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Don’t waste another dime on bloated channel reporting and vanity metrics.
Inflation and summer fun converged to push back-to-school spending later, NPD Group data shows.
With inflation at 40-year highs, deals have been a priority for consumers during the all-important back-to-school shopping season. In fact, shoppers have proven willing to hold out for a great discount, according to a new study from the NPD Group.
New data from the market research group signals that back-to-school season, which is the second-busiest shopping period behind the holidays, is off to a slow start. According to a recent NPD survey that covered the first seven weeks of back-to-school season, school spending was below last year’s totals. This came as revenue of non-school sales items grew 4%, according to NPD.
There are signs that shoppers are waiting until closer to the beginning of school to make their purchases, and they may believe they can get a bargain by doing so. The survey found that 41% of those who had yet to shop for back-to-school season said they are waiting for sales.
Alongside inflation, this data comes amid a return to more in-person activities, which led consumers towards spending on experiences over goods over the summer.
“Consumers are balancing their return to school, work and social activities, while retaining some pandemic-related behaviors, and prioritizing their purchases accordingly,” said Marshal Cohen, chief retail industry advisor for NPD, in comments provided by the firm. “Consumers have been more focused on travel and social activities this summer, pushing the 2022 back-to-school shopping peak later."
This could be seen at the category level. The fastest-growing school-related categories were portable beverageware, as well as art and coloring supplies. However, there is also strong revenue growth in the beauty and automotive supplies, indicating that shoppers are still focused in other areas.
At the same time, Prime Day and other summer deal events are spreading out back-to-school spending, leading shoppers to make a purchase anytime they see it throughout the summer, whereas previously the big trips for school supplies or clothes drove spending spikes at particular times.
"This is another example of here-and-now shopping leading to shallower retail spending peaks, with sales realized over a longer stretch of time," Cohen said.
It underscores how shopping seasons are getting longer, and the rise of ecommerce is one of the motivators.
“Consumers are still spending on summer fun, and the back-to-school focus has yet to kick into high gear – but it will,” Cohen said. “While retailers have clearly begun to use promotions to drive more sales, marketers need to continue entice the acceleration of back-to-school purchasing in general, and create some urgency for apparel, technology, and other high-volume stragglers.”
Back to school survey data from NPD. (Handout photo)
The late-arriving back-to-school surge is set to converge this weekend with Labor Day, which often brings end-of-summer sales. Here, too, however, spending is focused on activities that bring people together.
Survey results from the market research tech firm Numerator found that nine-in-10 consumers are planning to shop Labor Day sales events. They’ll be seeking deals on food for holiday celebrations, apparel and household essentials.
Meanwhile, the survey also found that inflation’s impact could be lower for this holiday. The survey found that 51% of consumers expect to adjust behavior based on rising prices, which was down from 62% for Memorial Day.
Still, inflation remains a concern, and shoppers have a variety of strategies as they seek price relief. Among those who will change behavior due to rising costs, 45% will compare prices, 31% will stock up on sale items, 29% will hold off on purchasing anything other than necessities. A further 18% said they will hold off on purchasing an item at a specific price, Numerator found.
There are signs that consumers are beginning to feel better about their own position and the economy as a whole. Consumer sentiment ticked up in August, marking a 13% increase over July, according to the final reading of the month University of Michigan Survey of Consumers. Of particular note for what’s ahead, the year-ahead outlook rose 59% after two months at its lowest point since the 2008 recession.
It underscores the overlapping dynamics that are characterizing consumer behavior in this moment: Shoppers are ready to go out, but they are mindful of price as high inflation continues. While the fight against inflation will likely be a long one, people may be lifted as they begin to see less sticker shock at the pump. This comes as the shopping calendar builds toward the end-of-year holidays.
Microservices architecture allows the company to give retailers ownership over omnichannel software.
With the growth of digital commerce, providing consumer choice is at the center of all of a retailer’s operations.
In recent years, that became especially evident in the area of fulfillment.
Ecommerce made the process of moving an order into place for delivery a crucial function, as the ability to source products close to demand quickly was an imperative.
“Retailers are looking to own more of their fulfillment destiny because consumer expectations have increased,” Chap Achen, VP of product strategy and operations at Nextuple, told The Current on the floor of the NRF Big Show 2023. “Fulfillment is now a competitive weapon.”
As digital operations increasingly blend with the physical store, a host of new fulfillment options are coming online. They can have an item delivered from the store on the same day, or they pick it up. Even a wider offering such as in-store pickup has a host of different choices inside of it. Consumers can pick up an item at a counter, or a locker. They can stop by anytime, or schedule a pickup on Saturday.
While this optionality helps retailers meet customers where they are, it also adds complexity to the systems that run them, and requires operational adjustments to put them in place.
It means the software that powers fulfillment operations must also meet retailers where they are, Achen said. Many retailers have specific setups and processes. They may have a store located in a mall with a nearby distribution center, or a series of small storefronts. At the same time, retailers need to have flexibility with the software that they use so they can provide options to consumers.
For Nextuple, the vehicle to provide this is microservices, which describes a software architecture in which the parts of an application work independently, but are also built to work together. The company harnesses microservices to offer an ownership-centered approach to deploying its software through a product called Nextuple Fulfillment Studio.
“Today, there are only two ways to buy software: [software as a service] or custom building,” Achen said. “You can do it yourself or with a partner. We are a third option. We will help you accelerate your time to market because we've already developed 80% of your requirements, and then we'll give you that as source code.”
The software is composable. Retailers own the source code, and they can iterate. Along the way, they have the ability to swap out components of the software for pieces that enable them to better respond to the needs of customers, if they choose.
It shows how composable commerce is spreading throughout retail operations. A first wave of development applied the approach to the “front-end” of commerce, such as operating an ecommerce store and marketing. With fulfillment software such as Nextuple coming online, there are signs it is being applied to backend operations, as well.
In all, Nextuple offers 14 microservices as part of the Studio, including engines for same-day delivery, storage, inventory management and sourcing.
At the NRF Big Show, Nextuple announced that it is live with five national omnichannel retailers. Together, they have $50 billion in annual revenue and 7000 store locations.
The company is aiming to serve a group of retailers that are widely known, but still looking to hone operations for omnichannel retail. When it comes to fulfillment technology, the retail landscape has distinct tiers.
The largest players have built their own fulfillment tech to power logistics networks that reach across the country.
Name brand retailers with a national presence also want to offer competitive fulfillment, but haven’t made the move to acquire platforms or developed their own software in-house. Typically, they would seek out a software provider that offers a set platform on a subscription model. But the particular needs of commerce require software that powers physical operations with digital tools. That requires a different type of solution, Nextuple believes.
“We want to level the playing field,” Achen said. “We're helping the mid-tier [retailer] compete with Target, Amazon and Walmart.”