Back-to-school shopping is in full swing but this time around Walmart Inc. (WMT) and Target Corp. (TGT) may be the big winners as consumers hit brick-and-mortar stores for their clothing and school supplies instead of turning to e-commerce.
That’s according to Deloitte’s “Back-to-School” shopping survey which found that U.S. households will spend on average $510 on back-to-school supplies, up from $501 in 2017, amounting to $27.6 billion. Of that spending $16 billion is projected to be done in store, more than double the $6 billion in total spending that will happen online. About $5.5 billion of the consumer dollars is up for grabs, with shoppers undecided where they will spend 20% of their back-to-school budgets. (See more: 4 Retail Stocks Shattering Records Despite Amazon Threat.)
Walmart, Target To Benefit From Back-To-School
“Mass merchants remain the top location for back-to-school shopping, with 83% of shoppers noting they plan to shop this format,” wrote Deloitte in the report. “While price-based retailers can expect a large percentage of shoppers, customers tend to spend more when they shop traditional retailers like department stores, home electronics stores, and office suppl
Rod Sides, vice chairman at Deloitte in charge of the company’s retail, wholesale and distribution unit told CNBC that consumers are increasingly focused on convenience and when it comes to back-to-school shopping they find it easier to come into a store. That’s particularly true since 98% of the back-to-school purchases are for clothes and accessories. He said the ability to try on clothes in store and easily return items is one of the reasons physical retailers see increased foot traffic during the back-to-school shopping season. Sides pointed to Walmart and Target as winners this year. He said large retailers will do “quite well” as will discount retailers, including TJX Companies (TJX) the parent company of retailers T.J.Maxx and Marshalls. While the lower priced retailers will see more foot traffic the survey found parents expect to spend more at traditional retailers. (See more: Walmart Reports Earnings in Recovery
Digital Shopping Losing Its Luster?
Another shift for back-to-school 2018: digital shopping may have reached a saturation point. Deloitte found that mobile adoption has only increased at a minimal rate while computer and social media usage has decreased 10 percentage points from 2016 to 2018. “Customers are mainly using their devices to access websites, look for prices, and collect coupons and discounts—instead of actually making purchases. This could signal that shoppers are looking for the next innovation in retail technology,” Deloitte wrote in the report.