U.S. Back-to-School Spending Trends 2024: What Investors Need to Know
U.S. Back-to-School Spending Trends 2024: What Investors Need to Know
By Anuja Bharat Mistry and Ananya Mariam Rajesh
---
(Multibagger) - Deloitte's latest report reveals a projected decrease in back-to-school spending in the United States for 2024. The anticipated expenditure is expected to remain flat or decrease as consumers reduce their purchases of high-cost electronics like laptops and personal computers.
Key Insights from Deloitte’s Report
According to Deloitte's shopper surveys, U.S. parents are likely to allocate around $31.30 billion for back-to-school shopping for kindergarten to 12th-grade students, averaging $586 per student. This is a slight decline from the $31.90 billion, or $597 per student, spent in 2023.
Why This Matters
Parents traditionally hunt for significant discounts on essentials such as sneakers, computers, clothing, and backpacks as the new school year approaches. Retail giants like Walmart (NYSE:WMT), Target, and Shein have already launched their back-to-school promotions in early July, ahead of Amazon’s (NASDAQ:AMZN) two-day Prime Day event scheduled for July 16 and 17.
Expert Commentary
Stephen Rogers, Managing Director at Deloitte Insights Consumer Industry Center, noted that middle-income families are increasingly prioritizing value and are more inclined to purchase private label brands.
"As the summer sales events have become almost the unofficial start of back-to-school shopping, retailers need to have those promotional offers queued up and ready to go," Rogers emphasized.
Retailers and consumer goods companies should brace for continued volume pressure during the back-to-school quarter, Rogers added.
By the Numbers
- Consumer Behavior: About 67% of parents surveyed indicated they might switch brands if their preferred option is too expensive. The survey included 1,198 American parents of school-aged children.
- Spending Breakdown: Consumers are expected to spend $12.60 billion on clothing and school supplies, comparable to 2023 levels, and $8.6 billion on technology products, an 11% decline from last year.
- Income-Based Spending:
- Middle-income families (annual income $50,000-$99,000) are likely to cut spending by 9%.
- Low-income families (annual income less than $50,000) may reduce their expenditure by 4%.
- High-income families (annual income over $100,000) are expected to increase their spending by 5%, averaging $721 per child compared to $689 last year.
Analysis and Impact on Your Finances
For investors and consumers alike, understanding these spending trends is crucial:
- Retail Stocks: Lower back-to-school spending could impact the earnings of retail giants like Walmart, Target, and Amazon. Investors might want to watch these stocks closely for any signs of volatility.
- Consumer Behavior Shifts: The growing preference for private labels and value-based shopping could benefit discount retailers and brands that offer competitive pricing.
- Tech Sector: The anticipated 11% decline in spending on technology products might affect companies that heavily rely on back-to-school sales for laptops and other electronics.
Breaking It Down Simply
- What’s Happening? - U.S. parents are expected to spend less on back-to-school shopping in 2024, especially on expensive electronics.
- Why It Matters? - Retailers and tech companies might see lower profits, affecting their stock prices.
- How It Affects You? - If you invest in retail or tech stocks, keep an eye on market trends and adjust your portfolio accordingly. As a consumer, you might find better deals and discounts as retailers strive to attract budget-conscious shoppers.
By staying informed about these trends, you can make smarter financial decisions and potentially capitalize on market opportunities.