It might be hard to believe, but July is in full swing, and the lazy hazy crazy days of summer are quickly slipping by. Before you know it, parents will be digging out supply checklists and making shopping plans for their back-to-school needs. And while not quite as great a revenue driver as the holidays, the back-to-school shopping season plays a big role in the lives of consumers and retailers.
US retail e-commerce sales in July and August 2016 will increase 15 percent year over year, according to eMarketer, while retail e-commerce sales in core product categories will climb 16.7 percent in the same period.
Realizing the opportunity for increased insight and understanding around this crucial time of year, Rakuten Marketing (my employer) recently commissioned a survey of over 400 US digital advertisers to better understand their marketing plans for the 2016 back-to-school shopping season. To complete the full picture and understand consumer behavior for back to school, we also surveyed 1,200 US parents with children currently in school, ranging from kindergarten to college.
Across both surveys, the results were intriguing, and in fact, they challenged our preconceived notions and expected outcomes. When we began comparing our data to that of various forecasts and publications, we found there were some commonalities between the various reports and data sets, specifically around how much consumers will spend and what products they will purchase.
Digging into shopping and purchasing behavior, we encountered contrasting reports from advertisers versus consumers and from our own data versus industry forecasts or predictions.
As we further analyzed the data, we saw interesting juxtapositions centered around five key questions: What are consumers purchasing? When are they shopping? Where are they shopping? Why are they purchasing? And how much are they spending? The full report will be available for download soon, but we’ve included highlights below from three of those questions.
When consumers are shopping
To kick things off, we’ll focus on the when of back-to-school shopping. According to the National Retail Federation, by August 9 of last year, back-to-school shoppers had only completed 50 percent of their shopping, and 20 percent had yet to even start.
When we looked at Rakuten Marketing client e-commerce data for 2015, we noted consumer purchases across client verticals did not begin ramping up until the first week of August. The only outlier to this trend was apparel, with the highest weekly spend occurring during the week of the 4th of July. So when are consumers planning on making purchases for back-to-school 2016?
When back-to-school shoppers were asked when they expect to make purchases for the coming school year, we discovered that although some may shop as early as May, August remains the month that consumers will complete nearly 50 percent of their back-to-school shopping. However, select verticals such as consumer electronics will see 11.3 percent of purchases made as early as June for back to school.
So, while consumers appear to still prefer purchasing in August, select client verticals such as apparel and consumer electronics should be advertising early to capture a growing percentage of parents making purchases early for back to school.
How much customers are spending
When examining the spending behaviors and expectations for the upcoming shopping period, our survey told a similar story to that of eMarketer’s forecasts. In our consumer survey, nearly 40 percent of parents with children in school this fall plan to spend roughly the same amount as last year, while another 39 percent plan to spend somewhat more.
When asked how they expect consumer purchasing behavior to change in 2016, 40 percent of advertisers surveyed expect consumers to spend somewhat more this year than last. This “somewhat more” correlates to the expected 2.6 percent growth in back-to-school retail that sales eMarketer is forecasting — a higher growth rate than in 2015, though still smaller than in previous years.
What consumers are buying
The other side to this spending coin is what they’re purchasing. In 2015, more consumers (55 percent) planned to purchase apparel than any other back-to-school product category, even books and supplies, which captured 50 percent of the consumer vote.
When we looked at Rakuten Marketing display data for 2015 during Q3, we found that same-store client revenue for apparel had increased 27 percent, while that of consumer electronics grew 52 percent. Additionally, the average increase in same-store client revenue increased 27 percent across client verticals relevant to back to school, indicating that while apparel still represents a large portion of consumer back-to-school shopping, other verticals are gaining share of wallet during back to school.
This year, consumers intend to spend 43 percent of their overall back-to-school budget on apparel, with books and supplies accounting for 26 percent of consumer back-to-school spend. This represents 69 percent of consumers’ share of wallet for the back-to-school shopping season.
So, while some verticals, such as consumer electronics, are expected to capture nearly 13 percent of consumer back-to-school budgets, any gains in overall share of wallet from these other verticals in 2015 are projected to be marginal at best.
With the election year in full force and economic uncertainty globally, the 2016 back-to-school season is shaping up to be one for the books. It’s no wonder advertisers said their biggest challenges for the upcoming shopping season are budget constraints and changing consumer behaviors.
In the full Rakuten Marketing Back-to-School Report, we’ll delve into key factors like social media and mobile devices, how they’re impacting consumer behavior and how marketers can leverage these insights to really make the grade on this year’s back-to-school report card.
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