Economic Challenges Persist, But Consumers Still Spend

Rakuten Advertising in May 2022 surveyed more than 1,000 U.S. consumers who shopped for school-aged children and college students to better understand their shopping plans and incentives for this year’s back-to-school shopping season.

“We are in an economically challenged time, where inflation continues, but we see retailers still having many of the same struggles with supply chains and staffing,” said Julie Van Ullen, managing director and head of revenue at Rakuten Rewards. “Top-line revenue looks pretty good, because people are shopping, but their margins are seriously suffering, a direct byproduct of supply chain problems.”

Rakuten Rewards is not seeing consumers slowing their purchasing, but they are much more eager to find value in the products they buy.

At the time of the survey, when the economy was looking a bit better, nearly 80% of shopping survey participants planned to spend under $500 this year on back-to-school supplies. Less than 5% said they would spend $1,000 or more.

Some 68% of shoppers said they would often or always use some form of shopping incentive during the back-to-school season, such as coupons, cashback or rewards.

When asked what motivates consumers most, consumers cited percentages off, buy-one-get-one or buy-two-get-one, or coupon codes.

Consumers already expect free shipping, so that offer no long works as well as an incentive.

This season 49% of consumers will do their shopping in-store, compared with 23% online, and 28% in stores and online.

Interestingly, the study also provides insights on when consumers will buy certain products -- for example, backpacks in mid-July through mid-August, uniforms between late July and mid-August, and apparel leading up to Labor Day.

Van Ullen said the loyalty of shoppers is up for grabs, because consumers have been trained to find the product elsewhere for the things they want at the best value.

Baird Equity Research published a research note highlighting insights based on Amazon Prime Day.

The analyst firm cited Prime Day as an important measure of consumer shopping for the second half of the year, especially ecommerce for back-to-school and holiday purchases. The research points to an interesting trend not seen in prior years.

“One of the top-selling categories this year was household essentials, which is slightly different from years past,” wrote Baird Analyst Colin Sebastian. “If shoppers on Amazon are turning to the site for more essentials, this could provide some evidence that Prime members are less inclined to shop offline, especially given higher fuel prices.”

He wrote that orders for about $20 represented some 40% of total orders this year vs. 23% in 2021 -- and that average order values rose this year, about 20% to 21% higher year over year. Average item prices were roughly 9% higher than in 2021.

The number of items per order, which Baird uses as a proxy for conversion, dropped 14% vs. 2021. Prime members purchased 1.56 items per order vs. 1.8 previously.

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