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Economy Has Big Impact On Back-to-School, College Plans

Total combined spending for students to reach $47.50 billion

By James Limbach
ConsumerAffairs.com

August 3, 2009
The rules of back-to-school shopping have officially changed: buy only what you need, check for coupons and sales before hitting the stores, and, if you can find the perfect computer at the right price, grab it!

According to the National Retail Federation's 2009 Back to School Consumer Intentions and Actions Survey, conducted by BIGresearch, the average family with students in grades kindergarten through 12 is expected to spend $548.72 on school merchandise. That's a decline of 7.7 percent from $594.24 in 2008.

Total spending on back to school is expected to reach $17.42 billion, while back-to-college and back-to-school spending combined will total $47.50 billion this year.

According to the survey, the economy is having a major impact on back-to-school spending as four out of five Americans have made some changes to back-to-school plans this year.

Some of those changes affect spending, with 56.2 percent of back-to-school shoppers hunting for sales more often, 49.6 percent planning to spend less overall, 41.7 percent purchasing more store brand/generic products and 40.0 percent are planning to increase their use of coupons.

Others say the economy has affected lifestyle decisions, with 11.4 percent saying children will cut back on extracurricular activities or sports and 5.7 percent saying that the economy is impacting whether their children will attend a private or public school.

"The economy has clearly changed the spending habits of American families, which will likely create a difficult back-to-school season for retailers," said Tracy Mullin, President and CEO of NRF. "As people focus primarily on price, strong promotions and deep discounts will ultimately win over back-to-school shoppers this year."

Spending in most back-to-school categories is expected to decrease, with one bright spot: electronics. With personal laptops and desktop computers increasingly affordable for most families, spending on electronics and computer equipment is expected to increase 11 percent.

According to the survey, the average family plans to spend $167.84 on those purchases, compared with $151.61 last year. Families will also spend an average of $204.67 on clothing and accessories, $93.59 on shoes, and $82.62 on school supplies.

While discount stores (74.5 percent) will be the most popular destination for back-to-school shoppers, the number of people planning to buy school items at drug stores is expected to rise substantially. According to the survey, nearly a quarter of families will shop at drug stores for back-to-school, an 18 percent increase over last year. Drug stores have become more popular recently as their merchandise mix has broadened beyond health and beauty products to include school supplies, small electronics, and even groceries.

In addition to discounters and drug stores, more than half of back-to-school shoppers will head to department stores, nearly half will shop at a clothing store and 41.2 percent will visit office supply stores. Additionally, 22.2 percent will shop online, 20.8 percent will shop at electronics stores and 18.2 percent will shop at a thrift store.

"Americans will be looking far and wide for the best back-to-school deals, using newspaper ads, online promotion codes, and a lot of comparison shopping before making decisions," said Phil Rist, Executive Vice President, Strategic Initiatives, BIGresearch. "This year, many parents hope to begin back-to-school shopping early to spread the spending out over a longer period of time."

Average college spending increases slightly, students more likely to live at home

Even with the uncertainties the economy continues to present, college-bound students and their families are prepared to shell out a little extra this year. NRF's back-to-college survey, conducted by BIGresearch, found that college students and their parents will spend an average of $618.12 this year, up three percent over last year's $599.38.

With fewer people planning to attend college this fall, total college spending is expected to decrease to $30.08 billion. While the number of people attending undergraduate schools is not expected to change significantly, according to the survey, the amount of people who say they will participate in an advanced degree program is expected to drop this year (48.1 percent of respondents last year versus 38.9 percent this year).

"The economy is forcing young adults to make hard decisions about which schools to attend, where to live, and what's really a "necessity" for college," said Mullin. "This year, college students are just as focused as their parents on finding good deals and making smart choices with their money."

As with people who have school-aged children, 83 percent of Americans with students already in or planning to attend college say they the economy is affecting back-to-college plans. According to the survey, back-to-college buyers say the economy will cause them to spend less overall (48.0 percent), shop for sales more often (46.1 percent), and comparative shop with ad circulars/newspapers (30.8 percent).

The economy will also cause some students to make do with last year's school items (33.6 percent), share or borrow textbooks instead of buying new ones (17.4 percent), and will impact students' choice of college (15.0 percent).

In addition, 12.8 percent of survey respondents say the economy will affect where a student lives, with many choosing to save money by living at home. Nearly three out of five (58.5 percent) college students will be living at home this year, compared with 54.1 percent last year and 49.1 percent in 2007. As a result, fewer students will live in a dorm room or college house (15.8 percent vs. 18.0 percent in 2008) and in off campus apartments or homes (22.4 percent vs. 24.3 percent in 2008).

"Parents want to give their children everything necessary for the best education, but, this year, living at home may need to be a concession students need to make," said Rist. "The trend of students living with their parents will disproportionately impact home furnishings retailers, as fewer people may be purchasing kitchen items, home décor and furniture."

Much like back-to-school shoppers, families of college students will heavily increase their dependence on drug stores this year. According to the survey, 23.4 percent of back-to-college buyers will shop at drug stores, a 38 percent increase from last year's 14.3 percent. Back-to-college shoppers will purchase from discounters (53.4 percent), college bookstores (44.5 percent), department stores (43.1 percent), and office supply stores (32.5 percent) most frequently.

As in previous years, families of freshmen will spend the most on back-to-college purchases ($820.77 on average), largely due to major purchases of computer and dorm furnishings. Sophomores will spend the second-highest amount ($496.16), followed by juniors ($470.56), then seniors ($442.00).

College students and their families will spend an average of $118.56 on apparel, $57.85 on shoes, $34.52 on collegiate gear, $61.05 on school supplies and $80.06 on dorm or apartment furniture.

Spending on electronics or computer-related items is increasing for students ($266.08 on electronics compared with $211.89 last year) as laptops become a requirement for many colleges and universities across the country.

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