Nielsen: Expect U.S. Back-to-School Sales of Nearly $1.6B

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Includes: RTH, TGT, WMT
by: Marketing Charts

With the new school year almost here, consumers won’t be skimping on supplies, despite recession concerns, according to Nielsen, which forecasts 2.6% growth, or more than $1.57 billion, in school and office supply sales in US grocery, drug and mass merchandiser stores.

Sales during the core back-to-school season of mid-July through early September account for more than a quarter (28%) of the school and office supply category’s annual sales of $5.5 billion (total US food, drug and mass merchandiser stores, including Wal-Mart), according to Nielsen.

The top 5 (best-selling) back-to-school supply categories account for nearly two-thirds (64%) of back-to-school sales:

nielsen-back-to-school-item-sales-2007.jpg

“Consumers may be cutting back in terms of discretionary spending, but they are not about to send their kids to school without the necessities,” said James Russo, VP of marketing, food and beverage sector, The Nielsen Company.

More findings issued by Nielsen, below.

The Three R’s: Reading, Writing and… Retailers?

With nearly 100% household penetration, grocery stores may prove to be the winner this back-to-school season, as consumers seek to combine shopping trips:

  • Nielsen In-Store research shows that in August and September 2007, nearly 850 million consumers visited measured grocery stores, compared with the average two-month period of slightly more than 500 million consumers.
  • Grocery stores recorded more than 105 million consumers who visited the home, school and office supply departments during the back-to-school period, marked by an increase in traffic mid-August and a traffic spike during the first week of September.

More than 1.3 billion consumers visited measured mass merchandisers in August and September 2007, with 162 million consumers shopping the home, school and office supply departments, and the highest level of traffic taking place during the first week of August:

nielsen-grocery-store-mass-merchandiser-visits-home-school-office-2007.jpg
 

“Consumers are clearly shifting to value and one-stop-shop channels as they seek to optimize shopping trips,” said Russo. “Retailers at risk this back-to-school season are the specialty retailers such as office supply stores where distinct trips are needed, and apparel retailers, which are heavily skewed to discretionary spending.”

Staying Connected

In addition to backpacks and binders, many parents will find themselves adding mobile phones to this year’s back-to-school shopping lists. According to Nielsen Mobile, 46% of US tweens (age 8-12) and 80% of US teens (age 13-17) use a mobile phone.

With several major mobile phone companies introducing sleek, youth-oriented devices - complete with cameras, integrated music players, and expanded memory - just in time for the back-to-school shopping season, Nielsen predicts this will be the biggest back-to-school season yet for mobile phones.

Nielsen Mobile research shows that mobile phone ownership doubles between age 10 and age 11, as junior high school students reach an age where many parents view the phone as both acceptable and necessary.

Back-to-School Online Activity

As the school season approaches, education-resources sites, including Family Education Network, Merriam-Webster, US Department of Education, and US Federal Student Aid show spikes in visitors. Nielsen Online reports an average monthly unique audience of 57.9 million to these types of sites beginning in August 2007 and carrying through September and October before tapering off in December.

Nielsen’s research shows that online retailers, particularly those that stock office and school supplies, also experience an increase in traffic during the back-to-school season.

Though an increasing number of consumers are browsing and shopping online to save gas, Nielsen expects shopping activity to soften somewhat as consumers increasingly combine their core Back to School shopping trips.

Lunchin’ and Learnin’

Along with learning comes lunch, and old favorites like peanut butter and jelly are still proving popular. US consumers are expected to spend more than $87 million on peanut butter and nearly $13 million on jelly during the four-week period surrounding the first day of school.

For added convenience, and perhaps due to an increasing number of schools banning peanuts and peanut butter due to student allergies, many parents are turning to combination lunch products, which are expected to rack up more than $68 million in sales.

Other lunch-related items expected to spike during the back-to-school shopping season include food storage containers, sandwich bags and paper bags, with combined sales of more than $95 million5 expected.

Back-to-School Not Necessarily a Precursor to Holiday Sales

For 2008, Nielsen predicts a shorter but more intense back-to-school selling season, as consumers are likely to delay the start of their shopping, opting to hold out for increasing aggressive sales and promotional activity by retailers. (Back-to-school sales traditionally begin the second week of July and extend through early September, peaking the second and third week of August, and the first week of September.)

“Consumers recognize that retail prices tend to fall the closer we get to the first day of school,” said Russo. “Stung by high gas and food prices, many consumers will likely hold out as long as possible, waiting for retailers to drop prices on items kids need for the new school year.”

While Nielsen predicts sales growth this back-to-school season, Russo cautions retailers not to view back-to-school sales as a precursor to 2008 holiday sales.

“Unlike holiday items, core back-to-school items are viewed as necessities,” said Russo. “When it comes to holiday sales, the dynamics and opportunities are very different from back-to-school.”

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