Inflation: ‘Customers have become brand agnostic’ in back-to-school shopping, CEO says
With the back-to-school shopping season now in full swing, consumer shopping trends have altered in the face of elevated inflation levels that have shrunk the budgets of many parents.
“Consumers are absolutely trying to get the best deal,” United National Consumer Suppliers CEO Brett Rose said on Yahoo Finance Live (video above). “Brand loyalty on stationery items is sort of out the door. Customers have become brand agnostic as ultimately all we as parents and as consumers are trying to do is save a penny where we can ... and spend less than we did last year, given the current economic climate and inflation.
According to the National Retail Federation, families are expected to spend an average of $864 on school supplies, which is $15 more than last year. This comes as inflation currently sits at 8.5%.
While consumers have pulled back on spending, back-to-school shopping is still being seen "as an essential category," National Retail Federation CEO Matthew Shay previously told Yahoo Finance. However while that stance remains true among parents, how and when they go about spending their money on these items has changed.
“We're not trading down backpacks," Rose said. "We're not trading down lunch bags or boxes. We're trading down the things that are maybe the ancillary items that people don't see. We're giving our kids the same pens as last year. We're reusing the crayons, the colored pencils."
The cost of school items like No. 2 pencils, loose-leaf paper, and Elmer's glue has increased from 10%-20% from this time last year due to inflation, according to the Wall Street Journal.
“I think every penny counts this year more so than ever," Rose said. "When you've got people that would buy a $0.50 pack of crayons instead of spending the $1.50 or the $1.80 for Crayola, it's brand agnostic.”
'Look at Dollar Tree'
While it's common for parents to conduct their back-to-school shopping at big-name retailers like Target (TGT), Walmart (WMT), and Staples, Rose — whose company is a supplier for discount retailers — has noticed a shift towards shopping wherever the best prices are available.
"Look at Dollar Tree, Dollar General, Family Dollar, even a Marshalls and TJ Maxx," Rose said. "You can find everything you want. Those five, six stores alone right there, big brands, off price. You're taking advantage of the fact that it happens to be available."
Because of inflation, the current retail landscape has expanded with opportunities for discount retailers to raise prices while still offering affordable deals to their customers.
"Great example: Five Below," Rose said. "You used to buy office supplies or anything for the tween market, price of $5 or below. Now you can find $10 or $15. Maybe traditionally, a scientific calculator or a higher-end backpack that couldn't be priced at $5, it can be priced at $15. It's still a great deal to the consumer. So all of a sudden, you have companies like Five Below and Dollar Tree who have raised their ceiling or what they're selling things for. And it's a phenomenal opportunity for consumers because those stores are just great."
He recommended starting back-to-school shopping as early as possible rather than waiting until the end of the summer when demand will be high.
"Maybe July 3, you're shopping and you find a backpack — grab it," Rose said.
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