Back to Books: The Strengthening Economy and a Larger Pool of School-Aged Children Will Boost Spending

Class is almost back in session, which means notebooks and calculators are darting off shelves as quickly as they are stocked. This year, IBISWorld expects that these goods will fly a little faster, with back-to-school spending projected to grow 4.6% from 2016 to 2017, totaling $27.5 billion. The strengthening economy and a larger pool of school-aged children will underpin this growth, as parents with deeper pockets treat their kids with more nonessentials for the school year; in 2017, IBISWorld anticipates that the average back-to-school expenditure per household will total $641.40, which represents a 3.1% annualized increase since 2012. While total outlay for all product categories is slated to rise this year, parental spending on shoes and apparel is projected to experience the strongest gains, while growth for school supplies and electronics will be more subdued.

Clothing, Accessories and Shoes

With disposable income on the rise and fast-fashion retailers like H&M making the newest children’s styles more affordable, overall expenditure on kids’ apparel has increased in recent years. To this end, it is no surprise that back-to-school spending on clothing, accessories and shoes is projected to markedly expand. IBISWorld expects that footwear outlay will grow the most rapidly, with spending on new shoes projected to grow 6.2% this year, totaling $6.9 billion. At 25.3% of total back-to school expenditure, shoes will slightly expand as a share of consumer demand in 2017. IBISWorld projects that this growth will be driven in part by increased access to online shoe stores. According to the National Retail Federation (NRF), 45.5% of consumers will do their back-to-school shopping online; therefore, IBISWorld’s 8.6% projected increase in the number of companies operating in the Online Shoe Sales industry in 2017 will help drive footwear spending this fall.

Clothing and accessory sales are also slated to rise this year, with demand for these goods increasing an expected 4.7% this back-to-school season. Clothing and accessories represent the largest spending category, with about 40.0% of total outlay, or $11.0 billion. Despite a projected 0.9% decline in revenue for the Department Stores industry this year, these establishments are expected to see the largest share of back-to-school shoppers; according to NRF estimates, 57.1% of consumers say they will shop at department stores for back-to-school items, compared with 46.0% who plan to shop at specialty clothing stores. The percentage of parents shopping at specialty clothing stores is projected to fall this year from 51.0% in 2016. The Children’s and Infants’ Clothing Stores industry will bear the brunt of this decline, with total revenue for this industry expected to decline 0.1% to $9.6 billion in 2017, according to IBISWorld estimates.

IBISWorld back to school spending chart 2017

School Supplies and Electronics

Spending on school supplies and electronics is also projected to expand this academic year, with both product categories slated to grow 3.3% in 2017. Electronics are expected to account for 21.9% of total back-to-school spending this year, with parents shelling out $6.0 billion on new laptops and tablets. Schools are progressively incorporating technology into their curricula, which is driving growth within this segment. Furthermore, personal electronics have become increasingly affordable, encouraging parents to purchase computers for their children. According to the NRF, the percentage of consumers shopping at brick-and-mortar electronics stores is projected to increase this school year, with 24.6% of parents planning to shop at these establishments. This will help drive 0.3% expected growth in demand for the Consumer Electronics Stores industry in 2017. Furthermore, growth in the percentage of consumers shopping online for back-to-school goods will increase demand for the Online Computer and Tablets Stores industry an additional 3.1% for the year.

High demand for school supplies, such as pencils and binders, will also be a bright spot for spending this fall. IBISWorld expects that outlay for this segment will reach $3.6 billion in 2017, representing 12.9% of total back-to-school expenditure. An increasing number of parents will do their school-supply shopping early this year, with 27.1% of consumers reporting that they will make their purchases at least two months before the start of the academic year, according the NRF; additionally, more shoppers (90.5 % of parents) plan to take advantage of the free shipping services offered by many online retailers this fall. This trend will benefit the E-commerce & Online Auctions industry, which IBISWorld expects will experience a 11.2% increase in demand in 2017.

IBISWorld Back to School Press Release 2017 PDF