Many apparel and accessory retailers are stepping up discounts and deals ahead of the back-to-school season to try and woo inflation-wary shoppers.
For the first time, Old Navy is offering a one-year warranty on kids’ uniforms to convince shoppers they are built to last and worth the money. In July, JCPenney held its first-ever “Power of A Penny” promotion, where JCPenney rewards members got $24.99 off a $25 purchase so that effectively, they only pay one penny. And Target is expanding its Teacher Appreciation Event to give teachers 20% off their entire purchase, including apparel, up from last year’s offer of 15% off school supplies only.
The back-to-school season is one of retailers’ busiest times of the year. But, inflation is still a concern, and parents and guardians are having to figure out what to prioritize when it comes to spending. Some surveys indicate that parents plan to cut their spending on items like shoes and clothes, which might take a backseat to more urgent needs like a new backpack or a costly graphing calculator. In turn, many apparel retailers are betting on sweeping promotions to sway more families to stores.
The research varies this year when it comes to how much households are likely to spend on items for school. Deloitte, for instance, estimates that back-to-school spending for grades K-12 is expected to decrease by 10% this year, adding up to $597 per student. The survey also indicated that apparel retailers plan to decrease apparel spending by 14% year-over-year. On the other hand, the National Retail Federation expects spending to reach a record $41.5 billion this year. That’s 12.5% higher than the $36.9 billion spent last year, and 11.9% more than the previous record in 2021.
Despite the differences in projection, it points to one major takeaway: that shoppers will be looking to stretch their dollars.
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“Retailers need to be aware of this and offer great products at great value across all channels,” Matt Pavich, senior director of strategy and innovation at the price optimization platform Revionics, said. “There is no doubt that the competitive landscape is more sophisticated and challenging than in the past, and retailers need to bring their A game.”
To this point, many retailers are plugging the longevity of their garments in their back-to-school announcements. Target and Macy’s both mention “value” multiple times in their back-to-school press releases. H&M’s press release touts “durable garments that kids can feel comfortable and confident in,” and Old Navy proclaims that it provides “long-lasting value for both parents and students.”
The hunt for back to school items has also started earlier. According to the NRF, more than half (55%) of consumers buying back-to-school items said they had already started shopping as of early July, and Jungle Scout found that searches for “back to school deals” on Amazon increased 396% in the last 30 days.
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Last month, H&M started offering cash back for back-to-school purchases, while Puma held a sweepstakes in which winners could nab a $200 Puma gift card and a backpack. By mid-July, Forever 21 was offering back-to-school deals in stores and online, starting at $5.
If retailers move up promotions, they may have an easier time clearing out inventory. “Most retailers wait too long before commencing their markdowns or fail to use a sophisticated approach, which can lead to profit losses and poor capture and sell-through rates,” Pavich explained.
Even with the deals, though, families aren’t always keen to spend, especially on clothing. Apparel prices rose 0.3% every month from March to June, according to the Consumer Price Index.
“Based on what I’ve seen, consumers want to buy less and seem to be targeting school supplies over apparel and electronics at this point,” Nikki Baird, vp of strategy at the retail management software firm Aptos, said. She shared that when she has visited stores, “apparel is not getting picked up, even with availability solid.”
Baird wonders if some of this may be due to the weather; if temperatures remain high, kids can wear their summer clothes for longer. With that in mind, it’s likely that shoppers could see more back-to-school deals teased later in the year when the weather cools down, she shared.
Based on demand, it’s also possible that retailers will reformat their deals from years past to increase the odds of shoppers coming back.
“I will be interested to see if retailers offer delay/bounceback promos, like spend $50 and get a $5 gift card for next time, or [something] like Kohl’s Cash that’s good for two weeks but two weeks down the road,” Baird said. “That would speak to the retailers trying to make consumers feel like they’re getting a discount, but hoping to stretch out that spending.”