Dive Brief:

• Back-to-school spending is about half of all school-related spending by U.S. families. About a quarter of U.S. households — some 29 million — shop for school items during the season, and their level of spending, which will reach around $27 billion, should be about even with last year, according to Deloitte’s 2017 Back-to-School Survey.

• But where and how that’s spent is changing, research found. In-store spending is more than twice that of online spending ($288 on average in stores vs $103 online) and at brick-and-mortar stores, back-to-school shopping is shifting from department stores (28% will shop there vs 54% last year) and specialty stores to mass merchants (81% plan to spend there, a 24 point jump from last year) and off-price retail, according to Deloitte. Target and Walmart are the go-to retailers, according to e-commerce platform Branding Brand, which found that two-thirds of back-to-school shoppers plan to find what they need at those retailers, while half will turn to Amazon.

• Parents and college students (69% of whom say they control at least 80% of their back-to-school purchases, according to a study from loyalty and marketing firm Alliance Data emailed to Retail Dive) are spending more on clothing and accessories this year, which will account for 55% of their spending (up 10 points from last year) taking from the school supplies and computer categories, the study found. Early shoppers (which make up 60% of back-to-school spenders) are expected to spend an average $532 more than the 40% who shop in August or later and spend an average $458. For later and undecided shoppers, convenience is key: undecided shoppers are more likely to choose retailers that offer free shipping (68%), buy online and return to store (52%), and offer loyalty programs that provide faster or cheaper discounts when shopping online (49%).

Dive Insight:

Back-to-school shopping is the second most important season for retailers, behind the holidays, but it has its own idiosyncrasies. Some years are stock-up years, which drives spending, while during other years (especially when the economy struggles) families make do and spend less.

This year doesn’t appear to be one where families are stocking up much, though they’re changing what they buy. The average spending remains flat at $501 this year compared to $488 last year, Deloitte found. Just 22% plan to spend more than last year on back-to-school, while 53% plan to keep spending about the same, according to Branding Brand.

While retailers like J.C. Penney are ramping up ways to make it easier for families to buy bedding and décor, college students have their priorities, and most (52%) would give up new clothes or bedding if they need the money for books and technology, Alliance Data found. Many parents are willing to subsidize apparel spending even for college students — 40% say their parents will fund all or most of the apparel purchases, while 40% of parents say their student will fund all or most of the apparel purchases, according to Alliance Data. Just 37% of students say their parents will fund all or most of their dorm/living essentials, while 33% of parents say the student will, according to Alliance.

Clothing and school supplies are still at the top of families’ back-to-school lists, but computers and associated hardware takes the highest average spend, Deloitte said. Nearly all (97%) plan to buy clothing and accessories, with an average spend of $284, and 98% plan to buy school supplies with an average spend of $104. Nearly a quarter (23%) plan to buy computers and hardware with an average spend of $307 and 18% plan to buy other electronic devices, with an average spend of $254. Of those, 30% plan to purchase school supply kits, and they’ll spend about 40% more than those picking things out individually, Deloitte found.

While back-to-school shoppers are still heading to stores, those shopping online want free shipping (68%) and a little more than half (52%) want to be able to return their online purchases to a store. And 61% of shoppers planning a store trip will research online first, according to Deloitte.

“At the end of the day, retailers need to remember that the key to capturing their share of wallet during the crucial back-to-school season is all about nailing the customer experience," Shannon Andrick, vice president of marketing advancement for Alliance Data’s card services business, told Retail Dive in an email. "Digital-savvy consumers – college students and parents – are using a range of traditional and online tools to shop for the coming school year. They can research, compare pricing and seek out promotions and loyalty programs – and use these tools to make purchases that will make both the retailer and the customer happy.”

Back-to-school marketing begins in earnest even before the school year ends for many, but most of the spending for the season — 17% or $19 billion — will take place at the end of the summer, between early July and late August, Deloitte says. More than half (54%) of shoppers will be finished stocking up for school by August, but 25% won’t be done until after school has started, according to Branding Brand, which surveyed younger shoppers.

When it comes to shopping online, most families (57%) are using their computers, with mobile gaining ground (49%) and tablets left in the dust (22%). However, social media is also a factor, as more than a quarter (27%) of shoppers take to social media to find deals (75%) or a coupon (67%). Just 3% of back-to-school shoppers pay using digital means, preferring to use debit cards (57%), credit cards (48%) or cash or checks (42%). Despite some research that buy online, pickup in store services can drive traffic, less than a third (31%) will eschew straight store shopping due to such services, according to Deloitte. Branding brand, though, found that 18% of back-to-school shoppers plan to pay for their purchases using Apple Pay.

Back-to-school shoppers' propensity to stick to stores means that merchandising and display remains critical, but flexible pricing is also important, says Paul Milner, marketing director for electronic shelf data firm Displaydata.

"When we think about all the money that retailers spend on attracting customers during the back to school season – the store environment, print and TV advertising, SEO, etc, the one area that hasn’t dramatically changed for the customer is the shelf-edge and their desire to actually see and touch the products they want,” he told Retail Dive in an email. “There’s something else important at play here too – we know that around 90% of all retail transactions still take place in-store. … Right now, a more agile approach to pricing is critical – especially as we enter the ‘unofficial' beginning of the holiday shopping season. With long–term customer loyalty and holiday sales at stake, retailers need to move beyond the constraints of manual pricing strategies.”

For its study, Deloitte conducted an online survey using an independent research panel between May 31 and June 6, polling a sample of 1,200 parents of school-aged children (all respondents had at least one child attending school in grades K–12 in the fall). Branding Brand surveyed 1,000 18-to-24-year-olds for its study. Alliance Data's Analytics and Insights Institute conducted an online survey of 441 college students and 432 parents of college students from May 29 to June 2.