Tuesday, July 24, 2012 | Edited by Daniel Moores
||Back-to-School Spending Grows as Parents Restock, Replenish Children's Needs
With more children entering elementary and middle school this fall and after cutting back their spending last year, parents with growing children will hit the stores this summer to replace and replenish what their children might have had to "make-do" with last school season.
According to the National Retail Federation's 2012 Back-to-School spending survey conducted by BIGinsight, the average person with children in grades K-12 will spend $688.62 on their children, up from $603.63 last year. Total spending is expected to reach $30.3 billion.
Combined K-12 and college spending will reach $83.8 billion, serving as the second biggest consumer spending event for retailers behind the winter holidays.
"When it comes to their children, there's nothing more important to a parent than making sure their children have everything they need, even in a tough economy -- and especially when it comes to back-to-school shopping," said NRF President and CEO Matthew Shay. "Backpacks rip, pencils break, and children grow, there's no way around it. But as they begin tackling their shopping lists, parents will make sure to spend smarter than they ever have before. We fully expect retailers to be aggressive with their promotions both in-store and online, keeping an eye on inventory levels as families look to spread out their shopping throughout the entire summer."
Not surprising, parents will spend the most on clothing, accessories and electronics this summer. Realistic about the cost of select items and the necessities needed for the school year, parents estimate they will spend an average of $246.10 on clothes and $217.88 on electronics. Nearly six in 10 (59.6%) will invest in some sort of electronic device, a sharp increase from the 51.9 percent who planned to do so last year.
Additionally, the average person with children in grades K-12 will spend $129.20 on shoes and $95.44 on school supplies such as notebooks, pencils and backpacks.
Economy still top of mind
After several years of uncertainty it seems the economy is still impacting how Americans shop. From shopping for sales more often to contemplating their children's athletic and academic activities, this year 84.8 percent of consumers with school-aged children say the economy will impact their spending plans in some way.
Specifically, more people plan to shop for sales more often (51.1% vs. 50.0% last year) and cut back on their children's extracurricular activities (11.0% vs. 10.2% last year.) Savvy shoppers looking to save some money will shop online more often (17.9% vs. 15.3% last year) and comparison shop online (32.1% vs. 29.8% last year).
If there's one thing the economy has changed it's the way people shop. This year more families say they will shop at department stores and online for school items as they look to get the best bang for their buck. Nearly six in 10 (59.9%) will take advantage of department stores' private label offerings and exclusive product lines, up from 57.0 percent last year and the highest in the survey's 10-year history.
Parents will also scour the Internet for free-shipping and other promotions. Nearly four in 10 (39.6%) will take their school shopping lists online, up from 31.7 percent last year and nearly doubling since 2007 when 21.4 percent planned to shop online.
Discount stores will be the most popular shopping destination, however, with 67.1 percent planning to shop there for school items. Clothing stores (52.0%), office supply stores (42.0%), drug stores (22.7%) and thrift stores (14.4%) will also see their share of back-to-school shoppers. Electronic stores, popular with families looking to invest in smartphones, tablets and MP3 players for their children, will see a nice bump in traffic this year (26.3% vs. 21.7% last year).
"The budget-conscious consumer has not forgotten about price, quality or value. We're merely seeing a more savvy shopper," said BIGinsight Consumer Insights Director Pam Goodfellow. "There's no questions consumers have become more practical in their shopping, and with school purchases oftentimes considered a necessity, parents have likely been saving and scrimping to be able to fully afford all of their children's needs for the upcoming school year."
Families getting jump-start on shopping
Hoping to spread out their spending, more people have already or will begin shopping earlier than they did last year. Almost half (47.8%) are planning to begin shopping three weeks to one month before the school bell rings, up from 42.4 percent last year, and 22.3 percent have likely already made a dent in their shopping list, saying they would shop at least two months before school starts, up from 21.8 percent last year.
Another quarter (24.0%) of Americans will start shopping one to two weeks before school, and 2.7 percent will wait until school starts. With some people having less to shop for and hoping to stock up on clearance items, 3.2 percent will shop after school starts, up from 2.6 percent last year.
Teens, pre-teens chipping in a bit more
It seems their "allowance freeze" has ended -- teenagers and pre-teens this summer will spend more of their own money on back-to-school items. The average 13-17 year old will spend $36.48 on pens, paper, lunch boxes and more, up from $31.64 last year. Their younger siblings (6-12 year olds) will spend on average $25.63 on what they want for school, up from $15.12 last year.
Additionally, when it comes to the heavy influence children have on their parents' back-to-school spending, 63.5 percent of parents say their children have at least 50 percent of a say in what they buy.
Men are expected to spend an average $739.75 on their children in grades K-12, compared to women who will spend an average of $640.42. The difference isn't only in the amount. Mom, much more likely to be the keeper of the family budget, will shop more at discount stores (71.2% vs. 62.7% of men), while men are more likely to shop at department stores (64.8% vs. 55.3% of women) and electronics stores (33.1% vs. 19.9% of women).
Economy still important for back-to-college shoppers
NRF's 2012 Back-to-College Survey conducted by BIGinsight found college students and their families will spend an average of $907.22 on everything from dorm furniture and collegiate gear to school supplies and personal care items, up from $808.71 last year. Total spending for back-to-college is expected to reach $53.5 billion.
According to the survey, eight in 10 (83.5%) back-to-college shoppers say the economy is impacting their spending plans. To compensate, more people this year will use the Internet to their advantage by doing more comparative shopping online (34.6% vs. 30.7%) and shopping online more often (20.5% vs. 18.8% last year.) More parents will also ask their children to make-do with last year's items (31.2% vs. 29.7% last year).
"With fewer 'needs' than a typical grade-school student, college students and their families are much more likely to look for ways to cut corners this summer as much of their costs come in the form of tuition and living arrangements," said NRF President Shay. "As the economy continues to play a role in Americans' spending decisions, retailers will offer shoppers plenty of ways to save money both in their stores and on their websites, including bundles, free gifts and gift cards with their purchase and even free online shipping on school items, aiming to attract value-focused back-to-college shoppers."
Favorite shopping venues
The economy isn't only impacting how people shop; it's impacting where they shop. The survey found 15.1 of shoppers said they plan to use catalogs to buy their college items, up from 11.4 last year and just 8.3 percent the year prior. The Internet has helped the resurgence of both digital and paper catalogs among shoppers of all ages. Nearly one-quarter (24.9%) of the average 25-34 year old will use catalogs to purchase school items.
Home furnishing stores, attractive to college students looking to invest in small appliances, bed and bath sets, will see a jump in traffic this year -- 16.4 percent of back-to-college shoppers will head to a home furnishings or home décor store, up from 11.2 percent last year.
College students and their families will also head to discount stores (51.9%), department stores (45.4%), drug stores (22.3%), office supply stores (40.3%), clothing stores (34.8%), electronics stores (21.1%) and thrift stores (15.0%).
"When it comes to how young adults and their parents tackle their college shopping list, nothing is off the table, especially now that catalogs are tablet and mobile-ready," said BIGinsight's Goodfellow. "Some college students and their parents may be hesitant to commit to any purchase without having researched whether or not they are getting the best deal beforehand. This year every retailer could be a 'winner' as consumers will spread out their spending, leaving no retailer unturned."
Electronics, gift cards will be popular
According to the survey, nearly three-quarters (74.2%) of back-to-college shoppers will buy apparel and accessories, spending an average of $132.97, and 71.0 percent, the highest in the survey's history, will buy new shoes, spending an average of $75.81.
Electronics will also be popular with college students -- 54.0 percent say they will buy a new computer, MP3 player, smartphone or other device, up from 45.8 percent last year, and will spend an average $216.40. College freshman, not surprisingly, will spend an average of $262.58 on electronics, the highest of any college level.
Shoppers will also spend on dorm furnishings ($100.27), food items ($100.18), personal care items ($81.76), school supplies ($75.73) and collegiate branded gear ($52.87).
Mom and dad are also sending their child to school armed with gift cards -- 37.9 percent of college shoppers are expected to spend an average of $71.23 on gift cards or pre-paid cards, the most since 2009 when this category first appeared in the survey.
College students and their families, like parents with children in grades K-12, will begin shopping earlier this year. Nearly one-third (31.9%) are planning to start school shopping three weeks to one month before school starts, up from 28.9 percent last year. Nearly three in 10 (29.0%) say they will begin shopping at least two months before school starts, up from 24.4 percent who said so last year. Nine percent (9.2%) will start shopping after school starts.
According to the survey, fewer people say their college-aged children will live at home this year (42.9% vs. 52.9% last year), and more say their child will live in a dorm room or college housing (25.9% vs. 18.1% last year).
Overall, college freshmen and their parents are expected to spend the most this year, spending an average of $929.35. Graduate students, preparing for life on their own or a career, will spend $879.89, followed by sophomores ($812.97), juniors ($767.41) and seniors ($680.70).
(Source: National Retail Federation, 07/19/12)
To download the complete survey results, follow this link.
||IBM Shopping Index Shows Women Ready to Buy Clothes
Women are likely to be replenishing their wardrobes in the third quarter, according to a forecast released last week by IBM.
In-store sales of women's clothing are expected to climb 9.2 percent, according to the IBM analytics-based predictions. Other categories expected to jump over the next three months include children's clothing (6.2 percent), footwear (5.2 percent) and "other clothing" (7.5 percent), which includes exercise apparel, outerwear and formalwear, according to the forecast.
"As the economy starts to come back, there is some pent-up demand for women in the clothing area because they haven't been spending on themselves as they have others," said Ellen Davis, senior vice president of the National Retail Federation at a briefing for the forecast.
Sales of men's clothing, on the other hand, are expected to decline by 6.7 percent, according to the report. "Men bought very heavily over the last year....Maybe men bought, and they were kind of finished," said Michael Haydock, IBM chief scientist and author of the report.
"This forecast reflects a growing trend: Consumers are ready to shop," Jill Puleri, global retail leader for IBM Global Business Services, said in a statement. "Consumers will be stocking up on items that they need, but still earmarking products for later in the season. For retailers to effectively tap into consumer desires, they need to deliver timely, hyper-personalized promotions that will compel consumers to instinctively act on a deal."
At the same time, Haydock said consumers will be managing how they spend their money and spreading out their purchases over time: buying for example, notebooks and pencils in July, clothing in August and waiting until September to buy a new computer. "Consumers are managing their checkbooks," he said.
The report comes on the heels of recent dismal consumer spending numbers. Recent months have been tricky for retailers as sales stalled in June, marking the third consecutive month of falling retail sales, according to data released last week from the National Retail Federation.
"People have money," said Haydock, and retailers are wondering "how to pry that money free. People's sentiments are going up and down; it's not on auto pilot by any means," he said.
While apparel sales are expected to get a bump over the next few months, overall spending in the second half likely will slow, according to Haydock.
"People are deferring their purchases because they aren't getting the right promotions," said Haydock, pointing to the IBM Social Sentiment Index, which tracks and analyzes large volumes of social media data to assess public opinions.
(Source: Chicago Tribune, 07/17/12)
||As It Loses to Spirits, Brewing Industry Aims to Revive Brand Beer
Brand beer might soon get a reboot.
Top brewing executives are putting a new urgency on working together to boost the reputation of beer, which has lost favor among some millennial drinkers. The topic is likely to be discussed this week as leaders from MillerCoors, Anheuser-Busch and other beer marketers gather at the Trump Soho hotel in New York for the annual meeting of the Beer Institute, an industry trade group.
It will be the first meeting led by MillerCoors CEO Tom Long, who will be installed as the trade group's chairman for a two-year term. It was Mr. Long who issued a public wake-up call late last year at a meeting of the National Beer Wholesalers Association, telling members that "the days of beer guys knocking each other around and not worrying too much about spirits and wine is over." In a statement to Ad Age, he said that as BI chairman, he hopes "to bring energy and ideas to the many programs and plans that tell the story about beer being the right choice for consumers and retailers alike."
Beer shipment volumes have fallen for three straight years through 2011, according to Beer Marketer's Insights. And for the 52 weeks ending May 26, volumes fell 0.3%, compared with a 3.2% increase in spirits volume, according to Nielsen, which tracks store sales.
The scope of the new effort is unclear, but there seems to be a consensus that beer needs to emphasize its positioning as the beverage of "moderation," which Anheuser-Busch VP-Marketing Paul Chibe said "gives it a distinct advantage" over other booze options.
Still, leaders have not made any decisions on a communication plan and whether or not that could include a consumer-facing effort such as a TV ad. More likely, the effort will begin with PR outreach to opinion leaders inside Washington, D.C., where the Beer Institute is based.
The last big beer image campaign, called "Here's to Beer," came in 2006. It was led by Anheuser-Busch, endorsed by the Beer Institute and included broadcast and online elements. But it later fell apart as AB was not able to lure competitors on board, who rightly calculated that AB would pay for it anyway.
Bob Lachky, a former chief creative officer for AB who led that effort, told Ad Age he was skeptical competing brewers would ever come together again in any significant way.
"There's natural jealousy, natural unwillingness to work (together) and, frankly, a Beer Institute that has no authority other than what its members want to do," he said. "And if a majority of members don't want to put money up for something that they think is going to benefit one guy vs. the other, nothing is ever going to happen."
(Source: Advertising Age, 07/23/12
Daily Sales Tip: Determining What Customers Expect
Knowing your client's expectations gives you a tremendous advantage over your competition.
Most salespeople will not ask what those expectations are; consequently, they cannot perform the way the client wants them to. In addition, most will rely on their company to "exceed" the client's expectations. It is impossible for a company to exceed the client's expectations because the company simply has too many clients with too many different expectations to individualize the sales process.
Consequently, you are the only one capable of doing it. It is your job to turn the purchasing experience into the one your client wants, not your company's. You must become the client's advocate in the process.
Knowledge really is power. By taking the simple step to ask your client what their expectations are, you gain the power to give them the experience that will give you the basis for gaining referrals and word-of-mouth marketing. In addition, if you discover your client has unrealistic expectations, you can deal with them at the beginning of the sales process rather than finding out later, after they have evolved into a real problem.
Do yourself a huge favor -- ask. Not only will it improve your relationship with your client, you'll see the effort returned in the form of more sales.
Source: Sales author/consultant Paul McCord