heavily on bargains to make it through the end of summer and beyond.

This trend is manifesting itself through online purchasing. According to a recent survey from BigCommerce, parents spend 75% more time looking for products online than people who don’t have kids. And while parents typically spend 60% more than people without children, it’s apparent that most are looking harder to find better deals.

How can retailers make the most of back-to-school shopping?

To address the gap between back-to-school shopping customers, retailers need to widen their appeal to a larger clientele base. By committing to either value or luxury products, they can work to circumvent the slump that’s hurt revenue numbers for so many middle-class targeted retailers like Sears and Macy’s. Some retailers, like Nordstrom, are splitting the difference and offering both discounted and upscale products simultaneously.

The back-to-school schism is just the latest side effect of a dissipating middle class, which now accounts for only 43% of the population—down from the 55% it occupied in the 1970s. For retailers, this is yet another call for large-scale adjustment, whether it’s Nordstrom’s bargain offerings, or a skew toward Walmart’s strategy of stocking more upscale items. The question now is which retailers will make the most efficient, most effective changes—without sacrificing the differentiators that make their brands unique.

Learn more about modern Assortment Planning from Infor Retail.

Back to school

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