Tariffs weigh on back-to-school

Key Concepts:

• Back-to-school spending
• Tariffs impact on retail
• Amazon Prime Day sales
• Consumer Price Index (CPI)
• Income cohorts spending patterns
• Inflation adjustment
• Consumer behavior: waiting for delivery, brand switching
• Spending on essentials

Back-to-School Spending Trends

• Retail discount events, including Amazon Prime Day, are expected to drive back-to-school spending.
• Deloitte's annual survey indicates that parents expect to spend approximately $570 on back-to-school items, which is about $16 less than in 2024.
• Almost half of parents with children in grades K-12 plan to shop during Amazon Prime Day sales for back-to-school items.

Impact of Tariffs and Inflation

• Tariffs are influencing back-to-school spending details this year.
• Deloitte's Brian McCarthy points out that the survey data doesn't adjust for inflation.
• Adjusting for inflation using the all items CPI rate of 22.4%, parents plan to spend $29 less than last year, a 5% decrease even with higher prices.

Income Cohort Spending Patterns

• Lower-income families plan to spend more due to higher prices, while higher-income families expect to reduce spending due to economic concerns.
• This trend is described as "opposite of what you might think."

Consumer Behavior in Response to Higher Prices

• Over half of all parents are concerned about higher prices for back-to-school items.
• 7 in 10 parents are willing to wait longer for delivery to save on shipping costs.
• Three-quarters of parents will switch to a different brand if their preferred brand is too expensive, a significant increase from the previous year.

Spending Priorities and Strategies

• Overall spending is expected to focus on essentials.
• Consumers are trading down on brands and retailers.
• Purchases are being spread out over time.

Notable Quotes

• Deloitte's Brian McCarthy: The survey doesn't adjust for inflation.

Synthesis/Conclusion

Back-to-school spending is being significantly influenced by tariffs and inflation. While the initial survey data suggests spending is on par with last year, adjusting for inflation reveals a decrease. Consumer behavior is shifting, with a focus on essentials, brand switching, and willingness to wait for delivery to save on costs. Income cohorts are behaving in unexpected ways, with lower-income families planning to spend more due to higher prices and higher-income families pulling back due to economic concerns.