Consumers Prioritize Needs Over Deals for Back to School Shopping

While retailers may entice shoppers with attractive back-to-school bargains, US shoppers are keeping the blinders on.

Analysts say overall retail sales revenue increased 1% in July compared to last year, while unit sales declined 2%, reflecting ongoing consumer selectivity as well as the shift of early summer retailer promotions from July last year into June this year.

New Circana data shows spending growth is being driven less by promotional events and more by shoppers making deliberate purchases based on need, a trend that is shaping the back-to-school season and could influence holiday shopping in the months ahead.

“Consumers are still spending, but they are increasingly doing so through prioritization rather than expansion; driven by purpose rather than promotions,” said Kiara Barrett, global head of thought leadership at Circana. “Promotional activity remains important, but broad discounts alone are generating less incremental demand.”

For the four weeks ending Aug. 1, nonedible consumer packaged goods (CPG) dollars were down 0.9%, and unit sales fell 3.6%. Discretionary general merchandise retail dollar sales decreased 4.3%, and unit demand dropped 3.9% compared to the same period a year ago. Circana data shows that consumers continue to carefully prioritize discretionary purchases. Lower-income consumers are still pulling back on these categories. Growth is more concentrated among higher-income households and a narrowing set of categories, particularly those that deliver clear value, convenience, health benefits or affordable enjoyment. At the same time, food and beverage sales revenue rose 0.5% and unit sales increased 1.6%, highlighting the continued demand for essential purchases.

Recent spending patterns, including those related to back-to-school shopping, demonstrate the shift in the consumer’s mindset. They are continuing to shop as needs arise rather than concentrating purchases around major promotional events. The result is a more measured shopping season, with shoppers balancing value-seeking behavior against essential purchasing needs. June promotions successfully pulled some overall retail demand forward but did not have the same impact on back-to-school shopping, analysts say.

Circana anticipates that the traditional back-to-school shopping season will be moderate at best: low on unit demand, with higher spending driven by pricing.

Said Barrett, “As marketers look toward the holiday shopping season, the back-to-school experience offers an important lesson: promotions alone may not be enough to stimulate demand.”