Retail

Forget back-to-school bargains: Retailers waiting it out as parents postpone purchases

Key Points
  • Many retailers say they are still waiting to see strong demand as parents and students delay purchases of fresh outfits, notebooks and glue sticks.
  • About 61% of U.S. elementary and high school students will start the school year with virtual only learning, according to a survey this week by Burbio, and that has shifted demand from traditional supplies to technology.
  • Walmart, Target, Kohl's and The Children's Place are among the retailers that said shopping is off to a slow start.
  • "We'll extend the season and extend our assortment because we know at some point in time, those students will need backpacks and uniforms. They're going to need school supplies," Target CEO Brian Cornell said.
A worker stocks shelves of back-to-school supplies at a Target store on August 03, 2020 in Colma, California.
Justin Sullivan | Getty Images News | Getty Images

As the back-to-school season kicked off, retailers across the U.S. stocked stores with fresh outfits, notebooks, glue sticks and kid-sized masks. 

So far, many say, those items have largely stayed on shelves as parents and students put off purchases, waiting for more clarity on what learning will look like this year.

Walmart CEO Doug McMillon said sales of school-related items have been "negatively impacted by the health crisis in terms of timing and demand." Kohl's CEO Michelle Gass said the season is off to "a softer start." And The Children's Place Chief Operating Officer Michael Scarpa said "back-to-school sales have been significantly impacted."

Those retailers, however, anticipate that school-related spending may strengthen and stretch out over a number of months as districts make decisions and students start more in-person learning in the fall or early 2021.

"We've made the decision to be flexible," Target CEO Brian Cornell said last week on an earnings conference call. "We'll extend the season and extend our assortment because we know at some point in time, those students will need backpacks and uniforms. They're going to need school supplies."

Scarpa of The Children's Place said it will feature back-to-school merchandise "for an extended period of time."

And, he added, "we have no plans at this time to be in a position to mark that inventory down."

An unusual year for back-to-school

Early in the season, retail industry-watchers projected that parents would spend more as they bought pricey technology, such as laptops, tablets and headphones. A survey by the National Retail Federation in July said average spending would hit a record high of $789.49 per family.

But parents are stalling, retailers say. 

About 61% of U.S. elementary and high school students will start the school year with virtual only learning, according to a survey this week by Burbio, which aggregates school and community calendars nationwide. Nearly 20% will attend school each day, and the rest will have a mix of in-person and remote learning.

Even as school districts make plans, some have changed them in response to outbreaks or guidance from public health officials. The number of students that will begin with remote learning has shot up by approximately 10% in the past two weeks, according to Burbio.

Some school districts have said they plan to return to in-person instruction, but at a later date.

Sales of traditional school supplies, such as crayons, pencils and notebooks, declined by 32% in the seven weeks ended Aug. 8, according to data and analytics firm The NPD Group. On the other hand, sales of items for remote learning have shot up, the firm said. Notebook computer sales are near historic levels. Sales of monitors grew 79%, keyboards rose 62%, USB cameras/webcams jumped 116% and routers were up 73% during that time.

Best Buy has been one retailer that's benefited from that shift. CEO Corie Barry said Tuesday on a call with reporters that back-to-school products were "some of our biggest drivers of performance" in recent months.

She said many families tried to use whatever technology they had on hand to help students learn remotely in the final weeks of last school year, as the pandemic forced abrupt change.

"Now, families are trying to create sustainable work and learning spaces in their homes that could support an extended period of time," she said.

She said as students and teachers switch between different models, from remote learning to in-person to hybrid, that could lead to "a sustained, longer-period need."

Retailers have tried to keep up with the evolving dynamics with their mix of merchandise and messaging.

Kohl's tweaked the tag line on its website to emphasize that it's the place to shop, whether kids are "heading back or logging in" and dedicated sections of its website to "at-home learning" items like tablets to set up the remote classroom, pots and pans to stock "your kitchen cafeteria" and bounce houses to help with "backyard recess." 

Disney, Crayola and one of Target's well-known private labels, Cat & Jack, are selling kid-sized masks with colorful themes.

Best Buy launched a parent portal to help with tech troubleshooting as kids learn remotely.

And Bed Bath & Beyond and J.C. Penney are encouraging college students to make over their childhood bedrooms as they log in at home rather than moving into dorms.

'Not the time to make an entrance'

Retailers may have psychology on their side — so long as they strike the right tone, said Ashwani Monga, a Rutgers University-Newark marketing professor who studies consumer psychology.

Many families have experienced hardships in recent months, as they've lost jobs, had a pay cut or a sick family member. He said even those who haven't felt the pandemic or its economic impact are likely to pull back on spending that could appear showy, such as a fancy school bag or a new wardrobe of designer clothes.

"This is not the time to make an entrance," he said. "Everyone, including kids and parents, are aware that this is when so many in the world are struggling and you want to be more understated in how you dress."

However, he said, parents who have the means may splurge privately on items that could be used for remote learning or strengthen family ties. For example, he said, parents may justify splurging on a large smart TV or expensive calculator as a way to keep their student engaged with school. 

A desire to spend quality time together and live in the moment may also fuel their shopping decisions, he said. That's why parents might spend on home decor for their child, such as new bedroom furniture for a teen who'd otherwise be off to college.

"People aren't going to think as much 'Hey, in six months, this kid may be back to a dorm and what am I going to do with this stuff?'" he said. "They're going to think 'How can I build this bond and make my child feel comfortable and build those connections — even if it's for a short period? ... Life is short. Who knows what will be next? If I have a good moment right now, let me make the best of that moment.'"

Monga said he's seen the unique dynamics of the back-to-school season up close. At his college campus, most classes will be held remotely. At home, he said his family has waited to hear if his 15-year-old daughter will go back to school in person. 

He said a sense of uncertainty weighs on shopping decisions, including his own. Even if school starts in person, he said, he's seen outbreaks in other parts of the country that have forced kids to shift back to remote learning.

"You don't even know when it starts, if it's going to stay like that," he said. "It has definitely pushed our own shopping back because you're like 'let's wait and watch' — and nothing is getting resolved."

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