A worker stores shelves of school supplies in a Target store on August 28, 2020 in Colma, California.
Justin Sullivan | Getty Images News | Getty Images
US shoppers are becoming increasingly concerned about visiting stores and trying on clothes in locker rooms, according to a recent survey.
Some of First Insight’s respondents also say they are starting to cut spending due to the resurgence of Covid cases.
Both trends threaten to slow the momentum for an incredibly strong back-to-school shopping season that has been predicted by many.
Deloitte has estimated that back to school spending for Grade K-12 children would reach $ 32.5 billion this year, up 16% from 2020 and 17% from 2019. That averages about $ 612 each Student. The consulting firm’s estimates are based on a survey of 1,200 parents conducted May 27 through June 5.
A lot has changed since then.
Although parents may have extra cash after rounds of government economic checks and child tax credits, the recent spike in Covid cases fueled by the Delta variant could thwart those predictions. Coupled with inventory shortages caused by shipping disruptions and conservative planning by retailers, things may not look as rosy as it did when students started their summer vacation.
Bed Bath & Beyond CEO Mark Tritton told CNBC’s Sara Eisen Thursday that some customers are delaying their purchases back to college. He said some of that spending would move into September.
Undoubtedly, there are concerns that last minute plans for back to school may change. Finally, the Centers for Disease Control and Prevention recently lifted their masking policy and asked vaccinated people to return to wearing masks indoors to help prevent the spread of Covid. The new guidelines have made consumers rethink their choices about restaurants, travel and other shopping.
56 percent of consumers say they are proactively reducing their retail store spending, First Insight found in a survey of 1,038 people asked Thursday. That’s a 52% increase from the previous month when the predictive consumer research company asked consumers the same questions about their shopping behavior in the context of the pandemic.
First Insight’s survey also found that 64% said they were generally concerned about the pandemic, up from 51% in July. 56 percent said they felt nervous when interacting with sales reps in stores, a sharp increase from 43% in July.
“The tailwind that retailers and restaurants have enjoyed recently may be short-lived,” said Sarah Wyeth, analyst with S&P Global Ratings, in a client report.
“Even if the virus can be contained, other risks seem to grow,” she said. “Labor and supply chain bottlenecks could dampen short-term performance or, worse, continue into the critical Christmas shopping season.”
Lessons from last year
A look at the mood swings in just a few weeks this summer offers a glimpse into the tough calculations being made by retailers.
A year ago retailers put red stickers on Minions: The Rise of Gru merchandise. The release of the Universal film was postponed to 2022, but toys, t-shirts, and even groceries tied to the film ended up on the shelves – and then in the trash cans.
It was similar with articles related to Disney’s “Black Widow” and Warner Bros. “Wonder Woman 1984.” Both films were delayed, but the action figures and backpacks still arrived as planned.
Fearful of piling up too much inventory for movies that might not get released, department stores and big box chains have been more conservative with product choices – especially when it comes to entertainment properties. This means that there will be less variety for back-to-school buyers this year.
“Retailers didn’t buy a wide range of products, but instead planned to have a large inventory with fewer choices – a risk reduction strategy they had to implement when they went back to school six to nine months ago,” said Nikki Baird, vice president of Retail Innovation at Aptos, a technology solutions provider that works with shoe brands and other retailers.
Product decisions for this year’s back-to-school season were made more than nine months ago. At this point in time, vaccines were not yet approved.
“Your fate is fixed”
In late spring, buyers feared that products might be sold out. According to a back-to-school survey by Deloitte, 50% of people were concerned about items that were out of stock, especially technology items.
“Many of the items you will buy back to school have already landed in warehouses and stores,” said Greg Portell, senior partner in the global consumer practice at Kearney, a strategy and management consultancy. “At this point your fate is set.”
Portell is optimistic that consumers will have a long shopping list after skipping clothing purchases last year.
“This is not just about getting some clothes so you have fresh clothes to go back to class,” Portell said. “This is a complete change to your closet. This is a surge in demand that we’ve never seen before.”
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is the distributor of “Minions: The Rise of Gru”.
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