• by Sarah Mahoney , Staff Writer @mahoney_sarah, July 12, 2023

Parents tell the consulting giant they plan to spend $597 per student, a 10% drop from last year, with the biggest cuts in school clothes (down 14%) and technology (down 13%.) They plan to spend 20% more on school supplies. If they stick to those intentions, that will amount to just $31.2 billion.

"That decline came as a bit of a surprise for us this year," says Brian McCarthy, a principal at Deloitte. "The last time we saw a drop in spending was back in 2014."

He tells Retail Insider parents are feeling the pinch of inflation and higher interest rates. Of the 68% who plan to spend less this year than last, "half of them told us it was due to reduced disposable income."

The survey, based on 1,200 parents with at least one child attending school in grades K-12 this fall, found that households of all income levels plan to rein in spending.

Yet he says about 60% of the total are willing to splurge on certain items. "When it makes sense, they're going to treat their child. They are going to look for those moments."

To save money, more parents plan on shopping in stores rather than online, and with interest rates rising, more intend to pay cash. About 80% intend to shop at mass merchants as their preferred retail format, followed by online retailers (60%) and off-price retailers and dollar stores (both at 33%).

Inflation, although cooling, is still a reality, with the cost of school supplies rising 24% in the last two years.

And the parents in the survey are somewhat gloomy about the months ahead. Overall, 30% say family finances are worse than last year's. But lower-income families feel more pain, with 45% of those households earning less than $50,000 feeling worse off. Among those earning $50,000 to $100,000, 32% feel that way. And among those earning more than $100,000, just 21% feel worse off.

Overall, 51% believe the economy will worsen in the next six months, with lower-income respondents even more likely to agree.