Anticipating higher prices for their shopping list than a year ago, consumers expect to spend 14% more on average on back-to-school shopping per child this year, according to a new KPMG survey conducted in July. Broadly, consumers are also preparing to spend more this fall on not only essential goods and services but also on apparel, personal care and restaurants, among other discretionary categories.
Underlying the spending outlook are the findings that consumers are spending a higher percentage of their income on monthly living expenses and placing a lower percentage of their income in savings and investments.
“Despite the financial strains many families are facing and the reshaping of consumer spending patterns due to inflation, the anticipated increase in back-to-school spending highlights a resilience and adaptability among consumers,” said Duleep Rodrigo, KPMG US Consumer and Retail Sector Leader. “As we approach Fall 2024, understanding these shifting priorities and spending patterns for discretionary items will be crucial for both retailers and consumers as they navigate a challenging economic environment. Consumers are prioritizing value and adjusting their spending, both in-store and online, in response to economic pressures. Businesses must navigate these changing dynamics to effectively connect with their customers.”
The survey of 1,000 US adult consumers nationwide, including more than 400 back-to-school shoppers, provides valuable insights into spending behaviors and consumer sentiments now and looking ahead to fall.
The KPMG survey reveals that 42% of back-to-school shoppers anticipate spending more per student, as three-fourths of them expect higher prices. Mass merchants remain the top choice for back-to-school shopping, expected to capture a 34% share of the wallet. Lower-income families are moving their spending from online-only retailers, dollar stores and apparel retailers to mass merchants.
Looking ahead at fall spending overall, consumers on average expect to spend more each month on 11 of 14 essential and discretionary goods and services. More than 80% of all consumers surveyed plan to spend more on groceries. Over half of consumers expect to spend more on discretionary items such as apparel, restaurants, travel, personal services, and entertainment this fall. For example, consumers anticipate spending 8% more each month on apparel and 6% more on restaurants and personal care products.
Additional Key Findings
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Financial Security: The survey indicates that today, 62% of consumers feel the same (32%) or better off (30%) financially compared to a year ago, while 38% feel worse off. Yet, the survey found a continuing decline in the estimated amount of monthly household income placed in savings and investments since 2022. At the same time, the percentage of monthly income spent on monthly living expenses has increased to an estimated 42% compared to 40% last year.
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Inflation Impact: Inflation continues to affect consumer behavior, with 94% feeling the impact and 76% reporting their cost of living has risen by over 5%. Consumers are particularly concerned about price hikes in groceries and automotive.
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Consumer Online Behavior: Compared to their expectations a year ago, in the 2024 survey most consumers expect to purchase either more or the same amount online this fall across all 14 essential and discretionary categories.