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Back-to-School Spending Proves Resilient Amid Pandemic

 

By Lorn Davis

The back-to-school shopping season, which extends from July to September, typically represents one of the most lucrative milestone events for retailers throughout the year. 2020, of course, has not been a typical year for retailers or anyone. With the pandemic-driven uncertainty around remote learning and millions of Americans still without jobs, observers are scrutinizing how 2020 back-to-school spending stacks up against previous years, particularly ahead of a make-or-break holiday season for many. The good news is that overall, these circumstances did not negatively impact spending across most key categories.

Retail Performance by Category

 

Off-price retailers like Nordstrom Rack, Ross Stores, and TJ Maxx, for instance, did see a modest uptick in spending during the back-to-school shopping season through mid-August and mid-September.

However, retailers not in the off-price category – from high-end department stores such as Nordstrom to apparel retailers like Old Navy and Urban Outfitters – saw large increases in year-over-year spending growth, particularly during September. The spending patterns would suggest that consumers are maintaining confidence and even showing a pent-up seasonal demand.

Technology as a Safe Haven

 

While the growth in apparel may represent a positive surprise, tech spending was expected to be more resilient and even positioned to benefit from a remote-learning tailwind. To wit, weekly spending at technology retailers spiked by approximately 40% at the end of August, suggesting parents and students invested in new technology ahead of the school year.

Office supply and technology retailers like Best Buy, Office Depot, and Office Max each also experienced modest increases in year-over-year weekly spending during the back-to-school shopping months.

Spending at big box stores and online retailers also seemed to benefit. These types of retailers like Amazon, Target, and Walmart saw weekly spending jump in September, as students stock up on more supplies and furniture for school. With Prime Day moved from August in 2019 to October this year, there was a slight dip in spending in late August and early September.

The “Other” Categories Impacted

 

Of course, other areas also depend on back-to-school shopping to fuel seasonal sales. Weekly spending at early-learning academies and online tutor and textbook rental providers like ABC Mouse and Chegg, for instance, picked up at the end of August, jumping by nearly 50% year-over-year as college students headed back to campus.

Looking at consumer spending across furniture stores, there was a nice spike, up 80% year-over-year in September, particularly as promotions like Wayfair’s “Way Day” sale also helped boost spending and incentivized shoppers at the end of September.

Finally, sporting goods stores saw mixed results, suggesting there was at least some impact due to the cancellation or delay of fall sports. Retailers like Big 5 Sporting Goods and Dick’s Sporting Goods saw a year-over-year spending dip from the summer.

Overall, the pandemic and uncertainty around in-person and remote learning did not negatively impact consumer spending as may have been expected during the back-to-school shopping season. While the circumstances around the pandemic and remote working may help some consumers save money in transportation and food costs, there may be more money to spend on other areas, such as retail, technology, school supplies, and furniture. Given the apparent resilience, though, retailers and investors are hoping the back-to-school season is an indicator of a lucrative holiday-shopping season to come.

 

 

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Skills

Posted on

November 30, 2020








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