Back-to-School Retail Meets Digital 3.0 FIT Framework

Back-to-School Retail Meets Digital 3.0

The retail industry is facing its first sales event of the pandemic with the coming of back-to-school sales. And while some of the sales projections are solid, the fundamentals for success are still wavering.

The projections were led by the National Retail Federation (NRF) this week, as it foresees record sales for back to school. Its estimates are based on a hybrid schoolyear, one in which parents have to split their bets between possibly going back to physical classrooms and possibly taking courses online.

According to the NRF, parents with children in elementary school through high school will spend an average $789.49 per family, topping the record of $696.70 in 2019. Spending is expected to total $33.9 billion, up from $26.2 billion in 2019.

“Consumers tentatively plan to spend a record amount to prepare students for school and college this year as they buy more laptops and computer accessories in anticipation that at least some classes will take place online because of the coronavirus pandemic,” said a statement from the NRF.

“By any measure, this is an unprecedented year with great uncertainty, including how students will get their education this fall, whether they are in kindergarten or college,” noted NRF President and CEO Matthew Shay. “Most parents don’t know whether their children will be sitting in a classroom or in front of a computer in the dining room, or a combination of the two. But they do know the value of an education, and are navigating uncertainty and unknowns so that students are prepared.”

The NRF numbers have been solid guides in the past – but predicting a huge jump in back-to-school sales with unemployment at record levels and more than half the country still reeling from the pandemic is dicey. For every optimistic projection coming out this week about back to school, there’s one that urges caution, such as this prediction from The Wall Street Journal.

“As school officials try to figure out what the fall semester will look like, the buying season is likely to be compressed into August and maybe even into successive months as parents put off purchases until there is certainty on what items their children will need,” said the WSJ. “That makes inventory tougher to plan. In an NPD Group study released on Monday, 32 percent of surveyed parents said they weren’t expecting to buy supplies yet because it is too early to plan, while 37 percent said they weren’t planning to buy school supplies because they already have enough.”

Data, in this case, can inform buying decisions – but the individual decisions will depend on other factors. To test those factors, PYMNTS matched the back-to-school decisioning against our Digital 3.0 FIT framework, which is a recommended structure for determining factors that will encourage the digital shift and go-to-market strategies. That framework depends first on the ability for companies to consider the pandemic, its progress and any developments in mitigating its effects. It then recommends three factors to evaluate business dynamics: removing friction, encouraging positive digital inertia and saving consumers’ time.

On the most basic level, the back-to-school season depends on the virus. In areas of the country where the virus is still raging, retailers will need to be realistic about school schedules, and this means it’s risky to count on increased spending. For example, retail hotspots in Florida, Arizona and Texas will need to realistically consider whether schools can open with physical classrooms, and then consider whether parents will choose to send kids back even if they’re open. At the very least, retailers need to depend on eCommerce sales in the states where the virus is raging. But regardless, the pandemic is what will determine buying behavior.

Second, are retailers removing friction from the buying process? Again, in states where the virus is still rampant, the argument could be made that in-store shopping is adding friction. However, retailers everywhere should consider that consumers have shifted to online buying. Look at Best Buy’s recent jump of 255 percent in eCommerce sales for evidence. Digital sales – or at the very least, home delivery and curbside pickup – will need to be at the ready.

Third, is the general inertia nudging shoppers toward digital sales? With Amazon pushing Prime Day to an unknown date, but definitely after October 5, a major player has a little less power on the digital side. Retailers should encourage moves toward eCommerce through promotions and marketing. If consumers are splitting their bets, retailers need to let shoppers know they’re prepared for either online or in-school scheduling, and essentially meet the consumer where she is.

Fourth, parents who might need to balance homeschooling with working from home need to know they’re spending their time efficiently. Data, which has admittedly been scarce, can help in this regard. Before pitching products like laptops and mobile devices, retailers should make sure these purchases haven’t been made recently.

Bottom line: Back to school is uncharted territory for retailers this year. The Digital 3.0 FIT framework, along with available data, can help evaluate some tough decisions.