NEW YORK — Mass-market retailers in the U.S. are bombarding shoppers with deals on computers, clothing and other back-to-school essentials at affordable prices. To close the deal, they market “buy now, pay later” services so customers can spread the cost of a stylish return to school.
The strategies to secure sales are being shown to entice consumers, especially those in lower income brackets, to spend during the second-most important retail season after the winter holidays, retailers and analysts said. Several forecasts predict that back-to-school sales will be about the same or lower this year than last.
Even if inflation has dropped, the cost of food, rent and other necessities remains much higher than before the coronavirus pandemic. High interest rates have made it more expensive to carry a credit card balance. Savvy shoppers across all income levels have proven willing to shop secondhand and shop labels and brandswhich are usually cheaper than the nationally advertised brands.
“Inflation is the biggest thing that changes my spending,” said Jasleen Reyes, 43, a mother of three who works as a hotel operations manager and lives in New York City’s Harlem neighborhood. “It used to not be that big of a deal. Now I have to watch every dollar.”
For Reyes, that means looking for more discounts, especially when it comes to sneakers and jeans for her kids. She also planned to use a “buy now, pay later” (BNPL) plan to buy a laptop for her 24-year-old son, a college student, and school uniforms for one of her teenage daughters.
Reyes estimates she will spend $3,200-$3,400 on back-to-school items this year, about $1,500 more than last year, mostly because of the laptop. She uses credit cards but prefers the four-term BNPL option because it spreads her costs over two months, interest-free, rather than adding them to an account each month that would accrue interest if she couldn’t pay the balance off straight away.
Unlike gift-giving holidays like Christmas and Valentine’s Day, the back-to-school season is dominated by spending on essentials like classroom supplies and replacing clothes and shoes that children have outgrown.
But like the winter holidaysBack-to-school shopping season is starting earlier and earlier. One reason is Amazon’s Prime Day. Rivals hoping to grab some of the online giant’s momentum have helped make July a big month for discounts.
For example, Target offered 20 school supplies, including notebooks and colored pencils, that together cost less than $20. The discounter moved the sale from the first week of July a year ago to the third week of June.
More people are turning to buy now, pay later services as the school year starts. In June, $6.75 billion in online purchases were made using BNPL services in the U.S., up 14.3% from the same month a year ago, according to data from Adobe Analytics.
Many shoppers appreciate the flexibility of ‘buy now, pay later’, but consumer groups have raised concerns that the growth of this payment method could put consumers in trouble. reflect financial stress and ultimately leave Americans with even more debt.
According to BNPL company Afterpay, millennials made the most back-to-school-related purchases on its platform from April through June, followed by members of Generation X. Spending on back-to-school products grew in “accessories, apparel, electronics, footwear and home furnishings,” a company spokesperson said.
Afterpay data from May, June and July shows a 65% year-on-year increase in sales of backpacks through the company’s payment system, while sales of flashcards and electronic tablets increased by more than 50%. Sales of “school shorts”, “school skirts” and low-top trainers purchased through Afterpay increased by more than 100%.
The National Retail Federation predicts that sales of school supplies will reach $38.8 billion this year, the second-highest figure since the group began keeping track in 2007. It still holds last year’s record of $41.5 billion.
“Households are dealing with inflation right now,” Jack Kleinhentz, the federation’s chief economist, said at a news conference last week. “Even though it’s improving, they have to prioritize. They have to be more selective.”
Professional services and consulting firm Deloitte estimates that back-to-school spending will reach $31.3 billion, nearly flat from $31.9 billion a year ago.
Back-to-school shopping has contributed to the record sales that Amazon reported its 10th Prime Day event on July 16-17, with big spikes in spending on products such as backpacks, lunch boxes and office supplies, Adobe said. The tech company doesn’t adjust its analytics for inflation, but said new demand, not higher prices, has driven most of the increases in consumer spending this year.
Chummy Tees, an online T-shirt company based in Sonora, California, has closed more deals than it did a year ago, founder Josh Neuman said. He said the buying frenzy began in late June; last year, business picked up in mid-July and intensified in August, Neuman said.
“It seems like parents want to be ahead of the curve to get the best deals and make sure their kids are all set for day one,” he said.
For those just entering university, dorm room supplies According to co-founder Amanda Zuckerman, e-tailer Dormify appeals to both sides of the budget.
This season, Dormify has created two different bundles, one for big spenders and one for shoppers on a budget. The 16-piece deluxe bundle starts at $329, while the “core” bundle starts at $199 and includes 27 items.
The retailer has also lowered starting prices on some items, with duvets starting at $69, down $30 from a year ago.
Zuckerman said back-to-college spending, which normally begins in late May, began this month. She believes the late spending was due to the delays and disruptions with the government’s approval process for free applications for federal student aid after an updated version of the financial aid form was released.
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