As inflation surged in the United States, back-to-school shopping hasn’t been easy for parents. According to the National Retail Federation’s (NRF) annual survey, back-to-school spending reached $41.5 billion, down from $46.9 billion in 2022. The 2022 figure itself was downgraded from the 2021 high of $47.1 billion.
According to the NRF’s poll of 7,843 consumers, families with children in elementary through high school anticipate spending an average of $510 on back-to-school supplies, which is approximately $125 less than the 2022 record. The largest percentage in the history of the NRF study, 53% of respondents did not purchase electronics or other computer-related accessories in 2023 so far, down from 65% in 2022.
Meanwhile, Washington-based business, Kent, was forced to pass along 15% price increases in January 2023 to its retail clients because of soaring transportation costs. But by May, as gas and food prices also surged, shoppers abruptly shifted away from the $35 higher-end rain boots to the no-frills versions that run $5 to $10 cheaper, its CEO Karl Moehring said.
“We are seeing consumers shift down, noting dramatic 20% sales swings in opposite directions for both types of products. Wages are not keeping up with inflation,” Moehring said, as reported by the AFP.
Parents, especially those in the low to middle-income range, are focusing on the necessities during the back-to-school shopping season while also switching to less expensive stores due to the inflationary trend, which reached a new 40-year high in June 2023.
Walmart stated that rising gas and food prices are preventing consumers from spending as much on discretionary products, particularly apparel. Inflation has slowed down consumer spending on devices, according to Best Buy, the biggest retailer of consumer electronics in the country. As a result, both businesses reduced their profit projections.
Such financial difficulties contrasted sharply a year ago when many low-income consumers were flush with government stimulus and encouraged by salary rises, and they were able to spend freely. This is because the industry is experiencing its second-most significant shopping season after the winter vacations.
When consumers received their two-hundred dollar monthly child tax credit checks in 2022, Footwear Distributors & Retailers of America CEO Matt Priest remarked, there was a noteworthy increase in online sales for the group’s retail members. Without that increase, he anticipates that consumers will purchase fewer pairs of children’s shoes this season and will turn to private-label goods.
Jessica Reyes, 34, took her children Jalysa, 7, and Jenesis, 5, to a “Back to School Bash” event in August in Chicago’s northside where students could receive free backpacks full of supplies due to inflation-straining household resources.
“I feel like everything is going up these days. We’re a one-income household right now…so I think it’s greatly affected us in all areas, in bills and in house necessities and school necessities,” she said at the event, as reported by CNBC.
While shopping, her daughters were lured to the school supplies that featured their favourite TV characters and animals, but she concentrated on the simple designs.
“They want the cute ones, you know, the kitty ones. And those are always more expensive than the simple ones. And the same thing with folders, or notebooks, or pencils,” Reyes said.
Earlier, Manny Colon dropped at the back-to-school fair to select backpacks for his daughters Jubilee age 8, and Audrey age 5.
Colon, 38, works at the primary school where his daughters go. He claimed that due to the high costs of petrol, groceries, and school supplies, his wife has been forced to take on additional jobs.
“I think it’s definitely impacted us,” he said.
Numerous predictions indicate a successful back-to-school shopping season.
According to Mastercard Spending Pulse, which monitors spending across all payment methods, including cash, back-to-school spending decreased by 7.5% from July 14 through September 5 compared to the same time in 2022, when sales increased by 11%.
Sales decreased by 0.8% for the 2020 back-to-school season as the pandemic severely disrupted preparations for school reopening and back-to-school purchasing. However, many of the figures are being supported by increasing pricing.
According to retail analytics company DataWeave, a basket of about a dozen supply items revealed an average price increase of about 15% for the 2017 back-to-school season compared with a year earlier. For instance, the cost of backpacks has increased by over 12% to an average of $70.
According to Matthew Kurtzman, the CEO of Back 2 School America, an Illinois-based non-profit that provides back-to-school kits to children from low-income families, there has been “a significant increase in the costs of supplies,” including a 10% increase from their vendor and another possible mark-up on the horizon. Additionally, shipping expenses have increased.
Back 2 School America will be able to cover the new expenses in 2023 because of increasing support, and the organisation is on schedule to provide more school kits than ever before – 12,000 so far and more than 30,000 by the end of September, according to Kurtzman.
Retailers struggle mightily to persuade customers to purchase, especially on apparel.
Walmart announced that it was offering more reductions on apparel in order to reduce inventory. Analysts predict that these sales will increase the pressure on competitors to offer deeper discounts in order to compete. Walmart, though, stated that it is encouraged by the early indications of school supply purchases.
In terms of Washington Shoe, Moehring stated that he will switch production in the next months from more expensive children’s boots to more reasonably priced goods. Although he’s being cautious, the company still expects annual revenues to surpass those of the previous year.
“I believe it is a muddy outlook,” he said.
Cost of raising a child
Meanwhile, USDA recently issued ‘Expenditures on Children by Families, 2023.’ This report is also known as ‘The Cost of Raising a Child.’ USDA has been tracking the cost of raising a child since 1960 and this analysis examines expenses by age of child, household income, budgetary component, and region of the country.
According to the most recent Consumer Expenditures Survey statistics, a household with two children and a middle-income ($59,200–$107,400) married couple will spend about $12,980 per child per year in 2022.
For food, shelter, and other requirements to raise a child to age 17, middle-class, married parents can anticipate spending $233,610 ($284,570 if expected inflation prices are taken into account). The price of a college education is not included in this.
Education and child care can take up another large portion of the family budget. Research shows that, on average, they account for about 16% of children’s spending. Young children can be particularly expensive, as day care can cost more than college. However, most families report not spending anything on childcare. They may rely on family members to babysit or send their school-age children to public school. That means families who hire nannies, send their children to private schools, and pay for a variety of summer camps and special programmes are likely spending far more than the average amount reported here.
Regardless of income, families tend to spend more on groceries as their children get older. Teenagers are the most expensive, said Mark Lino, an economist at the Department of Agriculture’s Centre for Nutrition Policy and Promotion and lead author of the USDA report. They eat more. Data shows that families spend about 18% of their childcare budget on groceries, a category that includes groceries, school lunches and restaurant meals, all of which are hit hard by inflation.
Car, gas, insurance, airfare and public transportation costs peak when children are between 15 and 17 years old. Of course, this is the time when many teenagers start driving. But this also reflects increasing participation in activities further from home, according to USDA data. These are the years when they start driving, so you include them in insurance or even buy them a car, Lino said.
Overall, healthcare accounts for about 9% of children’s spending, but higher-income families tend to spend much more. In addition to increased insurance premiums, these costs include medical, dental and psychiatric services not covered by insurance, as well as prescription medications.
From diapers to Dr. Martens and Garanimals to graduation gowns – clothing accounts for about 6% of children’s spending. Unlike most other costs, this number has fallen over the past 50 years as Americans turn to cheap, foreign-made clothing. Also unusual: The cost of clothing tends to fluctuate from year to year, depending on the latest trends.
What happens to the money?
With a 29% share of all child-rearing expenses for a middle-class family, housing costs are the highest single expense. Food comes in second at 18%, followed by child care/education (for those who can afford it) at 16%. Depending on the child’s age, costs change.
The USDA conducted the analysis based on the household income level, the child’s age, and the area of residence. It is not unexpected that more money was spent on a child the greater the family’s income, notably for child care/education and other ancillary costs.
Additionally, costs rise as a youngster gets older. For infants to toddlers, annual expenses were on average roughly $300 lower, while for teenagers between the ages of 15 and 17, they were on average $900 higher.
Teenagers have greater food and transportation expenditures because this is the age when they start driving, thus insurance is usually included or maybe even a second car is bought for them.
Additionally, regional diversity was noted. The highest money was spent on children by families in the urban Northeast, followed by those in the urban West, urban South, and urban Midwest. Families in rural locations across the nation spent the least money raising a child; costs for housing, child care, and schooling were 27% cheaper in rural areas than in the metropolitan Northeast.
The cost of raising children is susceptible to economies of scale. That is, costs for each child decrease as there are more children. Compared to families with two children, expenses for married couples with one child were on average 27% more for each child.
The average cost per kid in households with three or more children was 24% lower than the cost per child in a family with two children.
The “cheaper by the dozen” effect is another name for this phenomenon. Each extra child costs less because families may buy food in greater, more economical amounts, share bedrooms, pass down clothing and toys, and frequently babysit younger siblings.