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Shopping trends, time lines, and shopper engagement during the annual back-to-school season.

Last year, the back-to-school season benefited from heightened spending and a burst in consumer confidence. This Back-to-School Checkout study investigates whether this trend will continue as well as new ways to succeed and threats to watch out for during the 2013 back-to-school season.

Fewer people are shopping this back-to-school season. (Read more on page 2.)

Shoppers are planning early but still shopping later. (Read more on page 3.)

Are private labels competitive during the back-to-school season as well? (Read more on page 4.)

IN T

HIS

ISS

UE

Issue 3, 2013 BACK TO SCHOOL

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Retailers Will Find It More Difficult to Win Shoppers This YearCompared to last year, this year’s data shows that shoppers are not as price-sensitive. This year, 73 percent of back-to-school shoppers indicate that “finding the lowest price” is important to them, down from 80 percent last year. It appears that shoppers are having a noticeable mind-set shift. While this bodes well for brands, there will be fewer shoppers to

win over for retailers. In fact, 31.2 percent of respondents do not expect to shop for any back-to-school products at all, up from 27.7 percent last year. With fewer people shopping, certain channels are seeing a drop in traffic.

We foresee that mass, clothing, and drug will take the largest hit, losing 2.3 percent, 3.2 percent, and 5.5 percent of shoppers this year, respectively, compared to last. (See Figure 1.)

Number of shoppers drops by

3.5%

Figure 1 Source: The Integer Group® | M/A/R/C® Research June 2013 Checkout Study, N=1,329, and June 2012 Checkout Study, N=1,304Q: This year, at which of the following places do you expect to shop for any back-to-school products and promotions?

Figure 1: Retailers Shoppers Plan to ShopFigure 1: Retailers Shoppers Plan to Shop

20132012

60%

50%

40%

30%

20%

10%

0%

Mass

(e.g.,

Wal-

Mart, T

arget)

Office S

upply

(e.g.,

Staples

, Offic

e Max

)

Drug Stor

es

(e.g.,

Walg

reens

, CVS

)

Discou

nt/Doll

ar Stor

es

(e.g.,

Dollar

Genera

l, Fam

ily Doll

ar)

Grocery

Stores

or Sup

ermark

ets

(e.g.,

Kroger,

Safeway

)

Depart

ment S

tores

(e.g.,

Mac

y’s, S

ears)

Clothin

g Stor

es

(e.g.,

Old Nav

y, Gap

)Club

(e.g.,

Costco

, Sam

’s, BJ’s

)

Online

Electr

onic

Stores

(e.g.,

Best B

uy, Rad

io Sha

ck)

Thrift

Stores

Othe

r

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Shoppers Are Still Planning Early, but Will Shop Later This Year In our 2012 issue of The Back-to-School Checkout, we explored the phenomenon of shoppers beginning to shop earlier. This year, we find the trend reversing: people are beginning their shopping later again. Only 38 percent of people will begin shopping a month or more before school starts, compared to 45 percent last year. (See Figure 2.)

Comparatively, shoppers will be planning just as early as last year. (See Figure 3.) There is actually a 0.99 correlation between last year’s and this year’s trends. With retailers pushing promotions out earlier, shoppers have become accustomed to thinking about the back-to-school season sooner. It appears they will continue to enter a planning state earlier this year, even though they don’t plan to head to retailers for some time.

With this in mind, marketers should be wary about pushing promotions and messaging out any earlier. For the past two years, Integer has observed this trend’s influence on driving shoppers to shop earlier and earlier. It led us to question how early back-to-school marketing could be pushed in summer. Based on this year’s data, it appears we have reached the limit.

Figure 2Source: The Integer Group® | M/A/R/C® Research June 2013 Checkout Study, N=761, and June 2012 Checkout Study, N=769Q: When do you expect to do most of your back-to-school shopping this year?

62%

will wait until at least three weeks before

school starts to begin back-to-school shopping.

Figure 2: Actual Shopping20122013

MoreThan 2MonthsBeforeSchoolStarts

1–2MonthsBeforeSchoolStarts

About aMonthBeforeSchoolStarts

2–3WeeksBeforeSchoolStarts

TheWeekBeforeSchoolStarts

After theFirst Dayof School

Figure 3: Planning

MoreThan 2MonthsBeforeSchoolStarts

1–2MonthsBeforeSchoolStarts

About aMonthBeforeSchoolStarts

2–3WeeksBeforeSchoolStarts

TheWeekBeforeSchoolStarts

After theFirst Dayof School

20122013

Figure 3Source: The Integer Group® | M/A/R/C® Research June 2013 Checkout Study, N=914, and June 2012 Checkout Study, N=948Q: When did you or will you begin planning for your back-to-school shopping?

40%35%30%25%20%15%10%5%0%

40%35%30%25%20%15%10%

5%0%

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Private Label Has Become the Go-To for Back-to-School Shopping

Quality at a Lower Price

When it comes to back-to-school shopping, quality is an important attribute for products and retailers. Yet shoppers still yearn to find the right products at the lowest price. Though they seem to be contradictory, Price and Quality are the top two priorities for choosing retailers and brands, with 73 percent and 53 percent of shoppers identifying them as important.

Private Labels Are Quality at a Lower Price

During the financial crisis, shoppers were faced with a dilemma at shelf. They were torn between supplementing their educational needs with a balance of quality and affordability. This tension prompted shoppers to try private labels. Private

labels seemed to have filled a void during the economic crisis, and they don’t show signs of retreating—shoppers have heightened their perceptions of private-label products. This year, 38 percent of shoppers are buying more private-label products compared to 31 percent last year. Even more interestingly, 84 percent of all shoppers are purchasing private label. (See Figure 4.) With the momentum that private labels are building and the relevant value that they provide the back-to-school-minded shopper, we are sure to see them contending for the shopper’s wallet.

57%

agree that brand names offer

more attractive packaging.

Only 1 out of 3 shoppers believes brand names are of

higher quality.

20135%

37%

47%

11%

20125%

31%

51%

13%

Figure 4: Purchasing Trends in Private Labels

Figure 4Source: The Integer Group® | M/A/R/C® Research June 2013 Checkout Study, N=1,329, and June 2012 Checkout Study, N=1,304Q: Which statement about store/private-label brands best describes you?

I Do Not Buy Store/Private LabelsI Am Buying MoreI Am Buying the Same AmountI Am Buying Less

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Figure 5Source: The Integer Group® | M/A/R/C® Research June 2013 Checkout Study, N=760, and June 2012 Checkout Study, N=769Q: Where do you get your information on what to buy for your back-to-school needs?

0% 5% 10% 15% 20% 25% 30% 35% 40%

In-Store Circular

School Lists

Newspaper Circular

The Internet

Retailer Coupons

Manufacturer Coupons

Television Commercials

School’s Website

Online Websites (e.g., Retailer, Manufacturer)

Recommendations From Peers, Friends, and Family

Shopper Card Discount

Social Media

A Message on the Retailer’s Shelf

In-Store TV

Mobile Phone

In-Store Associate

Other

Figure 5: Top Information Sources

20122013

Traditional Sources Are Still KingTraditional sources for back-to-school information such as in-store circulars, school lists, and newspaper circulars still reign supreme over other channels, but such sources are also undergoing slight decreases in usage this year. In 2012, shoppers claimed to use an average of 3.33 sources, which remains unchanged for 2013.

Figure 5 shows us that traditional sources slightly decreased this year, while mobile, social media, the Internet, and school website usage had modest bumps. This indicates a small trend of shoppers’ leveraging modern information sources for back to school and replacing traditional and seemingly outdated methods.

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Retailers Score Poor Marks on FunWhen shoppers are asked to grade shopping by attributes such as fun, time, price, and quality, fun by far receives the worst grades. Where 75 percent and 65 percent of respondents graded price and quality, respectively, an A- or higher, only 38 percent of respondents gave fun the same grades. Actually, the attribute of fun was graded a B by more respondents.

It seems retailers can do more to provide a fun shopping experience. With the recent economy, it makes sense that most have been focusing on delivering the right price. However, retailers have essentially been ignoring 25 percent of shoppers who walk in the door wishing to have an enjoyable experience. With fewer shoppers in the market this year, creating an enjoyable experience is an opportunity to reinvigorate the retail space and differentiate a store and brands from others.

1 out of 4 shoppers

wants to have fun during

back-to-school shopping.

Figure 6: Grades That Shopping Qualities Received From Participants

Fun

Time

Price

Quality

Report Card

38%

41%

61%

33%

75%

21%

65%

31%

Grade

A+, A, A-‐

B+, B, B-‐

A+, A, A-‐

B+, B, B-‐

A+, A, A-‐

B+, B, B-‐

A+, A, A-‐

B+, B, B-‐

Figure 6Source: The Integer Group® | M/A/R/C® Research June 2013 Checkout Study, N=914, and June 2012 Checkout Study, N=948Q: Please use a letter grade to describe what you expect for each of the following: “Makes back-to-school shopping fun”; “Offers high-quality products”; “Saves me time shopping”; “Gives me the lowest price”

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Implications for Brands and Retailers.

1. Advertising Will Be More Important This Year With fewer shoppers heading out this season and with the shoppers who are heading out planning to visit fewer channels, retailers will have a harder time maintaining the same level of foot traffic as last year. This means that retailers will have to strive harder to get shoppers through the door by investing more in enticing people with promotions/deals, proper communication, and incentives outside of the store.

2. Market at the Same Time as Last Year We noted that shoppers will be heading out later, but they will still be planning BTS shopping as early as they did last year. And during this planning stage, shoppers may already be making set decisions for when they decide to start shopping. Marketing at the same time will spur consumers to enter a planning state sooner and will build your relevance when the time comes to purchase.

3. Private Labels Vs. Name Brands Private labels will continue to do well. Remind shoppers that they don’t have to splurge on brand names to provide for their education. Communicate quality at a lower price, and leverage the momentum that private labels have built with shoppers. Name brands need to use their strengths to compete. Use their more attractive packaging to catch attention at shelf. Then communicate new products, varieties, and any innovations to help shoppers choose your product.

4. Differentiate by Making Shopping Fun The attribute of fun in shopping has been neglected over the past years and, in turn, has received poor marks. Make shopping fun, and win over a large demographic that finds this aspect important. Create events. Spark new ideas. And play games in store. Make back-to-school shopping enjoyable for shoppers and their families, and you will be rewarded this season.

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The Integer Group® (www.integer.com) is one of the world’s largest promotional, retail, and shopper marketing agencies, and a key member of Omnicom Group Inc. Integer lives at the Intersection of Branding and Selling® and creates strategic marketing solutions for clients in categories that include retail, beverage, packaged goods, telecommunications, home and shelter, automotive aftermarket, and power sports. Integer has more than 1,200 employees working in U.S. locations as well as international offices in Africa, Asia, Australia, Europe, the Middle East, North and South America. Join the conversation on shopping culture and brand strategy at www.shopperculture.com.

The Integer GroupCraig ElstonSr. VP, Insight & Strategycelston@integer.com7245 West Alaska DriveLakewood, CO 80226

M/A/R/C® Research is a brand development firm dedicated to helping clients create, evaluate, and strengthen their brands. Our teams design and execute qualitative and quantitative, traditional, and online solutions while adhering to a client-service ethic built on being easy to work with and delivering what is promised. Our core competency is measuring attitudes and behaviors to accurately explain and predict market share, revenue, and bottom-line impact of a client’s actions. We help our clients address consumer, channel, and B2B marketing issues to launch better products and services, attract and retain valuable customers, and build stronger brands. Our proven, marketing-issue-focused solutions support clients’ brand-building efforts.

M/A/R/C ResearchRandy WahlEVP, Advanced AnalyticsRandy.Wahl@MARCresearch.com1660 North Westridge CircleIrving, TX 75038Visit us at www.ShopperCulture.com

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©2013 by The Integer Group® and M/A/R/C® Research. All rights reserved.The data contained in this report may be reproduced in any form as long as the data is cited from The Integer Group and M/A/R/C Research. www.ShopperCulture.com.

2013 BACK TO SCHOOL EDITION

The Checkout is based on a nationally representative survey of 1,200 U.S. adults conducted monthly by M/A/R/C Research. Please contact us to learn more about the data we collect or additional analysis.