Three-percent Looks Like 2011 Magic Number

NEW YORK NY August 3 –The bottom line: households with school-aged children (pre-school through 12th grade) plan a slight rise in back-to-school spending – an increase of 3.2% or an average spend of $602.00, according to the annual survey conducted by Brand Keys (www.brandkeys.com), a New York-based brand and customer loyalty research consultancy.

Average spending and increases for major back-to-school categories, include:

Clothing:$328.00 (+4%)

Computers/Electronics:$220.00 (+5%)

Shoes (athletic & dress)$125.00 (+4%)

Supplies$  95.00 (--0--)

Books/Study aids$  23.00 (+3%)

Metholdology

The Brand Keys survey includes assessments from 10,000 households, drawn from the nine U.S. Census regions. Interviews were collected by telephone and central location intercepts to account for the surging number of cell-phone only households. The directionally higher spend in Computers and Electronics reflects consumers’ desires to trade up from desktop computers to tablets and cell-phones to smartphones.

“Whatever families spend, what’s absolutely certain is the time between back-to-school shopping and the first day of school has been decreasing every year,” noted Brand Keys founder and president, Robert Passikoff. “This situation is exacerbated by retailers advertising over a longer period of time, offering good-better-best deals, and an absolute sense of entitlement on the part of the consumer. “

The Trouble with Prognostications

“Timing is everything, in life, as in research. When you interview consumers is very nearly as important as what you ask them. Ask too soon and you get exaggerated and optimistic effects or dispassionate and illusory figures,” said Passikoff.

Last month Customer Growth Partners predicted a 6.2% spending increase this year, which would be the best back-to-school retail performance in the past half decade. NPD predicted spending would be the same as 2010. “But if you get the timing right and actually get measures of what consumers really think, and not what they say they think, you will get figures you can bank on.” said Passikoff.

This year’s survey showed that nearly three-quarters of consumers (72%) were intending to wait till the end of August and shop just before schools open.

“While any increase in consumer spending will be welcomed by retailers, the money will be slower in coming than in previous years. Consumers are putting off purchases until they absolutely have to buy or feel there are no better deals to be had,” said Passikoff.

Ever-Rising Consumer Expectations Delay Spending

The genesis of the shorter back-to-school purchase cycle is a consequence of increasing consumer expectations. “Retailers have spent more than a decade teaching consumers that they can get things cheaper if they wait longer or look a little harder,” said Amy Shea, Brand Keys executive vice president, Brand Development. “Every year consumers expect more, but it’s a serious error to suggest that the price-value equation is only about money. Value isn’t just pricing, it’s about brand, and brand differentiation. Retailers who manage their brands so that they provide real added-value will always benefit.”

Unlike other major shopping events, like Mother’s Day, there’s a more unbalanced distribution in terms of retail outlets that will benefit from consumers’ back-to-school shopping. The breakdown of “preferred” retail categories this year versus last was:

Discount Stores:95% (unchanged)

Department Stores:           58% (-2%)

Office Supply:50% (-5%)

Specialty Retailers40% (-5%)

Online           40% (-10%)

Catalogs35% (unchanged)

Online to Post Biggest Sales Gains

The largest change in preferred retail distribution platforms occurred in the Online category, where consumers indicated that they were going online more to search for deals and promotions, rather than to specific product outlets themselves. “But even in the face of that trend,” noted Shea, “online retailers like Amazon and Zappos still make the top-10 list of retailers showing the greatest increase in consumer intent-to-shop.” This year’s list includes:

1. Amazon

2. Zappos

3. TJ Maxx / Wal-Mart

4. J. Crew

5. Bed, Bath, & Beyond

6. Staples

7. Kohl’s

8. Apple Stores/iTunes

9. Footlocker

10. Walgreen’s

“While the state of the economy always impacts overall spending, given the ubiquity of merchandise range, overall quality, and pricing strategies, what brands get what piece of the academic pie will ultimately be determined by what retail brands actually stand for,” said Shea. “And research and merchandising timing precision only help the bottom line.”

“Real differentiation can become an authentic proxy for value, both emotional and rational,” echoed Brand Keys’ Passikoff. “That consumers not only believe that, but actually behave that way in the marketplace, should be a fundamental lesson for retailers looking to leverage consumer insights and their build their brands.”