As parents and students gear up for another school year, retailers are scrambling to get their slice of the pie. Traditional gift-giving holidays aside–back to school is the second-largest annual shopping event.
The dust is still settling from the sucker punch that the COVID-19 pandemic hit the retail industry with. But there is hope on the horizon. According to Cardlytics’ purchase insights, 2021 spending was strong and showed signs of growth, with a few caveats. Here are the key trends to watch for as you plan your 2022 back-to-school campaigns.
- Back-to-school shopping is the second-largest annual shopping event, accounting for up to 21% of all non-holiday spending.
- Spending across back-to-school categories is returning to pre-pandemic levels while the overall trend points towards fewer, more loyal customers.
- Uncertainty in school enrollment levels still looms, but retailers can make the most of the upcoming back-to-school shopping season by focusing on building customer loyalty.
The Importance of Back to School
Between school supplies, new clothes, sporting goods, and home decor–students and their parents make many purchases before going back to school.
The big back-to-school shopping season typically kicks off in early-to-mid June, with a peak in those final few weeks before school starts in mid-August. The uptick in sales tapers off by the Labor Day holiday, and retailers shift their focus to the December holiday shopping season.
But how big is big?
Cardlytics data shows that back-to-school shopping accounted for 6 out of the top 10 non-holiday shopping weeks in 2020. In fact, it comprised a whopping 21% of non-holiday spending that year, with only a slight dip to 19% in 2021, when back-to-school accounted for only 3 of the top 10 non-holiday shopping weeks. It’s a surge in retail shopping that everyone from big box stores to specialty shops simply can’t afford to miss out on.
Consumers are spending more across popular back-to-school shopping categories. In 2021, we saw a 1.2% increase in spending over the previous year, despite a drop in customers and frequency. This growth highlights an opportunity for retail managers to focus on building customer loyalty to maximize sales across a noticeably shrinking pool of customers.
Customer Consolidation: Pre-Pandemic to Present
While spending is on the road to recovery, the landscape for retail has changed. The academic calendar drives back-to-school sales, but the number of shoppers and where and how they shop has undeniably changed.
At face value, the numbers look good–all spending categories saw growth in 2020 and, with the exception of the home and office supplies categories, 2021 witnessed similar growth. One clear insight from 2021 is that the number of customers is steadily shrinking. That means a smaller group of shoppers spend more to account for the overall growth.
Breaking Down the Data
That could be a sign that customer loyalty is suffering. Convenience still seems to be a key driver for shopping decisions, pushing consumers to consolidate trips and shop with fewer brands. When looking at 2021 compared to 2020, there is a slight shift back to in-store shopping, up 3.4%, while online shopping is down 2.3%.
It also makes sense that the 2020 spikes in books, supplies, and technology that fueled virtual learning are down 8.8% in 2021. Other trends that we saw come and go during the pandemic included an uptick in home decor spending as we grew bored with our surroundings, and dips in clothing and shoes with fewer opportunities to go out.
The 2021 data shows that home decor is down 8.0%, clothing is up 24.3%, and shoes are up 28.6%. These are much closer to 2019 numbers, signaling a return to normalcy.
School Enrollment & Retail Trends
We can’t blame the pandemic for every little nuance. Lingering fears over supply chain issues, economic headwinds due to inflation, and erratic social behaviors have taken their toll on the retail industry. In difficult economic environments, consumers will look to find savings wherever they can to ensure they are maximizing the value of their hard earned dollars. Advertisers should look to promote deals and incorporate value messaging into their strategies this back-to-school season. As every purchase will be carefully considered, savings is the name of the game. Being able to put dollars back into customers’ wallets through rewards is an effective way to capture consumer spend.
But there have been significant changes in public education as well.
There are whispers about plummeting public school attendance rates across the nation. While we can’t say there is any direct link between school enrollment and back-to-school retail trends, it’s hard not to notice the numbers in two of the nation’s largest public school systems.
During the 2020-21 school year, coinciding with the height of the COVID-19 pandemic, Texas Public Schools dropped in attendance rates by 2.2%. It’s the first time Texas has seen a drop since the school board began collecting enrollment data. This decline is confounding considering that Texas also saw significant growth from domestic migration in the same year.
Similarly, the California Department of Education released numbers for the 2020-21 school year, citing a decline in enrollment by more than 160,000 students. That was also a first in at least two decades for California schools.
Again, a drop in public school attendance doesn’t necessarily translate to a decline in shoppers during the back-to-school 2021 shopping season. These students are still learning–through homeschool, private school, or other educational programs and therefore still need school supplies, sporting equipment, and clothing. But there could be a correlation due to less pressure to be well-dressed or fewer requirements for educational expenses outside of public school systems.
So, how do fewer customers during the school enrollment period translate to your customer experience strategy? It’s simple–the key is to focus on customer loyalty programs and the digital customer experience.
Loyalty Becomes the Name of the Game
Retail brand managers, e-commerce directors, buyers, and planners are regrouping to improve the customer experience and lure shoppers back to their stores. There’s a premium on building customer loyalty for the 2022-23 back-to-school shopping season.
A smaller pool of bigger spenders translates to a higher value on each acquisition. Retail brands have been meticulously tracking the cost of gaining a new customer and comparing it to the cost of keeping that customer. And those data sets aren’t going away any time soon. They’ll get more attention as boardrooms full of marketing professionals and business executives try to crack the code for the retail customer experience.
As you pour over the numbers, remember that Cardlytics data can provide a more complete picture, helping you re-evaluate a customer’s lifetime value in today’s market.
The Bottom Line on Customer Loyalty and Back to School
The bottom line is that the customer pool is shrinking. While shoppers might be spending more freely, they choose convenience over specialty shopping experiences. Many customers are still choosing online retail and mass-market retailers, shifting back in favor of the one-stop-shop mentality. And that makes your dwindling pool of customers much more valuable.
Now is the time for laser-focused, optimized customer loyalty programs to draw the big spenders back to your stores. That’s where Cardlytics can help–we specialize in providing high-quality, first-party insights to help you re-evaluate your customer experience strategy and improve customer loyalty.