2018 back-to-school survey - Deloitte United States...Deloitte’s 2018 back-to-school survey • Mass merchants remain the top location for intended visits and budgeted B2S spend

2018 back-to-school surveySizing up the season

2018 back-to-school surveyCopyright © 2018 Deloitte Development LLC. All rights reserved. 2

Key findings

Deloitte’s 2018 back-to-school survey

• Mass merchants remain the top location for intended visits and budgeted B2S spend

• Price-based retailers keep their high ranking positions among top shopping destinations after pushing down traditional department and specialty clothing stores in 2017

• Despite less planned traffic to traditional retailers (e.g., department, home electronic, and office-supply stores) parents expect to spend more at these retailers than they spend at price-based retailers

• Across categories, higher-income shoppers are more likely than lower-income shoppers to visit specialty stores (e.g., department stores, home electronics, specialty apparel). Lower-income shoppers are more likely than higher-income shoppers to visit price-based formats (e.g., mass market, dollar stores)

• Department stores are less popular with GenXers and Millennials, whereas off-price retailers are more popular among the younger generations

Customers have strong preferences about retail format; ranks have shifted in recent times

• Total back-to-school spending is expected to reach ~$27.6B, or $510 per household, slightly up from $501 in 2017

• $5.5B is up for grabs. Shoppers remain undecided on where to spend 20% of their budget: online or in-store

• Households plan to spend an average of $292 in stores – representing $16B in total spending. This is more than double that of the $115, or $6B in total spending, they say they’ll spend online for back-to-school

• B2S is experiencing plateauing digital influence, there is flattening usage of laptops, mobile, and social

• Children will likely influence over $21B in B2S spending during the back-to-school season

In-store still prevails, but shoppers are continuing to increase their online spend

• About two-thirds (62 percent) of parents plan to begin the B2S shopping before August; this group of early shoppers spends on average about $100 more than shoppers that get a later start

• Approximately $18B will likely be spent in B2S shopping in the 4 week period between mid-July and mid-August

• More than two-thirds (68 percent) of shoppers plan to complete their shopping within a 1 month period of time; however, the longer someone extends their B2S shopping, the more they will likely spend

Back to School Shopping is a lengthy season, but timing matters

Survey findings


Back-to-school (B2S) shopping season accounts for about 50% of annual school-related spend and touches one-quarter of U.S. households

* Number of households with school going (K-12 grades) children in the US [Source: US Current Population Survey 2017]** Number of children enrolled in K-12 grades in the US [Source: US Current Population Survey 2017]# Percentage of child’s annual school related products that will likely be purchased during back-to-school shopping season [Source: Deloitte survey]^ Deloitte calculations on back-to-school market spend ($27.6 billion) [Source: Deloitte survey and US Current Population Survey 2017]

B2S is the second biggest shopping season and involves…

54 Million children** $27.6 Billion in spend^

50% of school related spend#29 Million households*

Average B2S spend per household: $510


Back-to-school shopping spend expected to be dominated by clothing category

B2S 2018 ― Estimated market spend by category

Source: Deloitte calculations on back-to-school market spend ($27.6 billion) [Source: Deloitte survey and US Current Population Survey 2017]Note: Sample size (N) = 1,200*Electronic gadgets include cell phones/smart phones, tablet/e-reader, and wearable devices

School supplies

$6.0B

Clothing & accessories

$15.1B$27.6B

est. market size

Computers & hardware

$3.7B

Electronic gadgets*

$2.8B


Average B2S spend is up slightly at $510 in 2018 compared to $501 in 2017

National Avg. B2S spend:

$510 Northeast

West

South

Midwest

24% $513

% of total B2S spend Avg. spend

21% $493

34% $488

21% $568

Northeast region has the highest B2S season average spend in 2018

Source: Deloitte surveyNote: Average spend based on shoppers from each region – South (n = 424), Northeast (n = 230), Midwest (n = 264), and West (n = 282).


High-income households are most optimistic about household finances and the economy. They are open to retailers that offer premier products and experiences.

Economic optimism and demand for experiential retailing increase with household income

Low-income(Less than $50k)

Middle-income($50k-$99k)

High-income($100k+)

Economic optimismMore confident about the U.S.

economy’s prospects now (June 2018), than you were at the end of 2017

Household financial stabilityHousehold's financial situation today is

better than it was a year ago

Digital substitutionBuying fewer traditional school supplies because my child is using more digital

technologies

Premier retailing experienceMore likely to purchase from retailers

that offer premier products and experiences

Price sensitive retailersMore likely to purchase from a retailer that sells at the lowest possible prices

24% 40% 44%

27% 27% 39%

28% 38% 41%

81% 76% 70%

Source: Deloitte surveyNote: Sample size (N) = 1,200

28% 38% 44%

“Please indicate your level of agreement with the following statements (% who agree or somewhat agree)”

Consumer spendingtrends


Both demand and avg. spend is high for Clothing & accessories; highest avg. planned spend is in the Computers & HW category

Source: Deloitte surveyNote: Sample size (N) = 1,200; *Electronic gadgets include cell phones/smart phones, tablet/e-reader, and wearable devicesSpending on ‘voice and mobile data plans’, ‘digital subscription’, and ‘other’ are excluded; average spend includes only respondents who will purchase the above mentioned category or item

2018 B2S: Planned spend by category

98% plan to buy


Average spend $286

Share of B2S spend 55%

98% plan to buy

School supplies

Average spend $112


23% plan to buy


Average spend $299


16% plan to buy

Electronic gadgets*

Average spend $271



Children will likely influence over $21B in B2S spending

Source: Deloitte surveyNote: Sample size (includes only respondents who will purchase the above mentioned category or item)

20%

30% 32%

42%

80%70%

68%

58%

Clothing & accessories Electronic gadgets School supplies Computers & hardware

Children - No/Slight influence Children - Moderate/High influence

Extent of child’s influence on parents’ back-to-school shopping

$12.7B$2.4B

*Total planned B2S spend by category that would be influenced by children

$2.2B$0.6B $4.2B$1.7B $2.5B$1.2BChild’s

influence*


$5.5B is up for grabs. Shoppers likely to remain undecided on where they will spend 20% of their budget: online or in-store

In-store is likely to be the most preferred channel during B2S shopping season…


B2S spending by channel

Average B2S spend in 2018: $510

Average spend: $292

Share of total spend: 57%In-store

Online

Average spend: $115

Share of total spend: 23%

*Undecided (In-store or Online)

Undecided* ?Average spend: $104

Share of total spend: 20%

$15.7

Billion

$6.3

Billion

$5.5

Billion

Market size


Online likely to pick up from undecided in Computers & HW, where in-store likely to pick up from undecided in Electronic gadgets

…But, online likely to gain share across most categories


33%

31%

17%

14%

37%

40%

63%

66%

30%

29%

20%

20%

40%

28%

19%

17%

40%

53%

61%

61%

20%

19%

20%

22%



Electronic gadgets

School supplies

In-StoreOnline Undecided

2017 2018Category


2016 2017 2018

1 1 1

4 2 2

5 3 3

14 5 4

3 4 5

2 6 6

9 8 7

7 7 8

- 10 9

11 9 10

10 11 11

15 13 12

8 12 13

12 14 14

6 15 15

- 16 16

16 17 17

12 18 18

“Which type of retailer(s) do you plan to visit for your B2S shopping?”

Mass merchants retain their place as the most popular type of B2S retailer; however price-based and online retailers are gaining

Question: “Which type of retailer(s) do you plan to visit for your B2S shopping?”Source: Deloitte surveyNote: Sample size (N) = 1,200; multi-select question

3%

4%

7%

8%

9%

9%

11%

15%

15%

17%

20%

26%

27%

31%

32%

36%

38%

83%

Bookstores (On-campus)

Catalogs

Retailer mobile apps

Specialty clothing stores

Bookstores (Off-campus)

Supermarkets

Home electronics stores

Consignment shops/thrift stores

Drug stores

Retailer websites

Warehouse membership clubs

Fast fashion apparel retailers

Traditional department stores

Office supply/technology stores

Off-price stores

Online only retailers

Dollar stores

Mass merchants

Rank Retail format preferences

Upward movement in

preference rankings

Downward movement in

preference rankings


7%

7%

6%

5%

4%

2%2% 2% 2% 2%

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Massmerchant

Traditionaldepartment

Fast fashionapparelretailers

Online-onlysites

Off-pricestores

Officesupply

Dollarstores

Retailerwebsites

Specialtyclothing

Warehouseclubs

Homeelectronics

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Averag

e B

2S

sp

en

d (

$)

Sh

op

per p

refe

ren

ce (

%)

Shopper Preference (Retail format for most spend during B2S season) % Average Back-to-School Spend $

Retail formats for most spend and Average B2S Spend

Some of the most preferred formats are likely to have lower overall spend

Source: Deloitte surveyNote: Sample size (N) = 1,200;single-select

55%

60%

56%

54%

52%

Some of the less preferred formats are likely to have high overall spend

Timing


Shopping activity peaks by early August during B2S season

B2S Shopping periods by traffic and total spend

Approximately 90% of B2S shoppers are expected to be active during late July to early August, a time which accounts for two-thirds of all B2S spend

Question : “Out of $__ you plan to spend on back-to-school shopping, how much do you plan to spend during the following periods?”Note: Sample size (N) = 1,200

10%

26%

54%

67%

34%

8%

Earlier than July Early in July

(first 2 weeks)

Later in July

(last 2 weeks)

Early in August

(first 2 weeks)

Later in August

(last 2 weeks)

September

$1.3B $3.6B $8.1B $9.9B $3.9B $0.8B

$ BTotal B2S Spend (out of $27.6B)during noted period

% of active B2S shoppers during noted period


Majority of shoppers start earlier than August

Parents who begin their B2S shopping before August are likely to spend 20 percent more than late starters

Source: Deloitte surveyNote: Sample size (N) = 1,200; “When are you likely to begin your B2S shopping?”

July SeptemberAugustEarlier than July

10%

Earl

y in J

uly

19%

Late

r in

July

33%

Earl

y in A

ugust

31%

Late

r in

August

6%

1%

62% plan to begin shopping before August

(Average spend = $544)

$532 $553 $543 $473 $384 $284Average B2S

Spend

38% plan to begin shopping in Aug or later

(Average spend = $455)

B2S shoppers by starting period (%)

68% of shoppers plan to complete their shopping within a one-month period of time from when they start


Early shoppers are more deal-seeking and mobile-savvy compared to late shoppers

Early shoppers

Avg. spend: $544Late shoppers

Avg. spend: $455B2S Category

I expect to find the best back-to-school deals early in the season

I plan to shop at different points throughout the summer to take advantage of deals

My choice of retailer is dependent on availability of my preferred brands

Use/plan to use Smartphone for back-to-school shopping

Belong to low-income household (Less than $50,000)

40%

66%

56%

55%

45%

27%

50%

49%

50%

37%

Early shoppers – Those who start shopping before AugustLate shoppers – Those who start shopping in August or laterSource: Deloitte surveyNote: Sample size - Early shoppers n=741, Late shoppers n=459

Shopping behavior


Device% of total shoppers

Usage

However, more shoppers plan to use mobile than desktop/laptop during B2S shopping

B2S shoppers are more likely to make online purchases via desktop/laptop

41%

44%

53%

56%

63%

Compare similar products online

Collect discounts, coupons, saleinformation

Make a purchase

Get price information

Access a retailer's website

44%

46%

53%

56%

57%

Access a mobile shopping app

Make a purchase

Get price information

Access a retailer's website

Collect discounts, coupons, saleinformation

Source: Deloitte surveyNote: Sample size for devices (includes only respondents who selected each of the devices); multi select question

53%

Mo

bil

eD

eskto

p/

lap

top

49%

n = 588

n = 639

Vs

57%(2017)

(2018)

(2018)

Vs

49%(2017)


“Please indicate your level of agreement with the following statements (% who agree or somewhat agree)”

Customers expect online and physical shopping experiences to be complementary

56%

52%

46%

40%

34%

28%

Research online before purchasing products in thephysical store

Purchase from online retailers who offer free shipping

Prefer to purchase from retailers offering buy onlineand return in-store option

When shopping online, I prefer loyalty programs thatprovide faster or cheaper shipping than product

discounts

Prefer to purchase from retailers offering buy onlineand pick-up in-store option

I will shop in stores less this season because buyonline and pick-up in-store option is more convenient


63%

56%

49%

44%

38%

31%

2017 responses


14%

15%

16%

27%

39%

44%

59%

63%

To post to or view virtual imageboards

To watch a retail/product video

To post comments, reviews orfeedback

To visit retailers' pages on socialnetworking sites

To read reviews/recommendations

To browse products

To receive a coupon

To find out about promotions

“Do you plan to use social media sites to assist in your

B2S shopping?*”

Most who plan to use social media will do so to find promotions, receive coupons, and browse products

Less than 1/4th of shoppers likely to use social media during B2S shopping season

“With regard to your B2S shopping, how do you plan to use social media sites? #”

Source: Deloitte survey Notes: *Sample size (shoppers who use at least one digital device, n = 985 #Multi-select question (n = 225)

23%


Technology adoption among B2S shoppers has shown smaller movement during the last three years; customers may be waiting for the next innovation in usage and/or technology.

B2S shoppers may be reaching a digital saturation point

51%49%

53%

59%57%

49%

32%

27%23%

2016 2017 2018

Smartphone for shopping Desktop/Laptop for shopping Social media sites to assist in shopping*

B2S shoppers planning to use each technology platform (2016-2018)

Source: Deloitte surveyNote: Sample size for each year – 2016 (n = 1,194), 2017 (n = 1,200), 2018 (n = 1,200)*Sample size (shoppers who use at least one digital device) in each year – 2016 (n = 951), 2017 (n = 978), 2018 (n = 985)


4%

4%

37%

44%

57%

Digital

payment

Gift Card

Cash/Check

Credit Card

Debit Card

“Which of the following payment methods will you likely use for your B2S purchases?”

Digital payment penetration remains low

Payments using credit and debit card are more preferred, though preference between the two depends on income levels

61

%

51

% 60

%

40

% 52

%

40

%

26

%

30

% 43

%

4%

3% 5%

3%

3%

4%

Baby Boomers GenXers Millennials6

8%

58

%

40

%

25

%

48

%

68

%

53

%

29

%

20

%

5%

3%

4%

2% 4%

5%

Less than $50,000 $50,000-$99,000 $100,000 and over

Debit Card Credit Card Cash/Check Gift Card Digital payment

Source: Deloitte surveyNote: Sample size (N) = 1,200; Multi-select question

Generation

Household income

Overall

Category & retail formats


Along with mass merchants, conventional retail formats – traditional department stores and home electronic stores – are among the most preferred destinations for the B2S season.

Customers intend to shop the most at conventional retail formats – mass merchant, department, and electronics stores

Rank Clothing & AccessoriesElectronic gadgets/

Computer & hardwareSchool Supplies

1 Mass merchants Mass merchants Mass merchants

2Traditional department stores

Home electronic storesOffice supply/technology stores

3Fast fashion apparel retailers

Online only sites Dollar stores

4 Off-price storesOffice supply/technology stores

Online only sites

5 Online only sitesWarehouse membership clubs

Warehouse membership clubs

Top five preferred retail formats – By category

Question: “Which type of retailer will you shop the most for ______ during this back-to-school season?”Source: Deloitte surveyNote: Sample size (includes only respondents who will purchase the above mentioned category); single-select question


38%

26%

13%

9%

2%4%

35%

20%

16% 15%

5%3%

48%

11%13%

15%

4% 3%

43%

16%14% 14%

4%3%

Boomers

GenXers

Millennials

Overall

Mass merchants Traditional department

stores

Fast fashion Off-price stores Online only* Speciality clothing stores*

While traditional department stores are likely to find favor with older generations, off-price stores are preferred by Millennials after mass merchants.

Mass merchants are likely to be the most preferred retail formats across generations for Clothing & accessories

Preferred retail formats for Clothing & accessories – By generation

* Sample size at generation-level has fewer than 30 respondentsQuestion: “Which type of retailer will you shop the most for clothing and accessories during this back-to-school season?”Note: Sample size – Boomers (n = 138), GenXers (n = 393), Millennials (n=615), Overall (n=1,174)


31%

22%

18%

13%

5% 6%

39%

20%

16%13%

5%3%

53%

9% 10%

16%

3%2%

43%

16%14% 14%

4% 3%

High-income ($100k+)

Middle-income ($50k-$99k)

Low-income (Less than $50k)

Overall

Mass merchants Traditional department

stores

Fast fashion Off-price stores Online only* Speciality clothing stores*

However, traditional department stores are likely to find more favor with high-income households than lower-income

More than half of low-income households plan to shop at ‘mass merchants’, compared to one-third of high-income households

Preferred retail formats for Clothing & accessories – By income

* Sample size at household income-level has fewer than 30 respondentsQuestion: “Which type of retailer will you shop the most for clothing and accessories during this back-to-school season?”Note: Sample size – High-income (n = 339), Middle-income (n = 341), Low-income (n=494), Overall (n=1,174)


Shoppers preferring traditional department stores and fast fashion stores are likely to spend the most on clothing and accessories.

Average clothing and accessories planned spend is higher at department and fast fashion stores than at mass merchants

$234

$390

$338

$277

$279

$320

Mass merchant stores

Traditional department stores

Fast fashion apparel retailers

Off-price stores

Online only sites

Specialty clothing stores

Average ‘Clothing & accessories’ spend – By most preferred format

Question: (1) “Which type of retailer will you shop the most for clothing and accessories during this back-to-school season?” Question: (2) “For the following categories, please indicate the total amount you estimate you will spend during back-to-school shopping season?”Note: Sample size (includes only respondents who will shop the most for ‘Clothing & Accessories’ from the above mentioned retail formats)


26%

23%21%

15%

9%

34%

29%

20%

7%4%

46%

23%

17%

7%

3%

36%

25%

19%

9%

5%




Overall

Mass Merchants Home electronic stores

Online only* Office supply/ technology stores*

Warehouse membership clubs*

When it comes to high-income shoppers, conventional stores – mass merchants and home electronic stores – will likely have a tough competition from online only formats

Dominance of mass merchants as the most preferred format for technology products vary with income

Preferred retail formats for ‘Electronic gadgets/Computers & hardware’ – By income

* Sample size at household income-level has fewer than 30 respondentsQuestion: “Which type of retailer will you shop the most for electronic gadgets/computers & hardware during this back-to-school season?”Note: Sample size – High-income (n = 117), Middle-income (n = 116), Low-income (n = 116), Overall (n = 349)


Average spend on technology products at Home electronics stores is higher compared to other retail formats

Planned spend on electronic gadgets and computers at conventional formats stays ahead of spend at online-only retailers

$334

$430

$318

$383

Mass merchant stores

Home electronics stores

Online only sites

Office supply/technology

stores

Average ‘Electronic gadgets/Computers & hardware’ spend ($) - By most preferred format

Question: (1) “Which type of retailer will you shop the most for electronic gadgets/computers & hardware during this back-to-school season?” Question: (2) “For the following categories, please indicate the total amount you estimate you will spend during back-to-school shopping season?”Note: Sample size (includes only respondents who will shop the most for ‘electronic gadgets/computers & hardware’ from the above mentioned retail formats)


$572$592

$422

$552

$347 $363

$311

$105

$185

$355

$200

$302$334

$430

$318

$383




Overall

Mass merchants Home electronic stores Online only* Office supply/ technology stores*

Low income households are likely to spend the most at home electronic stores, almost double their likely spend at mass merchants

Spend by higher income groups likely to be spread evenly across mass merchants and home electronic stores

* Sample size at household income-level has fewer than 30 respondentsQuestion: (1) “Which type of retailer will you shop the most for electronic gadgets/computers & hardware during this back-to-school season?” Question: (2) “For the following categories, please indicate the total amount you estimate you will spend during back-to-school shopping season?”Note: Sample size (includes only respondents who will shop the most for ‘electronic gadgets/computers & hardware’ from the above mentioned retail formats)

Average ‘Electronic gadgets/Computers & hardware’ spend ($) - By income


63%

17%

3%5% 5%

70%

12%

7%4% 3%

70%

7%

16%

2% 2%

68%

11%9%

4% 3%




Overall

Mass merchants Office supply/ technology stores

Dollar stores Online only* Warehouse membership clubs*

Nearly two-thirds of shoppers are likely to prefer Mass Merchant stores for school supplies shopping

Mass merchants are likely to hold clear lead over other retail formats when it comes school supplies

Preferred retail formats for ‘School Supplies’ – By income

* Sample size at household income-level has fewer than 30 respondentsQuestion: “Which type of retailer will you shop the most for school supplies during this back-to-school season?” Source: Deloitte surveyNote: Sample size – High-income (n = 335), Middle-income (n = 341), Low-income (n = 501), Overall (n = 1,177)


About the survey

Survey timing: May 31 to June 6, 2018

Sample: The survey polled a sample of 1,200 parents of school-aged children, with respondents having at least one child attending school in grades K to 12 this fall.

Methodology: The survey was conducted online using an independent research panel

Demographics

Income group (N=1,200):

• Low-income – Household income less than $50,000 (n=507)

• Middle-income – Household income between $50,000 and $99,999 (n=351)

• High-income – Household income $100,000 and more (n=342)

Region (N=1,200):

• West: (n=282)

• Midwest: (n=264)

• South: (n=424)

• Northeast: (n=230)


About the survey

This annual Deloitte survey was conducted online using an independent research panel between May 31 and June 6, 2018. The survey polled a sample of 1,200 parents of school-aged children and has a margin of error for the entire sample of plus or minus three percentage points.

All respondents had at least one child attending school in grades K – 12 this fall.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms.

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2018 back-to-school survey - Deloitte United States...Deloitte’s 2018 back-to-school survey • Mass merchants remain the top location for intended visits and budgeted B2S spend