A new report from Deloitte finds that the first yearly decline in back to school spending in nine years will be primarily attributable to inflation this year.
In its 2023 Back To School Survey, Deloitte forecasts that 2023 will see total spending per child fall 10% to $597, a drop from 2022’s $661. Over half of those parents surveyed who were planning to spend less cited, “reduced disposable income” as their motivation.
In a release, Nick Handrinos, Deloitte vice chair and US retail, wholesale and distribution, and consumer products leader, said, “With budgets strained this season, continued high prices could dampen the excitement of the back-to-school season for many families. Consumers will likely prioritize where they spend money as they look to replenish their savings accounts and spend on experiences, such as summer vacations, over goods.”
The survey queried a sample of 1,212 parents of school-aged children in May.
The data generated by the survey is consistent with retailer sentiment which sees a consumer who is both cautious and selective with their spending, even as inflation has begun to inch down over the previous year. The Consumer Price Index report that was released on Wednesday showed that inflation has declined somewhat from a year ago, however it is still above the 2% target rate of the Federal Reserve.
Deloitte’s survey indicates that parents will spend 14% less on clothing in 2023, and 13% less on technology compared to 2022. School supplies spending is expected to rise 20%. This data is largely in line with the reporting from the last several months, of companies that sell back-to-school items.
Target (TGT) had noted a “softness” in May’s discretionary spending, with sales increasing just 0.6% from the same quarter the previous year. Foot Locker (FL) which has called back-to-school a “key selling moment,” previously reduced its sales guidance for the full year in May, off fears that a consumer slowdown it was seeing would persist throughout the year.
During a company earnings call on May 19, Foot Locker CEO Mary Dillon said, “Inflation while abating is still high, higher than before. So the basics in people’s household — whether it’s gas, food, or rent — are elevated in terms of cost, so that puts pressure on the ability to spend discretionary dollars, which affects our category.”
