The Retail Opportunity for Back-to-College Shopping
Sharpen your pencils. Ready your calculators. The second biggest consumer spending season, back-to-school (BTS) and back-to-college (BTC) shopping season, is starting to ramp up for consumers. And this year is set to be one of the most substantial yet. The National Retail Federation (NRF) forecasts that consumers will collectively spend $83.6 billion on BTS and BTC items, which is up more than 10% from 2016 ($75.8 billion).
For retailers, this season presents a great opportunity to battle for shoppers’ dollars, especially on the back-to-college shopping front. While the long list of traditional school supplies for kids in the K-12 classrooms collectively contributes a large chunk of spending, it hardly compares to the BTC spend – which is nearly twice of the BTS spend ($54.1 billion compared with $29.5 billion for BTS).
As closely as these two are correlated and tracked, however, BTC and BTS shoppers behave very differently along the consumer journey. For retailers to understand how best to seize the BTC shopper opportunities, it’s important to break the B2C shopper down “elementary style” – by answering the who, what, when, where and why of the BTC consumer journey.
Who is influencing decisions?
Unlike BTS shopping, parents are not the sole decision makers when it comes to BTC spending. Students are heavy influencers, if not the sole decision makers, of back-to-college purchasing decisions. Parents and students have different perceptions about who holds the purse strings, but both point to heavy student involvement – 67% of parents discussed budgeting and shopped with students, while almost half (49%) of students decided on a budget and shopped alone.
The growth in B2C spend, in part, can be attributed to a record shattering 20 million college students/consumers that are enrolled in college.
What are they buying?
The NRF survey found that college consumers plan to spend the most in electronics ($12.8 B) and clothing ($8 B) categories, followed by snacks/food items ($7.5 B), dorm/apartment furnishings ($5.9 B), shoes ($4.5 B), personal care items ($4.5 B), school supplies ($3.9 B), gift cards ($3.9 B), and branded collegiate gear ($3.2 B). As Gen X college students are more digitally driven, technology products command the largest budgets. As a result, 63% of parents said they buy fewer traditional college supplies because students use digital technologies more often in and out of the classroom.
When are they buying?
While the majority of college consumers (34.6%) plan to start BTC shopping within three weeks to one month before school starts, 31.9% of consumers plan to start shopping at least two months before school starts – an increase from 26.1%. This is critical for retailers to note because those who shop earlier spend more than those who shop later
Where are they buying?
College students prefer to purchase products very differently than their parents. Where parents prefer to shop in-store across every category, students are more likely to shop online for computers, electronics, and college supplies. However, students prefer to shop in physical stores when purchasing clothing or housewares. It should be noted that across categories, there remains a consistent 25% of students who are undecided about which channels they will utilize to B2C shop.
Of all B2C consumers (parents and students), 44% will go online, 40% will go to discount stores 39% will go to department stores, 34% to college bookstores and 29% to office supply stores.
Why are they buying?
Convenience seems to be B2C consumers’ main motivation to purchase online, as 88.7% of students said they were more likely to purchase from online retailers who offered free shipping and 44.3% of BTC consumers would take advantage of buy online, pickup in store (click and collect) shipping services.
As most BTC products are need-based purchases, it makes sense that cost efficiency is a driver of purchasing behavior (for example, most people don’t want to spend $4.00 on a super-plush hot pink sponge, when they could buy a sponge for $1.00 that fulfills the same basic utility). Additionally, cost efficiency is a driver for discount store shopping.
While Gen Xers are price savvy, they’re allocating the money they save to other priorities. For example, a majority of students are likely to save for experiences in their college budget planning.
The back-to-college opportunity
As we’ve noted before, competing on convenience and price online will always mean forfeiting sales to Amazon. Likewise, embracing an online strategy based on those principles alone will only lead to diminishing margins.
So, how should retailers compete? By delivering incredible experiences in their stores. In the categories where college consumers prefer to shop online, there’s still a consistent 25% of students who are equally attracted to shopping online or in stores.
These are shoppers that can be influenced to come into a retail store, as they specifically budget money toward experiential events. However, the experience must be valuable and significant enough to forego the convenience and (often) price offered through online shopping.
And for the 50% of college consumers who prefer to shop in store for clothing and accessories, and 56% for household appliances, you have an opportunity to forge their loyalty with your brand more deeply through people-driven, technology-powered experiences.
What do we mean by people-driven, technology-powered experiences? When retailers put real, individual shopper data in the hands of the in-store sales associates, magic can happen. With a platform like 4-Tell’s, the online benefits of efficiency and convenience can be extended to the in-store experience through meaningful, in-store recommendations by knowledgeable, friendly sales associates who can help forge deeper brand and shopper connections while building brand loyalty.
The time is upon us to better seize the opportunity of the back-to-college season both online and in our physical storefronts. Let 4-Tell help make the in-store experience a joy for college shoppers by empowering your salespeople with better shopper data. Connect with us today to learn more.