Jul 21

Written by: IRI Blog
7/21/2009 2:54 PM

As the days of summer begin to wind down, consumers are turning their attention back to school. Last week, we offered a teaser of the “IRI Back to School Survey,” and today we’re excited to share with you the findings.

Last week, a similar survey was announced by the National Retail Foundation – you can read more about it here.  Our findings mirror the NRF’s in many ways – consumers are cutting back and are employing budget-saving techniques like coupons and discount retailers. We want to dive a little deeper into our survey results, as well as discuss some of the different results between the two studies.

Consumers representing all income levels are scaling back their back to school spending habits this year and are applying the cost-cutting knowledge and strategies they’ve learned during this economic downturn to avoid spending large sums of money up-front for school gear.

Shoppers are becoming more selective in their purchases and are focusing on essentials, as 58% of consumers across all income levels are budgeting more and prioritizing purchases. For example, all income groups are budgeting for clothing, shoes, and school essentials like notebooks and writing utensils. However, even within these prioritized areas, shoppers are scaling back – 51% of consumers will limit the amount of clothing they buy this year. Even the upper income shoppers earning $100,000 per year plus are budgeting, as 46% plan on purchasing less clothing this year. Smaller accessories like lunchboxes, scissors, glue, and markers are falling to the wayside, with less consumers budgeting for these items.

One major change is moving from a mass back to school shopping trip to smaller trips throughout the year. 64% of all respondents are only buying a few essentials before school and are planning on buying additional, smaller items on an as-needed basis. 56% of shoppers will be re-using school items from last year, a major trend we saw throughout the survey. For example, 81% of consumers will be re-using clothing from last year. Of those families earning under $35,000 a year, 39% will be dressing their children in hand-me-downs from older siblings or relatives.

Consumers are also getting savvier as the recession wears on, and are re-examining how and where they shop. Consumers are continuing their coupon-cutting practices, with 57% planning on using coupons, and 60% basing their purchases off store ads or flyers. In fact, 62% of families earning between $55,000 and $99,000 will be using these cost-cutting methods, the most out of any income group surveyed. Additionally, shoppers are leaving behind more expensive retails like specialty stores and department stores to visit discount retailers. 42% of consumers will be visiting more supercenters, 45% are taking more trips to mass merchandisers, and 30% are making the dollar store a part of their back-to-school shopping itinerary.

What are some of the key differences between our survey and NRF’s? The most critical difference we’ve found is that even those consumers in the highest income brackets are cutting back, and that 100% of consumers are budgeting or scaling back somehow.

Additionally, our survey found that consumers are budgeting less than the NRF shows – shoppers across the board are budgeting less than $300 for their back-to-school purchases, while the NRF reports a little under $550. The NRF also reports an increase in electronics spending this back-to-school season, while our respondents put electronics and accessories towards the bottom of their shopping list.

Where consumers are shopping is another difference between the two surveys. While the NRF reports that nearly a quarter of consumers plan on shopping at drug stores for back-to-school, our research shows quite the opposite. Our findings report that 22% of consumers will actually shop at drug stores less for back-to-school, including 25% of shoppers with a minimum of $100,000 a year incomes.

Despite some differences in the survey findings, what are the key messages we can take away, and how can CPG manufacturers and retailers apply them for competitive advantage? The points are clear: consumers are continuing to cut back due to economic stressors and are using old and new methods to save money, such as hand-me-downs and couponing. With the increased popularity of couponing and positive shopper reception of store flyers and ads, retailers and manufacturers can engage in joint promotion to drive shopper traffic and offer more coupons to appeal to the budget-minded consumer.

We plan on continuing our tracking of how consumers are spending their money in the coming months, especially as the holidays begin to approach. We will continue to report back to you with our findings, and as always we welcome your comments and questions.

Take care,

Thom Blischok

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