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First Data SpendTrend Report: Back-to-school spending may be heating up after tepid growth for the past three years

Summer camps might be winding down and pools getting less crowded, but the back-to-school shopping season is in full swing. With kids in some states already back to school and others just beginning to face the fact that summer is coming to a close, the First Data SpendTrend team analyzed actual consumer spending across the country to look at how back to school sales are faring this season.

 


 

Mom, I really do need a new computer…and a new outfit

Overall, back-to-school sales seem to be rebounding this year, after experiencing sluggish growth from 2013-2015. Back-to-school spending through July is up 2.0% year-over-year, primarily driven by Electronics and Appliances growth of 5.5%, Sporting Goods and Hobby Stores up 3.4%, and General Merchandise up 2.7%.  The growth in electronics and appliances was significant, especially since the sales growth for the sector declined 2.2% over the holidays.

 

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WHAT A BARGAIN?

Last year, the average back-to-school ticket price reached a three-year high at $66.73. July 2016 saw an average spend of $63.81 per ticket, just $2.17 less than July 2015 and short of the overall 2015 season average ticket price of $66.71. 

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SWIPING TICKS UP

Despite lower average ticket sizes for this year compared to last, transaction growth (the number of card swipes) is up this year 2.3% through July, which, if the past three years are any indication, may decrease as the average ticket price increases slightly. Lower prices due to discounting are driving more foot traffic and higher transaction growth rates. There is still a question mark out there for how the month of August will fare, as consumers continue to shop through the month. 

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TAX-FREE HOLIDAYS BOOST SPENDING, BUT SALES IN STATES WITHOUT THEM FARE BETTER OVERALL

There were 10 states that held tax-free weekends this year that could be analyzed on a year-over-year basis, meaning that they held the holiday at the same time in 2015 as 2016. Nearly all states saw an increase in spending during the tax free holidays regardless of school start dates, indicating that the weekends are a big draw for consumer shopping. Additionally, consumer spending growth rates in states with tax free holidays were overall on the decline during the weeks leading to the holidays, with surges during the tax free days. 

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However, states holding tax-free holidays weren’t the only beneficiaries of the first week of August bump. States that didn’t have a tax-free holiday still saw a solid increase in that timeframe. In fact, states without tax free holidays have been experiencing stronger sales growth across the board compared to states that do have tax free holidays. 

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LOOKING FRESH – NEW BACKPACKS, SHOES, AND CLOTHING

Arguably the category most frequently associated with back-to-school is Clothing and Accessories, as college, high school and elementary look to update their wardrobes before they take their seats at their desks.

The category got off to a slow start in July 2016, declining 1.6% year-over-year. However, with the help of tax-free holidays around the country, Clothing and Accessories got a big assist in the first week of August, across both states with and without tax-free holiday weekends.  

States with tax free holidays jumped from a -6.3% decrease to a whopping 8.4% growth rate, which was significantly more than the non-tax holiday states which observed a solid 3.0% growth that week. 

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With the Clothing and Accessories category, the crowned winner was Family Clothing Stores, which shows a 29.8% growth rate in states with the tax-free holiday, compared to a 13% growth rate in states without a tax holiday. 

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NEW KICKS

During the week of tax free holidays, Shoes Stores in states with tax holidays saw a large surge in terms of total share of spend, jumping from 17.85% to 22.57%, with slight decreases in Women’s Accessory and Specialty Shops, Men’s/Women’s Clothing Stores, Men’s and Boys Clothing, and Family Clothing Stores.

 

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Stay tuned for more information as the season wraps! If you have any questions or would like to receive the full report, please contact Liidia Liuksila (Liidia.Liuksila@FirstData.com).