As the new school year begins and children around the country anticipate what the year will bring, parents are plagued by funding a new school year in a time of increasing inflation and economic uncertainty. Last year, the excitement of leaving Zoom school and online accommodations behind tempered the high prices back-to-school season boasted. In Deloitte’s 2021 back-to-school survey, people were 55% more confident about the economy’s prospects than they were in 2020, as their purchases reflected. Although 2021 saw record high back-to-school spending, 2022 is beating the record.
The Morning Consult Back-To-School Shopping report revealed 36% of parents expect to spend anywhere from $251 to $500 shopping. 25% plan to spend over $500, a drastic increase from 2021, where only 7% expected to spend that much.
Today, optimism about the future, especially financially, seems to be trending down, just as worrying parents drop hundreds of dollars this month on back-to-school supplies. The recently released Gulf South Index from The Ehrhardt Group and Causeway Solutions revealed that 34% of U.S. respondents and 39% of Gulf South respondents feel they are worse off financially than they were two years ago. Safe to say we are no longer in 2021.
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Shifting priorities – what we are NOT buying this year.
Typically a pricier back-to-school purchase, electronics no longer take up the majority of budgets in 2022.
This year’s Deloitte report shows an 8% decline in shoppers purchasing technology products. In both 2020 and 2021, most school spending focused on electronics to supplement online learning. 31% of households planned on purchasing computers and other hardware, with another 37% planning to purchase other electronic items. The Morning Consult now shows 22% of respondents spending $0 on electronics this year.
Clothing leads spending now, with over 80% of respondents planning on buying new clothes.
However, it is not just the amount purchased that is causing such a big financial strain. High inflation rates are impacting every aspect of American life and clothing is no exception. According to a survey by The National Retail Federation, 80% of consumers are noticing inflation prices the most when purchasing apparel, more so than any other category.
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The price of brand loyalty.
In all markets recently, consumers show a stronger likelihood to switch from their previous favorite brands to save money. McKinsey & Company reported in February that 46% of shoppers have already switched to cheaper brands, and 90% plan on continuing that behavior. In the back-to-school market, Deloitte’s study shows 77% of shoppers are willing to trade brands if prices become too high.
“Brand loyalty only counts for so much when people are struggling,” said Marc Ehrhardt, president of The Ehrhardt Group. “People focus more on getting things they need, not always exactly what they want.”
Across the country, families struggle deciding where and how to spend their money when inflation makes the budget tight, and areas seeing higher inflation such as fuel and groceries still take financial precedent.
In a Morning Consult report on inflation, 39% of consumers reported ceasing purchases of apparel, with 31% purchasing less and 20% opting for cheaper choices as opposed to their regularly preferred brands.
For students whose new school clothes are a necessity, the challenge becomes shopping in the most cost-effective way. For the clothing retailers, this means attempting to remain competitive in the market while also maintaining customer loyalty- especially during the back-to-school season, when people are more likely making necessary clothing purchases.
One company using the seasonal shopping to their benefit during a time of financial uncertainty is Old Navy. Recently faced with financial struggles the popular clothing retailer placed a price freeze on their denim selection through September. MarketWatch stated the freeze “is designed to bring affordable items to families that are feeling inflationary pressure.” Not only is Old Navy attempting to curb some of the shopping dread so many families are facing, but they are also cultivating brand loyalty. By capping the price of denim, Old Navy hopefully maintains not only their current customer base, but gains more customers looking for low-cost, consistent options in stores.
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Even if “at-home learning” tech purchases drop, the long-term impact of “learning tech” does not.
As technology purchases decrease, the demand for tech inside the classroom remains, and schools are increasingly reliant on technology as an educational tool. 81% of schools are still providing digital resources in the classroom and using them as a learning method, even if they are no longer necessary purchases. The emergence of remote learning, and many of the tools used during it, remain essential to classroom life today, and the reliance on tech continues growing.
This remains true outside of the classroom too. Screen time and social media usage times are rising with younger children joining in greater numbers. In 2021, Pew Research Center reported that 81% of parents said their 11yrs or younger child has used a tablet or computer. They also note ever-increasing rates of social media usage among children, especially on apps like TikTok, which is expected to grow $8 billion in revenue this year.
Digital fatigue, however, is taking over, especially when it comes to classroom life. Parents show a decreasing interest and approval in online learning resources, according to Deloitte, with only 41% reporting that technology use in the classroom leads to a positive learning experience (last year it was at 50%). In June, Pew reported most teens prefer fully in-person learning to any type of online or hybrid experience. Still, it seems that technology reliance continues, even in the face of growing digital fatigue.
As we enter yet another school year, much of the excitement around post-pandemic life and school seem to be a distant memory compared to the strains, both financial and digital, we are facing today.