How the BTS season is shaping up

Other than the winter holiday season, back-to-school (BTS) and back-to-college (BTC) are, together, the largest retail event of the year. In 2015, the National Retail Federation (NRF) anticipates that combined BTS and BTC spending in the US will reach $68-billion, of which BTS accounts for approximately $25-billion, says Ruth Hamer, director of Digital Marketing at Marketyze.

The BTS shopping cart comprises not only school supply products (pens, notebooks, backpacks and so on), but apparel, shoes and some consumer electronics products as well. According to the NRF figures, school supply products in and of themselves account for about 16% of the total BTS outlay – about $4-billion. This is truly an astounding figure when one takes into account that the average price for school supply products is in the $15-$20 range.

Some interesting trends highlighted in the NRF report are:
* Although the NRF survey indicates that BTS spending per family in 2015 will be somewhat less than 2014 ($630.36 vs. $669.28 last year), in general BTS spending has risen by 42% over the past ten years.
* Discount stores are still the most popular retail venue for BTS purchases, but historical data shows that discount stores are losing market share to online retailers.
* Although there are still BTS shoppers who make their purchases as early as June (in order to avoid the rush, to avoid inventory unavailability and to take advantage of early promotions), in 2015 30% intend to do their BTS shopping only 1-2 weeks before school starts (up from 25% last year).
* Online consumers are taking full advantage of free shipping offers, as well as the click-and-collect services from the omni-channel retailers.

Competitive pricing intelligence for school supply products
As the BTS shopping season approaches its climax, we thought it would be interesting to look at how four leading retailers (Amazon, Staples, Office Depot and Walmart) are competitively pricing their school supply products.
We looked at circa 1,200 products from the following school supply product categories: arts & crafts materials; backpacks; calculators; certificate & award supplies; chalk, erasers & cleaners; maps & globes; reference books; school sports & recess; teaching aids & classroom equipment.

Amazon’s pricing was compared with the pricing of three different sets of exactly matched school supply products from Office Depot, Staples and Walmart over the months of May, June and July 2015.

Some BTS competitive pricing observations
Seasonal pricing observations:
* Across all three comparisons, Amazon dropped the prices on its school supply assortment in early June, and kept the prices more or less at the same level until the end of July. It seems that Amazon was positioning itself to capture the early-bird BTS shoppers.
* Walmart raised its prices during the month of June, but as of 5 July there was a fairly steady and significant lowering of prices.
* Staples, on the other hand, started lowering its prices only at the very end of July and very moderately at that. It was clearly banking on the procrastinators who will start their shopping only in mid-August.
* Office Depot dropped its prices quite dramatically on 23-24 July, and these continued to decline (more moderately) until the end of the reporting period.

Other observations:
* Compared with Staples and Walmart, Amazon and Office Depot had the greatest overlap of exactly matched products across the assortment.
* The 197 products that were shared between Amazon and Staples seem to be a slightly more expensive assortment (Amazon average price of $16.25) vs the products shared with Office Depot (Amazon average price of $14.38) and Walmart (Amazon average price of $13.97).
* The greatest average price difference was between Amazon and Staples, with Staples’ average price being $10.83 and 67% higher than Amazon’s.
* With all three retailers, Amazon was the price leader on 91% to 92% of the assortment.
With the height of the BTS season still ahead of us, stay tuned for an October sequel to this blog in which we will look at how these same four retailers priced their school supplies assortments during the months of August and September.

Source: Michelle Sturman, OPI

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