Strong Back-to-School Sales Expected as More Students Return

July 1, 2021


Back-to-school shopping is underway and with the expectation of more students attending schools in-person this fall, expectations are high for retailers.

As of early June, one-quarter of back-to-school and college shoppers have already started purchasing items for their fall classes. This is up from 21% last year and 17% in 2019 before the pandemic according to a recent National Retail Federation (NRF) survey.

In addition, shoppers are looking for bargains - 61% of consumers typically plan their back-to-class shopping around retailer sale events, up from 55% in 2019.

According to Mastercard Inc SpendingPulse, retail sales are expected to grow 5.5% year over year, excluding automotive and gas, between Jul 15 and Sep 6, which is typically the back-to-school period. Further, retail sales are projected to grow 6.7% from 2019.

In addition, Mastercard expects apparel sales to jump 78.2% from 2020 and 11.3% from 2019 during this back-to-school season. E-commerce sales are expected to increase 7% from 2020 and 53% from 2019 during the same period.

Will there be enough inventory for the expected demand?

However, whether or not retailers will have enough inventory on hand to satisfy this year’s demand will be a big question.

For example, physical clothing stores were caught in a bind with high inventory levels when the pandemic hit last year. As stores temporarily closed and/or limited the hours of operations, the inventory to sales ratio reached a high of 19.03 in April 2020.

This year, however, improved sales and deliberate actions to reduce inventory and to strategically maintain lower inventory levels, has resulted in steady declines in the inventory to sales ratio. The latest figure, for April, shows that clothing stores’ inventory to sales ratio was 1.99. Clothing stores have also made significant investments in omnichannel capabilities to take advantage of the increase in e-commerce.

From March to April, clothing stores’ inventories increased 2.3% as clothing stores replenished seasonal items and prepared for anticipated back-to-school sales.

Consumers returning to stores

Indeed, clothing stores are making a strong comeback as the economy continues to pick up steam and more people are vaccinated. Year to date through May, clothing stores’ sales increased 81.3% year over year and are up 11.6% April to May.

In its quarterly earnings call in May, shoe retailer, Shoe Carnival, observed that shoppers are returning to stores but the importance of e-commerce is here to stay:

“So far in 2021, shoe Carnival consumers are resoundingly reengaging with live shopping experiences as COVID-19 restrictions continue to ease. We anticipate this trend will continue and our brick and mortar store sales growth will outpace e-commerce growth for 2021, as consumers continue to see in-person experiences and family activities outside the home. As a result, we expect online sales for 2021 to deliver triple-digit sales growth versus 2019 and to moderate single-digit year-over-year declines versus 2020,” said Clifton E. Sifford, CEO of Shoe Carnival.

However, as clothing stores replenish inventories and focus on omnichannel strategies, the dependence on and the costs associated with last-mile delivery providers including the USPS, FedEx, UPS and others will grow. Clothing stores will need to include last-mile strategies alongside their omnichannel strategies to maintain growth.

 


ABOUT SPEND MANAGEMENT EXPERTS

Spend Management Experts has united with Transportation Insight to become North America’s #1 provider of small parcel management and optimization services.  Our team of best-in-class analysts employs cost modeling techniques to help clients optimize their supply chain spend, reducing costs by 20% or more.  Our approach is non-invasive to daily supply chain operations as we employ unparalleled market intelligence and proprietary cost modeling technology, targeting hidden costs and identifying savings opportunities. After establishing the success criteria, SME leverages proven project plans, data warehousing, and milestone documents to ensure an optimized and implementable solution. We build strong business cases based on your data to negotiate better terms, pricing, and service for our clients. We deliver your competitive edge.

Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

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Strong Back-to-School Sales Expected as More Students Return

July 1, 2021


Back-to-school shopping is underway and with the expectation of more students attending schools in-person this fall, expectations are high for retailers. As of early June, one-quarter of back-to-school and college shoppers have already started purchasing items for their fall classes. This is up from 21% last year and 17% in 2019 before the pandemic according to a recent National Retail Federation (NRF) survey. In addition, shoppers are looking for bargains - 61% of consumers typically plan their back-to-class shopping around retailer sale events, up from 55% in 2019. According to Mastercard Inc SpendingPulse, retail sales are expected to grow 5.5% year over year, excluding automotive and gas, between Jul 15 and Sep 6, which is typically the back-to-school period. Further, retail sales are projected to grow 6.7% from 2019. In addition, Mastercard expects apparel sales to jump 78.2% from 2020 and 11.3% from 2019 during this back-to-school season. E-commerce sales are expected to increase 7% from 2020 and 53% from 2019 during the same period.

Will there be enough inventory for the expected demand?

However, whether or not retailers will have enough inventory on hand to satisfy this year’s demand will be a big question. For example, physical clothing stores were caught in a bind with high inventory levels when the pandemic hit last year. As stores temporarily closed and/or limited the hours of operations, the inventory to sales ratio reached a high of 19.03 in April 2020. This year, however, improved sales and deliberate actions to reduce inventory and to strategically maintain lower inventory levels, has resulted in steady declines in the inventory to sales ratio. The latest figure, for April, shows that clothing stores’ inventory to sales ratio was 1.99. Clothing stores have also made significant investments in omnichannel capabilities to take advantage of the increase in e-commerce. From March to April, clothing stores’ inventories increased 2.3% as clothing stores replenished seasonal items and prepared for anticipated back-to-school sales.

Consumers returning to stores

Indeed, clothing stores are making a strong comeback as the economy continues to pick up steam and more people are vaccinated. Year to date through May, clothing stores’ sales increased 81.3% year over year and are up 11.6% April to May. In its quarterly earnings call in May, shoe retailer, Shoe Carnival, observed that shoppers are returning to stores but the importance of e-commerce is here to stay: “So far in 2021, shoe Carnival consumers are resoundingly reengaging with live shopping experiences as COVID-19 restrictions continue to ease. We anticipate this trend will continue and our brick and mortar store sales growth will outpace e-commerce growth for 2021, as consumers continue to see in-person experiences and family activities outside the home. As a result, we expect online sales for 2021 to deliver triple-digit sales growth versus 2019 and to moderate single-digit year-over-year declines versus 2020,” said Clifton E. Sifford, CEO of Shoe Carnival. However, as clothing stores replenish inventories and focus on omnichannel strategies, the dependence on and the costs associated with last-mile delivery providers including the USPS, FedEx, UPS and others will grow. Clothing stores will need to include last-mile strategies alongside their omnichannel strategies to maintain growth.  

ABOUT SPEND MANAGEMENT EXPERTS

Spend Management Experts has united with Transportation Insight to become North America’s #1 provider of small parcel management and optimization services.  Our team of best-in-class analysts employs cost modeling techniques to help clients optimize their supply chain spend, reducing costs by 20% or more.  Our approach is non-invasive to daily supply chain operations as we employ unparalleled market intelligence and proprietary cost modeling technology, targeting hidden costs and identifying savings opportunities. After establishing the success criteria, SME leverages proven project plans, data warehousing, and milestone documents to ensure an optimized and implementable solution. We build strong business cases based on your data to negotiate better terms, pricing, and service for our clients. We deliver your competitive edge. Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

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