The news: We expect back-to-school season sales to rise just 0.7% this year as inflation weighs down retailers’ sales during the critical season.

A tough environment: Soaring prices on gas and other goods are causing parents to stress about shopping for the upcoming school year.

• Thirty-six percent of parents say they can afford their kids’ back-to-school shopping without any issues, a 16 percentage point dip from a year ago when they had the benefit of stimulus checks and child tax credit payments, per Morning Consult.
• The share of consumers feeling the impact of higher prices is rapidly growing. Between early May and late June, the share of back-to-school shoppers planning to spend more than $500 on back-to-school items increased from 11% to 25%. (For the sake of comparison, only 7% of parents doing back-to-school shopping for the previous school year planned to spend more than $500.)
• This environment is making shoppers increasingly price-conscious, with ​​64% of consumers planning their back-to-school shopping around sales events, a nine percentage point jump from pre-pandemic 2019, according to a National Retail Federation/Prosper Insights & Analytics survey.
• Some parents aren’t even buying if it’s on sale. Twenty-one percent don’t plan to shop on Prime Day because of concerns about the economy and its impact on their financial situation, and another 20% are shifting spending to necessities, per Adobe.

Meeting shoppers where they’re at: Stores are set to play a role in 93% of shoppers’ school supplies purchases, 90% of clothes orders, 81% of electronics sales, and 80% of books purchases, per Morning Consult.

• That’s in line with broader trends that have seen brick-and-mortar growth rate outpace ecommerce for four straight quarters.
• With consumers venturing into stores, brick-and-mortar retailers have an opportunity to promote in-store offers and showcase their store products.
• Consumers are increasingly looking for incentives. Forty-two percent are shopping for sales more often, up from 36% last year and 30% in 2019, and 35% are buying more store-brand or generic products, up from 27% last year and 24% in 2019.

Seizing the opportunity: Both Target and Walmart are eyeing the opportunity to appeal to value-oriented shoppers.

• ​​Target extended its Teacher Prep Event—which offers a 15% discount on school supplies and other items—six weeks longer than last year. It is also offering college students exclusive discounts via its Target Circle loyalty program.
• Walmart is highlighting a curated assortment of items priced at $1 or less and promoting its AR “View in your Space” tool to help college students understand how furniture will look or fit in their dorms.

The big takeaway: Higher prices are causing consumers to alter their back-to-school shopping behaviors this year. To avoid missing out on critical revenues, retailers need to find ways to communicate and deliver value to shoppers.

Go further: For more on The Era of Uncertainty, read our report here.