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How Can Retailers Get Ready For Back To School Shopping?

After a dismal holiday season for major stores, back to school sales could help turn things around — with the right omnichannel strategy, says eMarketer.

Summer may be in full swing, but this is the time that stores are already making their inventory and marketing plans for the crucial back-to-school season.

And to eMarketer, that season is looking healthier than past periods for retailers.

Major retail brands have faced anemic growth and the challenge of facing discounting and showrooming from online-only rivals like Amazon (though its price cutting days appear limited).

Nevertheless, eMarketer analyst Yory Wurmser expects e-commerce to grow even faster, forcing brick-and-mortars to accelerate online/offline discovery and engagement efforts. Specifically, eMarketer has revised US retail ecommerce sales growth for 2016 up to 15.7 percent, the highest annual growth rate since 2011.

And yet, even in the rise of e-commerce, there’s a ray of sunshine for physical brands in eMarketer’s findings, which note that nobile traffic exceeded 50 percent of e-commerce traffic during the 2015 US holiday season. eMarketer has revised upward its projection for US retail m-commerce sales, which is now expected to grow 46.8 percent in 2016.

Key Projections

Among the data points eMarketer’s back-to-school report for the U.S. is forecasting:

  • Retail sales during the core back-to-school shopping months of July and August will climb 2.6 percent in 2016, compared with 1.6 percent growth last year.
  • Retail e-commerce sales in July and August 2016 will increase 15.3 percent year over year, while retail e-commerce sales in core product categories will climb 16.7 percent in the same comparison.
  • Retail e-commerce sales in July and August 2016 will increase 15.3 percent year over year, while retail e-commerce sales in core product categories will climb 16.7 percent in the same comparison.

It’s easy to lose sight of how important the back-to-school/college is to retail considering the colorful celebrations stores lavish on Mother’s Day and Father’s Day, as well as Valentine’s Day, Halloween, and the Super Bowl.

But as eMarketer points out, except for the winter holiday season, which drove $626.1 billion in spending last year, back-to-school/college came in second (albeit distantly) at $68 billion. (To put that in greater context, Mother’s Day consumer spending at retailer came in an even more distant third with $21 billion in 2015, followed by $18 billion for Valentine’s Day, $14 billion for the Super Bowl, and $12 billion around Father’s Day.)

back to school 2016No Cure For Retail

“Although a modestly better US retail climate should provide a tonic for some iconic retail brands, such as Macy’s, Target and Best Buy — which posted disappointing earnings in Q1 2016 — it won’t be a cure,” writes Wurmser. “Their problems revolve less around current economic conditions and more around changing consumption patterns that are driving more apparel and electronics sales online, where margins are lower, or into other product categories, such as automobiles or sportswear. U.S. auto sales in 2015, for instance, surpassed a record set in 2000.”

Online shopping plays a bigger role in some back-to-school categories than in others, eMarketer notes. Citing a Deloitte survey of U.S. parents  about their back-to-school plans in July 2015, eMarketer mentions that nearly nine in 10 respondents expected to buy school supplies exclusively in stores, while less than half said the same for technology services.

Back-To-Bricks

Devices and wearables were the only two categories where significant portions of parents said they would exclusively shop online. For the most part, school supplies such as writing materials and books are what drive back-to-school parents to stores (87 percent), followed by shoes (80 percent), jewelry (66 percent), and clothes (64 percent).

So while the back-to-school season isn’t going to erase all the troubles retailers have been struggling with the last several years, it will offer something more than a breather, a chance to better prepare for this year’s holiday season.

“Back to school is a place where brick-and-mortar-based retailers feel they can make a difference,” eMarketer quotes Jem Ripley, managing director of retail vertical at SapientNitro. “[Parents can shop] together with their son or daughter. The tactile nature of being able to look at different products and clothes for back to school— all those things resonate.”

Mobile Search Is Local Search (But What About Amazon Prime?)

Discovery is the name of the game for all retailers, whether online or offline. And Amazon has been the bane of brick-and-mortars’ existence as being one of the first places consumers go to find a product. Amazon Prime, the e-tail giant’s shopping membership program, has only increased the competitive pressures on physical stores.

An August 2015 survey of U.S. parents by Market Track found 37 percent of respondents went to Amazon first when shopping digitally for back-to-school products, eMarketer reports. Amazon’s draw may be even stronger for students, who can join a version of Amazon Prime for a heavily discounted rate: half-off all products after the first six months.

“That gives students an incentive to use Prime,” Mark Vandegrift, VP of product management for marketplace solutions at ChannelAdvisor, tells eMarketer. “The simplicity of the combination of Prime and the Amazon app makes it a really attractive option, especially when students are in a situation where it’s hard for them to get to brick-and-mortar stores.”

Amazon’s recent decision to curtail list prices to combat charges of false advertising could make retailer’s look more competitive.

But instead of waiting for Amazon’s prices to line up with what physical businesses charge, the battle lines really come down to the ability of providing the best discovery, engagement, and experience for consumers.

And on that front, mobile search appears to be the great leveler. After all, as GeoMarketing‘s reported over and over, mobile searches overwhelmingly lead consumers to a nearby store.

Mobile search has surged as more product research moves to smartphones, eMarketer says.

Julie Krueger, retail industry director at Google tells the researcher that 40 percent of back-to-school search in 2014 was done via mobile; in 2015, it climbed to 50 percent, and all signs point to an even higher figure for 2016.

“More and more people are not just starting searches, but doing a lot of their research on mobile phones,” she said.

The shift to mobile search has accelerated a move to product listing ads (PLAs), which have grown rapidly in the past year, according to Krueger.

As students search for specific products requested by schools, PLAs—along with local inventory ads that send searches to local brick-and-mortar stores — play a significant role, eMarketer says.

“The classic back-to-school shopping is ‘I’ve got a list of things that we need to get done,’ and product listing ads are really, really effective at that,” said Link Walls, VP of product management for digital marketing at ChannelAdvisor.

In terms of the way location technology and tools like geofencing and geotargeting can help retailers, Dan Silver, director of Marketing for location marketplace xAd, advised brick-and-mortars that the first step in identifying an audience — such as back-to-school shoppers — is to understand who is visiting their places before the inventory is stocked and the “for sale” signs go up.

“Mobile location data can provide retailers with important insights that shed some light on who their target audiences should be,” Silver wrote last year. “This real-world, dynamic data can not only better inform planning for back-to-school than some traditional targeting techniques, but also help optimize campaigns in real time to better reach audiences as shifts take place during the season.”

About The Author
David Kaplan David Kaplan @davidakaplan

A New York City-based journalist for over 20 years, David Kaplan is managing editor of GeoMarketing.com. A former editor and reporter at AdExchanger, paidContent, Adweek and MediaPost.