Walmart offers lesson on driving back-to-school sales

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Discussion
Jul 22, 2014

Two factors will make 2014 one of the most competitive back-to-school (BTS) seasons ever for retailers. The first, according to the most recent National Retail Federation Back to School Survey conducted by Prosper Insights & Analytics, is that the average American household shopping for BTS will spend five percent more this year on those purchases than in 2013. The second is that fewer households will be shopping for BTS, meaning overall purchases will decline.

NRF’s findings serve as a backdrop for the latest news from Walmart including that the retailer has:

  • Increased its inventory of BTS items by 30 percent;
  • Cut prices by 10 percent;
  • Offered an additional 10 percent discount to teachers during its first ever Teacher Appreciation Week (July 25 – July 31).

"Price is going to be extremely important for us, as it always is," Steve Bratspies, executive vice president, general merchandise for Walmart U.S., told Bloomberg News. "It’s about the best prices in the market on a large assortment."

NRF’s findings suggest price will remain an important factor in BTS purchasing decisions this year.

"Throughout the history of this survey, spending has fluctuated based on family needs each year, and this summer, we expect parents to continue to use caution, but also make smart decisions for their family budget that is a good balance between what their children ‘want’ and what they actually need," said Matthew Shay, NRF president and CEO, in a statement.

Walmart’s Teacher Appreciation Week offers the chain an opportunity to generate some good press along with sales.

"On average, teachers around the country spend about $1,000 readying their classrooms, and half of that comes from reaching into their own wallets to make sure students have what they need," said Mr. Bratspies in a statement. "We’ve had a commitment to supporting teachers in the communities we serve for many years. This program is one more way we’re helping lessen the cost, increase support and set teachers up for success."

Do you see price as being any more or less important to how well retailers will fare this back-to-school season? Will Walmart’s plan enable it to gain share of BTS sales? How do you see Walmart’s competitors responding?

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9 Comments on "Walmart offers lesson on driving back-to-school sales"

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Chris Petersen, PhD.
BrainTrust

For BTS items like paper and markers, price always seems to be very important, if not the most important consideration. Assortment also plays a role. For busy moms, being able to find what you need in one place is a plus.

Walmart is very shrewd in announcing and promoting their strategy early. Teacher Appreciation Week will not only generate more traffic with teachers who spend more, it is great press and brand building for Walmart.

What will be interesting to watch this year is the e-commerce response. For the most part BTS products are known commodities. Amazon and others should be able to compete very effectively on price. Moms seem willing to shop online for bigger ticket items like backpacks, but will they go online to purchase the consumables in quantity for BTS?

Dr. Stephen Needel
BrainTrust

First, let’s recognize that nobody can estimate what they are going to spend on BTS—the error range around that estimate has to be huge. Price will not be a factor again—people know who’s less expensive and who’s more expensive and that’s where they’ll shop. Walmart’s plan may move more volume, but at a lower profit, than in years before. They are clearly hoping that a lower price position will draw in customers from other chains. Either it works, or a price war ensues.

Max Goldberg
BrainTrust

For most families, for most BTS classroom items, price will be the key determinant. Walmart has it right. Cut prices, increase inventory and give a break to teachers. But not every consumer has easy access to a Walmart. Other retailers can compete by offering fair pricing and using loss-leaders and promotional bundles to add real and perceived value. Most small retailers can trump Walmart and the other big box stores in customer service.

Walmart may have many of the lowest prices on BTS items, but it is possible to compete. It’s all about the basics; fair pricing, value, inventory and customer service.

Gene Detroyer
BrainTrust

Price is only trumped by what’s hot in back-to-school. I understand Walmart’s aggressiveness on price. And I understand and like the idea of recognizing teachers. But I don’t understand increasing inventory by 30 percent. How about increasing inventory 10 percent against a declining market? I see huge discounts coming.

Kai Clarke
BrainTrust

Price is key, and very important to how retailers compete and may become successful during the BTS season. Walmart’s push, by focusing on prices, is a great retail position, especially by offering teachers something extra.

heather thornswood
Guest
heather thornswood
2 years 6 days ago

Pricing is ever important, but convenience and “cool” goes a long way. Can mom get all the school supplies, including uniform extras: socks, white button up shirt and cool backpack all from one place? Convenience is king as much as cash is king when it comes to mom’s busy schedule.

Bravo to Walmart for their teacher appreciation tactics. I hope their competitors up that ante—it’s good for teachers, kids and the rest of us as a whole. Competition in these realms is definitely a good thing!

Bryan Pearson
BrainTrust
By winning over students and capturing household dollars early, merchants stand not only to edge out the competition, they also gain potential new customers early in their life cycles. That can translate to decades of future business. Here are COLLOQUY’s six by-the-book lessons on how merchants can use their loyalty initiatives and insight to improve the back-to-school basket: Fish for sales: Customer data can reveal unexpected correlations. LoyaltyOne research shows that households with teens are more likely to make seafood purchases. If retailers can identify consumers who buy seafood and perhaps large quantities of frozen pizzas, they can target them for test promotions of laptop cases, backpacks and locker dry erase boards. Create a pop-up sale: More than 20% of consumers are very likely to buy something if it is a limited-time offer, according to a recent Staples poll. A merchant can build a limited-time, store-within-the-store that features back-to-school products, and offer special discounts to loyalty members. Inspire fuel for thought: Students who go away to college are likely to make more road trips. Merchants can investigate the viability of programs specifically for college students that will earn them double fuel points for their purchases while in school. The program… Read more »
George-Marie Glover
Guest
George-Marie Glover
2 years 6 days ago

Price is a major factor, especially for households with multiple school-aged children. There are more ways to save money than getting discounts.

There is no need to buy everything all at once. Buy the minimum before school starts and wait for sales to buy the rest.

Don’t automatically think you need to purchase everything on the list the schools provide in advance. Wait and confirm what your students will actually need from their teachers after school starts.

Things like rulers, protractors or pencil boxes can last years. Keep and use school supplies leftover from previous years or hand them down.

If you can afford to, donate supplies to your student’s class for those less fortunate and to help teachers from having to buy supplies out of their own pockets.

Alexander Rink
BrainTrust
2 years 21 hours ago

This is a great move for Walmart.

As our own research has shown, “The back-to-school numbers look very good for embattled retailers, but make no mistake, shoppers are likely to defer purchase decisions until they are absolutely certain that they have the best deal.” We can’t downplay the effect pricing has on shoppers.

Based on our findings, we can safely predict that Walmart will grab their fair share of BTS sales this season. They have segmented their message to appeal to the two largest groupings of BTS shoppers, parents and teachers. As for the competition, like Thanksgiving day openings, I think we can expect some similar moves to come out in the near future.

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