Back-to-School Sales to Shift to Value Retailers in the U.S. and U.K., Says FGRT

Sales to rise 3 percent to 4 percent in the U.S., while Amazon will be a key destination in the U.K., writes Managing Director Deborah Weinswig

August 10, 2017

NEW YORK (August 10, 2017) – Discount and value retailers will gain market share among back-to-school shoppers in both the U.S. and U.K., with both nations seeing healthy year-over-year increases, say the first two in a series of reports on Back-to-School 2017 to be published by FGRT (Fung Global Retail & Technology).

Based on U.S. Census Bureau Data, FGRT predicts in “US Back to School 2017, Part 1,” that U.S. back to school sales will increase by 3 percent to 4 percent, compared with a 2.5 percent estimated growth in 2016.  Sales in the U.S. will be propelled by stronger employment, rising wages, lower gas prices and more young adults enrolled in school. Spending on back-to-school clothing and accessories will rise, but the market share of department stores and specialty retailers likely will decline as consumers shift to off-price retailers, online destinations and mass merchants.

“Younger consumers are shifting from a retailer-focused to a brand-focused buying mentality, and with more brands selling directly to consumers via channels such as Facebook, department stores will likely feel the impact during the back-to-school season,” writes Deborah Weinswig, Managing Director of FGRT.

Consumers likely started their shopping on Amazon Prime Day, and other retailers have moved their back-to-school promotions earlier. Staples launched its Back to School Center on June 25.

“Retailers introducing deals early in the summer could benefit even more, as both back-to-school and back-to-college shoppers are starting even earlier this year, seeking to take advantage of sales, avoid last-minute crowds and spread out their spending,” Weinswig writes.

Higher inflation should support back-to-school spending growth in the U.K. but also will push consumers toward value retailers such as Aldi, Lidl and Primark, and to online channels, Weinswig observes in “UK Back-to-School Retail Preview 2017: Inflationary Pressures Set to Boost Discount Channels.”

“Average price rises are now outstripping average income growth, and we see the ensuing squeeze on U.K. shoppers’ spending power as fueling a flight to discount this back-to-school season,” Weinswig writes.

School uniforms account for 58 percent of U.K. spend and with inflation at 2.7 percent for clothing and footwear, shoppers likely will turn to discounters including Aldi and Lidl, which are offering ultralow-priced uniforms again this year. E-commerce, especially Amazon, will continue to gain market share thanks to its vast product offering and convenience.

The U.S. report can be found here, and the U.K. report here. Other recent reports issued by FGRT include: “Deep Dive: The US Retail Revolution Solution”; “Channel Checks: UK Apparel Stores Boost Beauty Offerings”;  the “Retail X Factor” series and the “Deep Dive: The Mall is Not Dead” series.

FGRT’s reports and analyses can be found at www.FungGlobalRetailTech.com and www.deborahweinswig.com. Subscribe here to receive Deborah Weinswig’s daily news and analysis on retail, fashion and technology.

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About FGRT

FGRT (Fung Global Retail & Technology) is a think tank whose research team, based in New York, London and Hong Kong, follows emerging retail and tech trends, specializing in the ways retail and technology intersect, and in building collaborative communities.

The team, led by Deborah Weinswig, former top Wall Street and retail tech analyst and startup advisor, publishes ongoing thematic and global market research on topics such as the Internet of Things, digital payments, omnichannel retail, luxury and fashion trends, and disruptive technologies. More information can be found at www.FungGlobalRetailTech.com.

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