Back-to-school is a big deal in the retail world, even when consumers are concerned about the economy. The National Retail Federation (NRF) expects total spending among K-12 and college households to be $128.2 billion this year, up 2.23% from a year ago.
While overall spending projections are up, average outlay per student is down from a year ago. K-12 households are expected to spend $858 per child this year, down from $875 spent in 2024 and $890 spent in 2023. Families with college students are projected to spend $1,326 per person, down from $1,365 spent last year and lower than the average $1,367 reported in 2023.
“Families are pulling back on electronics purchases and also prioritizing essential categories,” said Katherine Cullen, NRF vice president of consumer insights. “They are also switching up how they shop, where they shop, and seem to be more focused on promotions looking to stretch their dollars further.”
Cullen said there are some other shifts at play with families buying more clothing and accessories, dorm and apartment furnishings, and gift cards, than a year ago. She said families also are rethinking a new laptop or smart watch and whether they need headphones or speakers, when in past years they might have splurged a bit more.
The spending pullback this year is coming from K-12 households among high- and lower-income demographics, according to Cullen. Among K-12 households earning under $50,000 annually, spending is projected to go down 13% from a year ago. Those earning between $50,000-$100,000 are expected to spend the same as a year ago, but households above $100,000 are reducing spending by 3.96% year over year, the trade group reports.
College spending among lower-income households is projected to decline 12.88% to $1,082 per student. Middle-income families expect spending to increase 7.75% to $1,293 per student. Higher-income households are reducing spending to $1,572 per student this year, down 12.68% from 2024.
She said 72% of survey respondents expect to see higher prices when back-to-school shopping. Also, 51% of consumers are shopping earlier due to concerns of tariff-related price increases. Nearly half of consumers said they began shopping for school items a full month before classes start. About 30% wanted to get a two-month head start, according to the survey data.
Mark Mathews, chief economist at the NRF Foundation, said consumers have historically begun their shopping earlier when they are concerned about inflation and limited supplies. He said tariffs have been a moving target, but there was an expectation that consumers could see higher prices beginning this summer, which prompted some early shopping for things like electronics and footwear.
He said consumers are sentimentally weak but fundamentally sound. He said sentiment has been low, but consumer finances such as household wealth and income growth have been near record highs. Mathews explained that debt is rising, but it seems to be manageable with a recession unlikely amid solid second-quarter economic growth. The major concern moving through the rest of the year is the unknown impact of tariffs imposed by the Trump administration, he added.
Mathews said consumers have not yet seen price impacts as retailers stocked up on imported goods at the first of the year. He said other retailers are working to hold prices down and eating the tariff impact. Longer-term, he said, companies that absorb the tariffs have a greater negative impact on the economy than those that pass along the higher costs.
“When retailers absorb the higher costs over time, that is money that is not invested in higher wages and new hires that propel the economy forward,” he said.
Mathews said consumers do not have the savings buffer to face higher prices. He said the savings generated during the pandemic allowed households to withstand the inflation that followed, but that money is gone. While Cullen and Mathews expect consumers to spend on big events throughout the year, they will do so judiciously while looking for bargains and promotions.
The International Council of Shopping Centers, a member trade group for the commercial real estate and retail industries, surveyed consumers on back-to-school shopping intentions in early July. ICSC found 48% of U.S. adults will make back-to-school purchases this year, and 79% said they expect to increase spending over last year because of higher prices. They are also stocking up for the rest of the year. Also, 56% of respondents expressed concern about being able to afford the supplies they typically purchase due to price increases from tariffs.
Nine out of 10 respondents said higher prices will impact their purchasing behaviors, with 38% buying items on sale, 29% trading down to cheaper brands, and comparison shopping and 28% planning to reuse supplies from last year to save money.
Recent online shopping pushes from Amazon, Target and Walmart raked in an estimated $24.1 billion, according to Adobe. Still, 59% of the ICSC survey respondents said most of their back-to-school shopping would be done in brick-and-mortar stores. Only 17% said they will shop entirely online. Discount stores remain the most popular segment with 62% of back-to-school shoppers, followed by Amazon (57%) and dollar/variety stores (42%).
Consumers also admitted to shopping earlier this year, with 55% saying they had either started or completed their back-to-school shopping by the start of July. While the largest portion (39%) of back-to-school spending will occur in August, ICSC said the month will likely see less spending than in previous years as consumers shift their spending to earlier in the season.
“Consumers are prioritizing value and seeking early deals this back-to-school season,” said Tom McGee, CEO of ISCS. “Retailer-driven promotional events have become a vital part of the back-to-school season and have reshaped when and how consumers shop to take advantage of the best sales. American families continue to spend even as they face an uncertain economic outlook.”
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