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Consumer Confidence Boosts This Year’s Back-to-College Spending

August 09, 2017

 

back-to-college spending

 

As college students return to campus this fall, they’re bringing with them a lot more than just backpacks and school supplies. They come to campus bearing the latest electronics, branded merchandise, head-to-toe apparel, room décor, and so much more, making them a key retail market.

 

Although the cost of tuition continues to increase, student retail spending has been keeping pace. Back-to-college purchases are expected to hit an all-time high this year. According to National Retail Federation (NRF) research, back-to-college shoppers plan to spend an average of $969.88, up from last year’s $888.71. “Families are now in a state of mind where they feel a lot more confident about the economy,” explained Matthew Shay, NRF president and CEO. “With stronger employment levels and a continued increase in wages, consumers are spending more and we are optimistic that they will continue to do so throughout the rest of the year.”

 

Along with consumer confidence, the boost in spending also is driven by an increase in the number of students attending college. According to the National Center for Education Statistics, enrollment has steadily grown over the last five years and is projected to reach nearly 21 million this fall.

 

These combined trends are expected to result in a record-breaking retail season, with projections in total college spending soaring to $54.1 billion — a big jump from 2016, which rang in at $48.5 billion. It’s also big business. After the winter holidays, back-to-school spending is the second largest consumer-spending season for retailers, followed by Mother’s Day, Easter and Valentine’s Day.

 

These combined trends are expected to result in a record-breaking retail season, with projections in total college spending soaring to $54.1 billion — a big jump from 2016, which rang in at $48.5 billion.

 

Student Shopping Lists

As tech-savvy Millennials and Generation Z enter college, it isn’t surprising that electronics top their shopping lists, with more than half (51%) expecting to invest in laptops, tablets, electronic accessories, and calculators and cell phones for a total expenditure of $12.8 billion. Households plan to spend an average of $229.20 on these electronics purchases, followed by $142.90 on clothing, $134.20 on food, $105.58 on dorm/apartment furnishings, $81.38 on shoes, $81 on personal care items, $68.99 on gift cards and $56.57 on branded gear.

 

In addition, students are budgeting for experiences, “not just buying stuff for the dorm room,” added Rod Sides, vice chairman for Deloitte LLP, which conducted its own 2017 Back to College Survey. These include funds for fun and entertainment. Activities that students earmark for their college experiences are socializing at restaurants, bistros and bars (82%); attending cultural events like concerts, theater and movies (58%); and socializing at sporting events (50%).

 

Online vs. In-store

Despite the growing popularity of online shopping, students and parents will continue to comb the aisles of brick-and-mortar stores to get their goods. Parents expect almost half (49%) of their budget will be spent in store, while student predictions lag behind at 41 percent, as they’re more likely to shop online, compared to their parents. “While people expect most of their purchases to happen in the store, about one-quarter haven’t decided whether they will shop online or in store,” said Sides. “At the end of the season, even if the same amount of money funnels into college-related spending, retailers that adjust their timing, experiences and assortment may be the only ones who reap the benefits from it.”

 

Getting a Jump Start

Surprisingly, college students aren’t waiting until the last minute to shop for their back-to-college needs. Approximately three out of 10 consumers plan to shop at least two months before school starts, a 22 percent increase compared with last year, according to the NRF survey. There’s a strategy behind students shopping well in advance. Of those shopping early, 64 percent are trying to spread out their budgets, 41 percent don’t want to miss sales and 37 percent want to avoid crowds.

 

The extra time also allows students to take advantage of free shipping, which usually requires more lead time. Roughly nine in 10 college shoppers will avail themselves of this benefit and, around half will buy online and pick up in the store. Women are considerably more likely to buy online and pick up in the store, while men are more likely to use expedited shipping.

 

A Greater Voice in Purchases

More than two-thirds (68%) of parents anticipate that their children will influence back-to-college spending, especially since nearly 60 percent of students plan to contribute more than half of the budget. “Back-to-college shopping is prime time for retailers to create fans that can last a decade or more,” explains Sides. “The students appear to have the most influence on what the family buys for back-to-college, so it makes sense for brands to create those loyalists today and continue to see the payoff beyond the college years.”

 

NRF’s Shay agrees. “As students head back to the classroom, retailers are prepared to meet their needs whether it’s for pencils and paper, shirts and pants or laptops and tablets,” he said.

 

 

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