August marks the time of the year where summer activities and fun in the sun take a back seat to a moving back to the classroom and new curriculums, as children across the U.S. return to school.
With the return to school comes increases in consumer spending that impacts various retailers across the country. Stocking up on school supplies, consumer electronics and back to school clothes. Beyond those essentials, changes to consumer spend at the grocery store also factors in. Let’s look at how shoppers are spreading their dollars across the marketplace…
Market Size and Household Spend
Consumers are expected to spend record amounts for both back-to-school and back-to-college shopping this year, according to the annual survey released today by the National Retail Federation and Prosper Insights & Analytics. Back-to-school spending is expected to reach an unparalleled $41.5 billion, up from $36.9 billion last year and the previous high of $37.1 billion in 2021. Back-to-college spending is expected to hit $94 billion, about $20 billion more than last year’s record1.
Knowing households continue to feel the stress of tightened budgets, due to months of inflationary pressures, retailers are emphasizing promotions and deals to alleviate the financial burden. Retailers like Walmart, Target, and Amazon all launched back to school sales starting in July. Promotions include 45% off supplies, tech and clothing through Amazon, school supplies (all ages) starting at $1.99 from Target, and t-shirts, jeans, and uniforms under $10 at Walmart, to name a few2.
Beyond everyday school supplies, consumers are also feeling the pricing pressures while going to stock up on back-to-school lunch items as well…
Retail Inflation
While inflation has softened in recent months, with all items resting +3% in June, according to the Bureau of Labor and Statistics, Food at Home rests slightly higher at +5.7%.3 Even though the inflation contraction is a positive, there remains a pricing lag from what consumers are seeing in-store. This not only impacts everyday grocery trips, but it also now affects the back-to-school lunch and snack list as well.
Across all/most of the departments, average price (ARP) increases were the sole driver of recent sales growth, as units declined across the total store. Among edible departments, which include the three largest sectors, ARP increases land above the previously noted Food at Home inflationary rate. Notably within Grocery, ARP increases hit double-digits (+12%) for the most recent 4 weeks ending June.
While these price increases provide a benchmark across each department, some segments saw increases well beyond the average. In some cases, edible subcategories like shelf stable ramen and udon noodle blocks, shelf stable cracker snack and sandwich, and shelf stable fruit snacks saw price increase of 28%, 21% and 19% respectively.
Lunch Staples
Back-to-school sacked lunch items are also not immune to rising costs. Items like frozen and refrigerated deli meat, shelf stable fruit spreads / nut and seed butters, and bread and baked goods, all saw price increases. Even food storage bags and wraps saw moderate sales growth (+2.0%), driven primarily by an increase in ARP (+4.2%), while units declined (-2.1%).
Building a school-worthy sandwich to sustain you until the end of day, now comes at a higher cost. Everything from the breads and baked goods prices are up (+10.5%), to the sandwich fillings and proteins. Among the top five deli meats, performance was mixed, resulting in moderate growth, or slightly down compared to the previous year. Across all deli meats, ARP increases outpaced their total growth. Prices increased across all product positioning groups, at a similar rate.
Total US, SPINS Natural Enhanced Channel + SPINS Conventional Channel (powered by CircanaI) |4 weeks ending 6.18.2022 | Product Type | Positioning Group | Exclude PVL Items
Unfortunately, consumers seeking a more budget-friendly sandwich alternative may not find much relief when it comes to a classic peanut butter option. Shelf stable peanut butter, saw strong sales (+12.4%) for the most recent four weeks, however, average price increases were up +15.7% versus the same time last year. Shelf stable fruit spreads/jams/jellies posted healthy sales growth (+7.8%), driven primarily by ARP increases. These price increases were seen across all subcategories, including shelf stable fruit butter (+12.8%), shelf stable fruit spreads pure (+9.2%) and shelf stable fruit spreads with sweetener (+8.8%).
Total US, SPINS Natural Enhanced Channel + SPINS Conventional Channel (powered by Circana) |4 weeks ending 6.18.2023
Snack Attack
No lunch is complete without getting your snacking fix. Something salty, savory, and crunchy always helps tie the whole meal together. Shelf stable chips and pretzels and snacks, a $2.6B dollar category for the most recent four weeks, also felt the inflation sting. The total category increased sales by $179M (+7.3%), however the story is no different than the other lunch item segments. Units declined (-1.1%), as ARP increased (+8.5%). While all items increased in price, specialty positioned items outpaced their counterparts.
Total US, SPINS Natural Enhanced Channel + SPINS Conventional Channel (powered by IRI) | 4 weeks ending 6.18.2023
Among the top six shelf stable chips and pretzels and snacks subcategories, units declined across half the segments. shelf stable snacks other alternative, shelf stable tortilla and corn chips and shelf stable pretzels were the only three subcategories that posted sales growth that outpaced their rise in ARP.
Sources:
https://nrf.com/media-center/press-releases/back-class-shopping-expected-reach-record-levels 1
https://www.techradar.com/seasonal-sales/best-back-to-school-sales 2
https://www.bls.gov/news.release/cpi.nr0.htm 3
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Looking for more information? Please contact the SPINS Account Manager for PRESENCE, Mike Murphy at mmurphy@spins.com.
(847) 277-9500