Parents Buy More Expensive Back-to-School Products For Their Kids This Year
In the Back-to-School period from July 16 to August 19 – a solid four weeks of online transactions – CommerceHub has seen a +58% sales growth in the Back-to-School related categories such as Kids Apparel and Office Supplies, versus +40% for all categories of products sold online.
Now that doesn’t mean that the overall online sales for Back-to-School is +58%, but the 180 basis point difference between the overall growth rate and and the Back-to-School related category growth rate indicates a market trend and a strong Back-toSchool sales period.
The actual +58% growth rate that we’re seeing is indicative of the growth rate of indirect fulfillment via drop ship, for which we’re seeing very strong momentum. The main reason for this is that online retailers have found the drop ship fulfillment to be a very effective way to dramatically expand the product offering online (and increasing customer share of wallet) without making any cash draining inventory commitments.
Retailers Adding More SKUs
We see that retailers this season have put significantly more focus on the Back-to-School period, adding many more SKUs online to meet the customer demand. The number of SKUs added in the categories that we attribute to Back-to-School grew by +55% vs LY, whilst total number of SKUs across all categories only grew at +40%.
Customer buying more expensive items
Another interesting fact about this Back-to-School period is that the customer behavior has completely changed. Customers have really invested in their purchases and even though the average offered price (AOP) of the merchandise being offered to the consumer did not change versus last year, the average unit retail (AUR) – average retail of what the customer actually bought – increased by +14%.
This goes totally against overall performance in all category, where consumers chose to purchase less expensive items across the board, and we see a decrease in AUR of -5% vs LY.
Strong Back-to-School Market Trend
The results are confirmed by some major retailers in the market. For Example Kohl’s (KSS) reported their Q2 2013 earnings on August 15 2013, and Kevin Mansell, Chairman, President and CEO of Kohl’s was very ‘encouraged’ by some early results for the Back-to-School period, saying that ‘kids, juniors, young men’s and footwear’ were off to a good start. Kohl’s also saw very strong performance of national brands in the Back-to-School period, which seems to be a trend for this period across the large retailers.
Myron E. Ullman III, Chairman and CEO of JCP reported Q2 2013 earnings on August 20 2013, and – although JCP is facing a whole set of turn-around issues – he reported on a positive July trend and some good trending for the Back-to-School Period. He told investors that “it has taken time to find the right messaging and promotional cadence, but the response to our back-to-school marketing and messaging which we launched late in the period has been promising. And while it’s still early in the season we have seen encouraging signs especially during the tax free weekends and promotional weekend periods.
Is The Back-to-School Period A New Start For JCP?
So we assume that JCP is getting back in the game, not necessarily only through merchandising improvements, but also moving back towards their traditional promotional pressure, and getting store traffic increases.
But merchandising of course plays a key part for JCP re-invigorated strategy. Their reintroduction of St John’s Bay for Women’s is a key part of the turnaround, but traditional strong brands are also driving the encouraging some of the strong JCP Back-to-School results. Myron E. Ullman said that the viral FirstDayLook campaign as well as the trusted assortments of Arizona, Total Girl and Xersion “have beaten expectations”.
In summary, we can say that the Back-to-School period for online retail – and retail in general – is playing out very positively. Online retail is seeing a particularly strong trend with 180 basis points higher growth than other categories, driven by a significant SKU expansion within the Kids product category, as well as Office Supplies.
CommerceHub Same Store Sales (SSS) Data
We looked at suppliers that were active across a number of relevant online retailers in 2012 and 2013 and online retailing performance metrics such as GMV (gross merchandise value) Average Unit Retail (AUR), Number of Unique SKUs sold (SKUs) and Units per Month Sold (UPM).