As the Summer Heats Up, So Does Competition for Back-to-School Spend

To many, it may feel as though summer still has a ways to go. But like it or not, retailers must face the fact that Amazon.com's first-ever 48-hour Prime Day ushered in the unofficial start of the 2019 back-to-school (BTS) shopping season, along with some heated competition for consumer spend.

BTS is the second-largest shopping event of the year, accounting for 20 percent of annual spend, second only to the December holidays. This may not come as a surprise to in-store shoppers accustomed to navigating busy aisles to pick out notebooks, electronics, clothes, shoes, and dorm supplies. However, it has become a reality more recently for online customers vying to pick up deals from the comfort of their computers or mobile devices.

Given the undeniable revenue opportunity at stake, retailers that understand evolving BTS shopping trends can use them to great advantage. By analyzing macro-level purchase data to determine when, where and how consumers spend during this lucrative season, marketing campaigns can be designed to capture valuable market share.

The Early Bird Gets the Worm(s)

Since its inaugural Prime Day in July 2015, Amazon has pulled the start of the BTS shopping season forward. While Prime Day has certainly been successful for Amazon, other retailers have also benefited from the rising tide of the midsummer shopping holiday.

In fact, a number of savvy retailers like Target, Walmart, Macy’s, and Under Armour, among others, capitalized on this shift in consumer spending by launching promotions early. Not only do those retailers that start marketing for BTS early benefit from a boost in fall sales, they also set themselves up for a more lucrative holiday season. Customers who shop with a retailer for the first time in the fall spend 20 percent more with that brand during the holidays than they would have if they had shopped with them for the first time during the holiday period.

Brick-and-Mortar Dominates, But Online Still Grows

From 2017 to 2018, total BTS spend grew 2.5 percent, and brick-and-mortar retailers remained the preferred shopping destination of choice, commanding 79 percent of spend. However, online-only players like Amazon emerged as the fastest-growing segment, increasing their share of spend by 2.3 share points year-over-year (YoY), and claiming 17 percent of total spend.

Brick-and-mortar.coms — online sites run by retailers with physical locations — earned the smallest share of BTS spend, but grew YoY to help hold up the walls against online-only players. Given that customers who shop both online and in-store spend a whopping 48 percent more than those who shop in a single channel, having a strong online presence is absolutely imperative for retailers.

Convenience is King

Multiline retailers like Walmart, Amazon, and Target are dominating the BTS shopping season, accounting for 74 percent of spend in 2018. Enabling shoppers to pick up numerous items in one trip, it’s no surprise these merchants are the reigning champs of the BTS season.

In order to protect their share of wallet against multiline competitors, vertical retailers — such as apparel merchants, which captured 12 percent of BTS spend in 2018, and home decor and office supplies retailers, which each captured 4 percent — must give customers a reason to make the specialized trip in-store or to their online channels.

The Whole-Wallet Lens

With the introduction of new shopping holidays like Amazon Prime Day, the growth of omnichannel retail, and the looming threat from multiline retailers, there’s no denying that the competition is fierce for BTS season sales. To capture an outsized share of spend, it’s essential that retailers observe the evolving spending patterns with a whole-wallet lens of consumer spend, and adjust their marketing strategies accordingly.

Dani Cushion is the chief marketing officer at Cardlytics, a fraud-free, native advertising platform.