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Will Back-to-School Season Rekindle Hope for Retailers?

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The world has gone into a reset mode in 2020, thanks to the coronavirus outbreak that has left no option but to rethink how we did things. The lifestyle trends that are more prevalent amid the pandemic are cook-at-home, dine-at-home, work-from-home, online shopping and even study-from-home.

Notably, many schools were closed this spring due to the coronavirus pandemic. A recent survey by the National Retail Federation (NRF) reveals that parents are more concerned about their kids returning to school this year and assume that students will have to learn online for at least sometime before returning to classrooms.

While uncertainty prevails on whether children will return to schools and colleges this fall, parents are looking at the back-to-school sale season as an opportunity to buy the essential learning tools to ensure the continuity of study-from-home for their children until a vaccine for coronavirus is found. Consequently, this year is likely to set another example, with consumers taking a new approach to buying back-to-school supplies.

That said, the soon-to-come back-to-school shopping season is likely to be focused on what consumers purchase and how they do it. We are likely to witness a shift in consumer buying patterns to digitally advanced gadgets like laptops, tablets, smartphones, head phones and other accessories, which will enable students to take online classes uninterrupted. Some other popular items in focus will be study desks or chairs, other related furniture, and workbooks, preparing for the right learning atmosphere for kids.

Traditionally, the back-to-school season has been about spending on supplies related to children returning to schools and colleges after the summer breaks.

Apart from the purchase of the non-traditional back-to-school items, the sale season is likely to witness more online purchases and lesser store visits, as coronavirus fears have made consumers become skeptical about frequent shopping trips. Even though retail stores have reopened after the pandemic-led closures, NRF survey reveals that nearly 55% of K-12 families plan to shop their back-to-school supplies online, whereas online shopping contributed 49% last year. Among the college shoppers, nearly 43% are likely to shop online, down from 45% reported in the last year.

Per the NRF research, parents of children in the Kindergarten to high school (K-12) plan to spend $789.49 per family, on average, for back-to-school buys this year compared with the last year’s projected spending of $696.70. Total spending on school supplies is likely to be $33.9 billion, marking an increase from $26.2 billion spent last year. Moreover, spending in 2020 is likely to surpass the highest back-to-school spending of $30.3 billion recorded in 2012.

For college students, families are prepared to spend $1,059.20 per family, on average, topping last year’s record projection of $976.78. Total college spending is expected to be $67.7 billion, suggesting an increase from $54.5 billion reported in the last year and beating a record of $55.3 billion set in 2018.

On a combined basis, for K-12 and college, NRF estimates the total spending of $101.6 billion, suggesting a rise from $80.7 billion spent last year and crossing the $100-billion mark for the first time.

In addition to the aforementioned factors, parents also remain concerned about the health of children, their finances and the quality of education received. Notably, the unemployment rate in the United States declined to 11.1% in June.

As back-to-school is one of the biggest selling seasons, retailers generally look forward to this as revenue boosters. Owing to the health and pandemic concerns, the spending for the back-to-school season is likely to remain higher than before due to the nature of products purchased this year. Consequently, the season may trigger growth for retailers after the blow from the pandemic-led closures in the past few months.

As clear from the above discussion, retailers selling computers, related hardware and accessories; home furnishers, and general school supplies are likely to be primary gainers this year. Additionally, retailers with presence online are likely to have an advantage over peers. The list of gainers will primarily include stores like Best Buy Co., Inc. (BBY - Free Report) , Walmart Inc. (WMT - Free Report) , Target Corp. (TGT - Free Report) , Office Depot Inc. (ODP - Free Report) and Amazon.com Inc. (AMZN - Free Report) . Additionally, department stores, discount stores and clothing stores are likely to grab a share of the raised shopping spirits of consumers during the back-to-school season.

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