It’s that time of the year again. Kids are home from camp, enjoying the last few days of summer and preparing for the start of a new school year. At the same time, parents are realizing old school uniforms are too small, binders and calculators need to be replaced, and fresh electronics are needed.
According to the National Retail Federation, families with children in grades K-12 plan to spend an average of $673 on apparel and accessories, electronics, shoes and school supplies. According to the survey, that’s up from last year’s $630 for a total of $27.3 billion (a 9.6 percent increase) and compares with a total growth of 55 percent over the past 10 years.
Back to school and college shopping is the second biggest shopping event compared to the winter holidays. In order to fully capitalize on this opportunity, retailers must pay attention to the following key areas, which will maximize potential profit and customer foot/web traffic.
1) Promotions. In a time of sinking brand loyalty, retailers should look to promotions as a way to entice potential customers to keep coming back. While it may seem that the best approach for this is to continue offering deeper discounts, retailers that take a more scientific approach to the matter will see higher profits and organic revenue growth. By implementing sophisticated analytics, retailers can ensure each promotion is carefully calculated to ensure maximum profit – a behind-the-scenes approach that will still entice parents looking for a good deal on a new backpack.
2) Marketing Effectiveness. Similarly, retailers should use analytics to isolate the impact of marketing efforts and measure their effectiveness. This approach will determine the incremental demand stimulation, new customer acquisition and retention, and more. With nearly every retailer in the country putting out back to school ads on TV and online, it can seem difficult to measure the effectiveness of any given campaign. But by isolating performance drivers, retailers can identify effective and ineffective campaigns to inform future decisions and allocate resources appropriately.
3) Inventory Management. As brick and mortar retailers have ramped up their promotion and marketing efforts for back to school season, they’ve also tried to determine how much they expect to sell. In this omni-channel and hyper-informed consumer world, customer expectations for product availability have shifted considerably. Retailers who do not have adequate inventory and assortment planning capabilities will not meet these expectations and will lose customer interest and loyalty in turn.
However, companies that identify which key product attributes are most desirable at any given time will be able to forecast demand and adjust inventory accordingly. Companies will need to leverage both internal data and external competitor data to ensure they capture a holistic and accurate picture of consumer trends.
By examining the three areas above, retailers can make the most out of this organic revenue growth opportunity. This time of year can make a big difference with quarterly profits, impressing investors and driving significant profit if executed properly. By combining sophisticated analytics with promotions and marketing, and ensuring optimal inventory management, retailers will see a substantial increase in organic back to school revenue growth.