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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.
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Labor disputes on the West Coast could cause further disruption heading into peak season.
When the first half of 2023 is complete, imports are expected to dip 22% below last year.
That’s according to new data from the Global Port Tracker, which is compiled monthly by the National Retail Federation and Hackett Associates.
The decline has been building over the entire year, as imports dipped in the winter. With the spring, volume started to rebound. In April, the major ports handled 1.78 million Twenty-Foot Equivalent Units. That was an increase of 9.6% from March. Still it was a decline of 21.3% year over year – reflecting the record cargo hauled in over the spike in consumer demand of 2021 and the inventory glut 2022.
In 2023, consumer spending is remaining resilient with in a strong job market, despite the collision of inflation and interest rates. The economy remains different from pre-pandemic days, but shipping volumes are beginning to once again resemble the time before COVID-19.
“Economists and shipping lines increasingly wonder why the decline in container import demand is so much at odds with continuous growth in consumer demand,” said Hackett Associates Founder Ben Hackett, in a statement. “Import container shipments have returned the pre-pandemic levels seen in 2019 and appear likely to stay there for a while.”
Retailers and logistics professionals alike are looking to the second half of the year for a potential upswing. Peak shipping season occurs in the summer, which is in preparation for peak shopping season over the holidays.
Yet disruption could occur on the West Coast if labor issues can’t be settled. This week, ports from Los Angeles to Seattle reported closures and slowdowns as ongoing union disputes boil over, CNBC reported. NRF called on the Biden administration to intervene.
“Cargo volume is lower than last year but retailers are entering the busiest shipping season of the year bringing in holiday merchandise. The last thing retailers and other shippers need is ongoing disruption at the ports,” aid NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “If labor and management can’t reach agreement and operate smoothly and efficiently, retailers will have no choice but to continue to take their cargo to East Coast and Gulf Coast gateways. We continue to urge the administration to step in and help the parties reach an agreement and end the disruptions so operations can return to normal. We’ve had enough unavoidable supply chain issues the past two years. This is not the time for one that can be avoided.”