Inflation hits back-to-school purchases |  Penn today

Inflation hits back-to-school purchases | Penn today

In this back-to-school shopping season, parents, students and teachers are focusing on the essentials while opting for cheaper stores amid runaway inflation, which hit a 40-year high in June . Even though inflation in the United States recently eased slightly to 8.5% and moved away from historic highs due to lower gasoline prices, consumers are still seeing rising food prices and rent, as well as basic necessities such as clothing and school supplies.

“Inflation is still abnormally high, which will affect short-term spending such as back-to-school, which consumers are currently concerned about,” according to Barbara E. Kahn, Patty and Jay H. Baker Professor of Marketing at the Wharton School.

Shoppers are turning to alternatives, like prioritizing discounts or even buying more second-hand clothes. Such financial difficulties, in the midst of the second busiest shopping season behind the winter holidays, mark a big difference from a year ago, when many shoppers, drenched in government stimulus money and supported by wage increases, spent freely. In May of this year, as gas and food prices rose, shoppers abruptly shifted away from high-end products for no-frills versions.

“As Walmart and Target see revenue growth in grocery, higher-margin categories like apparel are seeing declines,” Kahn says, “and consumers are turning away from high-end brands to focus on essential, so revenue may increase but profitability decreases.”

Retailers also face big challenges getting shoppers to spend, according to Kahn.

“The the wall street journal reported that some retailers are turning to innovative strategies to appeal to price-conscious consumers,” she says. “Lululemon has been promoting their famous leggings at great value prices, but the catch is that they’re not new – other fashionistas wore them first.”

According to Kahn, other retailers are turning to innovation to capture consumers’ attention.

“For example, Walmart’s Executive Vice President Tom Ward announced that Walmart was looking to increase its ‘last mile’ delivery convenience, suggesting, for example, that drone deliveries may soon become a reality,” says Kahn. “Macy’s seeks to capitalize on a child’s desire for self-expression when they return to school in the fall. Macy’s new advertising campaign highlights the rapidly changing fashion landscape and encourages purchases that combine basics with “expressive splashes of wearable art”.

A report by US News & World Report shows that more than 75% of Americans worry about not having much wiggle room to spend on school supplies.

“This suggests that budget-conscious shoppers are going to prioritize shopping for back-to-school essentials,” Kahn says. “Parents will wait to see exactly what their children need, rather than buying in anticipation.”

The National Retail Federation estimates that back-to-school spending will increase 36% this year compared to 2019. They also expect families to spend an average of $864 on back-to-school items this year, which is $15 more than the year and $168 more since the beginning. of the pandemic.

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