Back to School: Retail Forecast for 2021
At the mid-point of this year, the National Retail Federation (NRF) revised its annual forecast for 2021 for retailers and brands. The NRF now expects overall retail to grow between 10% and 13% for the year totaling between $4.44 trillion and $4.56 trillion.
That’s good news for retailers and brands trying to bounce back from a rocky 2021 or capitalize on opportunities that emerged in 2020.
Retailers and brands are benefitting from multiple back-to-school sales opportunities this year. As many children returned to classrooms in the spring after quarantining, March sales of backpacks, apparel, and footwear grew by triple digits compared to 2020 levels and nearly doubled compared to 2019.
The back-to-school outlook for the rest of 2021 looks strong across all categories.
The words “uncertain” and “unprecedented” have been used a lot over the past year-and-a-half. Those words haven’t always been used in a positive way for brands or retailers. However, analysts at Bloomberg said they expect an unprecedented season for back-to-school shopping as more schools and colleges resume in-person classes this fall, and they mean that in the most positive way possible.
“The back-to-school season has always been important for U.S. retailers, and this year’s is likely to be a doozy.” – Henry Ren and Janet Freund, Bloomberg News
Gordon Haskett analyst and CNBC contributor Chuck Grom explained it this way: “For many families, you’re essentially having two years’ worth of college students that are going to college for the first time.” Grom also predicts this year’s “back-to-school period is going to be wildly successful.”
Back-to-School Forecasts by Category
McKinsey and Company noted that discretionary spending is on the rise. Categories that have been depressed over the past year are starting to recover. That works in favor of brands and retailers as back-to-school spending walks the line between discretionary spending and necessity.
Also, many parents with students who were away from school in a year where spending was flat may be more likely to invest in 2021. More than 50% of U.S. consumers say they expect to splurge or treat themselves a bit more than usual this year.
Clothing, Apparel, and Footwear
Back-to-school sales are expected to revitalize the apparel sector, with 69% of consumers saying they plan to spend the same amount or more on apparel than normal. Buyer intent signals are also higher this year than in 2020.
Footwear also looks tothe be a big seller this back-to-school season, especially with and the return of youth sports. Added to the consistent shopping patterns as children grow and require larger sizes, expect families to spend in the footwear category.
Electronics were the big sellers last back-to-school season as families geared up for remote learning and at-home schooling. While more education will take place in physical classrooms this coming school year, electronics are still expected to be a hot commodity this back-to-school shopping season. Best Buy has already increased its sales projection for a second time this year.
School supplies are always a top category. With many students now a year or two older than the last time they socialized with classmates in person, many of the supplies they have will be outdated or outgrown. Retailers and brands can also expect heavy spending on school supplies as parents and students refresh their supplies.
Consumer Buying Habits Have Changed
Nearly 80% of consumers say they value convenience more than they ever did pre-pandemic. Forty-five percent of shoppers say they’re more likely to purchase products from brands that make it easy to buy. While price is always a consideration, so is convenience in 2021.
For brands and retailers, this means continued growth in e-commerce. Look no further than Walmart’s Q1 2021 financial statement to see the dramatic effect. E-commerce sales at the retail giant rose 37% year-over-year in the U.S. and 49% internationally.
Even as pandemic fears recede, e-commerce sales continue to increase. Nearly $1 out of every $5 spent on retail purchases was done digitally in Q1 2021. The National Retail Federation predicts non-store and online sales will grow between 18% and 23% this year. Sales will be furthered as kids go back to class as evidenced by a Shopkick survey, in which more than half of back-to-school consumers say they plan to shop online more than they typically would.
Curbside pickup — especially among shoppers buying online and picking up at the store — also remains strong. More than a third of shoppers in late 2020 picked up an order outside of a store — a 50% increase compared to the previous year.
Consumers between the ages of 17 and 38 are twice as likely to use curbside pickup (49%) than shoppers age 39 and older (26%).
Curbside pickup can provide a significant positive for retailers and brands. Same-day pickup from stores for online sales can save retailers as much as 90% compared to shipping orders from warehouses.
But some things never change. The Shopkick survey shows that ”92% of in-store shoppers will flock to big-box retailers like Target and Walmart, followed by dollar stores (40%), office supply stores (38%), and off-price retailers (35%). Some 85% of online shoppers will turn to Amazon, followed by big-box retail sites (69%), office supply sites (27%), and online apparel retailers (26%).”
New Brand Discovery
Dramatic lifestyle changes during the pandemic led to more brand discovery. Half of consumers report switching from familiar brands to new brands and products. This creates a significant opportunity for offerings from new brands and companies.
For established brands and retailers, it means an intensified marketing effort to remind consumers of product attributes and benefits beyond the brand name.
A Return to Normal
Matt Powell, an industry advisor for NPD Group, offered a cautionary note. “There was a recent surge in softline sales when kids went back to school this spring in some areas of the country,” he said. “This is one example when the shift to buying — when it’s needed — could disrupt the back-to-school shopping season.”
Most experts — and parents — disagree. While increasing “as needed” sales, the traditional back-to-school selling season looks to be robust. Parents of school-age children look at back-to-school shopping as a family tradition and a way to get their children enthusiastic about returning to school — something many families did not get to experience last year.
As families try to ease their children’s (and their own) anxiety about a return to in-classroom learning, back-to-school shopping has become an overt signal of the return to normalcy we’ve all been craving. When you mix in a bit of nostalgia for parents who missed an annual rite of passage last year, back-to-school shopping becomes about more than just buying school supplies.
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