Muted back-to-school spending forecast for 2024 amid economic caution, Deloitte reports

As the 2024 school year approaches, Deloitte’s recent report indicates that back-to-school spending in the United States is expected to remain stagnant or potentially decline.

The anticipated dip is primarily attributed to a reduction in expenditure on high-cost electronics like laptops and personal computers, reflecting a broader trend of economic caution among consumers.

According to Deloitte comprehensive shopper surveys, total back-to-school spending is projected to reach $31.30 billion, equating to approximately $586 per student from kindergarten through 12th grade. This figure is slightly down from the $31.90 billion, or $597 per student, recorded in 2023.

Parents traditionally seek substantial discounts on essential items such as sneakers, computers, clothing, and backpacks as they prepare for the new school year. This year, the spending on clothing and school supplies is expected to hold steady at around $12.60 billion, mirroring 2023 levels. However, spending on technology products is forecasted to decrease by 11%, falling to $8.6 billion from the previous year.

In an increasingly competitive retail landscape, companies are adjusting their strategies to capture consumer attention early. Notably, China-founded Shein initiated its back-to-school sales in the first week of July, ahead of its usual schedule, aiming to outpace Amazon’s Prime Day event set for July 16 and 17.

Deloitte Insights Consumer Industry Center’s managing director, Stephen Rogers, emphasized the importance of timely promotional offers.

“As the summer sales events have become almost the unofficial start of back-to-school shopping, retailers need to have those promotional offers … queued up right, ready to go,” Rogers stated.

The report highlighted a significant shift in consumer priorities, with middle-income families increasingly focusing on value and showing a willingness to opt for private label products over established brands.

Approximately 67% of parents surveyed indicated they might abandon brand loyalty if their preferred brands are priced too high.

Deloitte’s survey, which included a sample of 1,198 American parents of school-aged children, revealed distinct spending patterns across different income brackets. Middle-income families, earning between $50,000 and $99,000 annually, are expected to reduce their back-to-school spending by 9%. Low-income families (earning less than $50,000 annually) could see a 4% cut in their spending for the 2024 school year.

Conversely, higher-income families with annual incomes exceeding $100,000 are projected to increase their average spending by 5%, rising to $721 per child compared to $689 in the previous year.

Retailers and consumer products companies are likely to face continued volume pressure throughout the back-to-school quarter. The economic caution observed among many consumers could translate to a more challenging retail environment, necessitating strategic adjustments to meet evolving consumer demands.

Image source: Reuters