Back-to-school shopping kicks off early as inflation shapes trends

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The basics:

• U.S. shoppers began back-to-school shopping earlier than ever this year
• Families spending $128B on school and college needs in 2025
• Parents turn to discount retailers, AI tools, buy-now-pay-later options
• N.J. shopping centers see strong foot traffic growth

Amid continuing financial uncertainty in the U.S., many consumers kicked off back-to-school shopping earlier than ever this year.

With lingering inflationary pressures and concerns over the possibility of price increases from the Trump administration’s tariffs on imports, more than two-thirds of the 7,580 shoppers surveyed by the National Retail Federation had already begun purchasing items for the upcoming school year as of early July, the organization found. That’s up from 55% last year. It also marks the most since the trade group began tracking early shopping in 2018.

Despite the current climate, parents seem confident they can refill backpacks and replace clothing by relying on budget-savvy shopping habits they’ve honed during the last few years of high prices.

Besides taking advantage of major July sales, like Amazon Prime Day and Target Circle Week, more families are turning to discount chains, such as Five Below and Dollar Tree, and off-price retailers, e.g. Burlington and T.J. Maxx, to make progress on back-to-school shopping lists.

Keisha Virtue, manager of retail research at Chicago-headquartered commercial real estate brokerage JLL, noted that while parents may be increasing their per-child spending, they are “strategically directing those dollars toward mass merchandisers offering both value and selection.”

“With inflation concerns driving 70% of shopping decisions, parents are maximizing their budgets by focusing on retailers that deliver both necessities and cost-saving opportunities,” she said.

They’re also spreading expenses over a longer period of time, trading down to more affordable brands and stores and scaling back on speedy delivery for slower shipping options to save money, an analysis by Deloitte found.

Additionally, parents are turning to artificial intelligence-powered tools to find deals online, PwC said in its back-to-school outlook.

With 1-in-5 of the 1,198 adults surveyed saying they’ll use AI for shopping, PwC explained it shows a rising comfort level with the technology among mainstream consumers. It also sends a message to retailers that it’s time to enhance their digital channels and search visibility for AI-powered discovery, the firm’s report said.

Crayons, calculators, computers

This year, families with students in elementary through high school expect to spend an average of $858 on clothing, shoes, school supplies and electronics, down from $875 in 2024, according to NRF.

Despite budgeting less this year, slightly more consumers are purchasing apparel and electronics, driving expected total spending to $39.4 billion — up from $38.8 billion last year.

Based on NRF’s findings, K-12 shoppers plan to spend an average of:

• $296 on electronics ($13.6 billion total)
• $249 for clothing and accessories ($11.4 billion total)
• $169 for shoes ($7.8 billion total)
• $144 for school supplies ($6.6 billion total)

College students and their families are planning to drop an average of $1,326, a decrease from last year’s $1,365. Although per person spending has decreased, on average, more consumers are shopping across almost every category, bringing expected total back-to-college spending to $88.8 billion, up from $86.6 billion in 2024, NRF said.

According to the survey, the top five categories for average college spending are:

• $310 for electronics ($20.7 billion total)
• $191 for dorm or apartment furnishings ($12.8 billion total)
• $166 on clothing and accessories ($11.1 billion total)
• $140 on food ($9.4 billion total)
• $118 on personal care items ($7.9 billion total)

Phil Rist, executive VP of strategy at consumer data firm Prosper Insights & Analytics, said the projected increase in spending “can largely be attributed to higher income households.” Meanwhile, lower income households “are pulling back across categories because of economic uncertainty.”

“Regardless of income, families want to ensure their students are set up for success. They are cutting back in other areas, using buy now, pay later or buying used or refurbished items to have everything they need for the school year,” Rist shared.

Appealing to the bargain shopper

Since families appear to be approaching their second-largest annual spending event with a note of restraint this year, retailers are trying to appeal to the value-seeking consumer as a way to capture part of the $128.2 billion expected in combined back-to-school and back-to-college spending this year.

NRF Vice President of Industry and Consumer Insights Katherine Cullen said, “As shoppers look for the best deals on clothes, notebooks and other school-related items, retailers are highly focused on affordability and making the shopping experience as seamless as possible.”

Thanks to strategic moves earlier in the year, chains like Target, Walmart and Dollar General have been able to mute any sticker shock for customers seeking school supplies because they accelerated shipments from China to stockpile inventory at pre-tariff prices.

However, retailers can’t hold the line much longer. As inventory buffers dwindle and tariff impacts escalate, price increases are expected to become visible to shoppers by the end of the third quarter in 2025, the International Chamber of Commerce recently warned.

Industry observers are cautiously optimistic heading into the 2025 holiday season, with Deloitte anticipating 4.5% year-over-year sales growth. To stay ahead of falling consumer confidence levels amid renewed inflation concerns, retailers are front-loading inventory orders and increasing AI adoption to manage pricing and supply chain decisions more efficiently, the firm said in a recent report.

Shoppers are expected to remain deal-focused and selective and favor essential, value-driven purchases over discretionary spending, market research CivicScience reported.

Shop NJ

With one of the highest numbers of shopping centers per square mile in the country, and an affluent and diverse consumer base, New Jersey is a significant player in the U.S. retail landscape. Industry stakeholders told NJBIZ they feel positive about the 2025 back-to-school shopping season.

“In general, the back-to-school season seems to be ahead of last year,” said Levin Management Corp. CEO Matthew Harding, adding that he expects overall sales to be “the same or just a bit above” last year’s period.

Harding did note that shoppers seemed to get a jump on prepping for the new school year. “Typically, it ramps up in late July. However, this year, we did see it a bit in early July,” he said. “I think that does follow what we’ve seen in other shopping seasons such as Black Friday sales starting much, much earlier. So, retailers are getting out there and pushing promotions out to draw customers in earlier.”

As for consumer behavior, Harding believes much of the decision making will be driven by cost. “We’ve seen it throughout the year a bit with consumers on certain purchases … Value is increasingly important as there is still some uncertainty out there in the economy,” Harding explained. “Customers are going to be more selective in terms of picking merchandise for things they need. And then, for the optional items or more subjective items, they’re going to be looking for value.”

Heading to the stores

While online continues to remain a big destination for back-to-school shopping, physical stores are expected to see an uptick in foot traffic for the season, trade organization ICSC’s consumer sentiment survey revealed.

According to the findings, 59% of adults expect to purchase most of their items in person — up from 54% in 2024. ICSC also said only 17% plan to shop fully online.

JLL’s questionnaire of 1,010 parents showed that malls and open-air shopping centers are experiencing increased popularity, with most parents (46.6%) planning to visit two-to-three retailers to complete their shopping.

Kristin Mueller, retail property management president at JLL, noted that one of the biggest strengths of those property types is that they fulfill parents’ desire for efficiency and value.

“With nearly half of parents planning to visit multiple retailers in a single location, shopping centers are perfectly positioned to deliver the variety, experience and cost-saving opportunities families are seeking during this high-traffic back-to-school season,” she said.

Scott Auster, head of leasing and executive vice president of New York City real estate investment trust Urban Edge Properties, agreed. “Think the convenience of so many stores together, and the ability to touch, feel and try on new things makes our centers appealing for families who want to get it all done at once,” he said.

Welcoming foot traffic

Auster noted Urban Edge’s 33 properties in New Jersey “are geared up and ready to welcome the back-to-school shoppers.”

“We’re seeing strong foot traffic across all of our shopping centers. Customers benefit from carefully planned merchandise mixes where they can complete their entire shopping list; plus enjoy some of our newest dining options,” he shared.

With a tenant mix that includes Whole Foods Market and Target, Auster said Urban Edge’s retail flagship Bergen Town Center is seeing “families completing the school supplies list and fulfilling essential grocery and household needs with a quick stop for lunch in between.” The Paramus property’s growing food lineup ranges from quick-service brands, like Cava, Chopt and Dunkin’, to full-service restaurants, such as Olive Garden and Miller’s Ale House.

Other sites managed or owned by Urban Edge include Brick Commons, Hanover Commons, Hudson Commons, Ledgewood Commons, Manalapan Commons, Plaza at Cherry Hill, Stelton Commons, The Plaza at Woodbridge and Totowa Commons.

This year is also notable because younger generations of parents, such as Generation Z, continue to drive a brick-and-mortar renaissance rooted in immersive retail experiences and brand engagement, PwC said.

Harding echoed the sentiment, saying that in general the younger set “wants to be out shopping in person.” That’s especially true at wallet-friendly chains that promote a treasure hunt-like shopping experience, like Marshalls and HomeGoods, he added.

Of the 80 properties in New Jersey that LMC leases or manages, value retailers occupy space at many of those sites.

Its portfolio includes chains like Marshalls and Dollar Tree (Blue Star Shopping Center in Watchung), T.J. Maxx (St. Georges Crossing in Woodbridge), Gap Factory (Somerset Shopping Center in Bridgewater) and Burlington and Five Below (Somerville Circle Shopping Center in Raritan).

Healthy outlook

Despite elevated economic volatility, the retail industry recently reported healthy sales and in-store traffic. Additionally, that trend is expected to continue in the coming months, according to LMC.

After conducting its annual mid-year survey, the North Plainfield-based commercial real estate services firm found that economic conditions, trade policy, and consumer sentiment do not appear to have had a negative impact on shopping and spending so far in 2025.

Store managers in LMC’s 125-property leasing and management portfolio across the Northeast and Mid-Atlantic said they are increasingly embracing technology innovations and boosting digital marketing efforts to connect with consumers. Additionally, more respondents said they are actively engaging artificial intelligence to benefit their businesses or exploring the use of AI tools.

“Over the last three quarters, our tenants said that they’re meeting or exceeding last year’s sales. So, that’s a very positive indicator about how the year is going – especially in light of all the ups and downs,” he said.

Over the last three quarters, our tenants said that they’re meeting or exceeding last year’s sales. So, that’s a very positive indicator about how the year is going – especially in light of all the ups and downs.
– Matthew Harding, Levin Management Corp. CEO

LMC has issued its retail survey three times a year since 2011. The next will take place this fall, with findings released ahead of the holiday season.

Based on the responses it has received so far, Levin believes retailers expect a solid season and are looking ahead to the period. Ahead of the crucial time, Harding stressed the importance of “keeping in touch with customers and adapting to their wants and needs.”

“We see retailers that have gone by the wayside because they have failed to do so – whether that was just from not evolving or perhaps having high debt levels,” he said.

As consumers shift where and how they choose to shop, Harding said he believes it presents an opportunity for brands to respond in smarter, more targeted and innovative ways.

“Retailers have to keep current. Our local retailers do a great job of being very closely in touch with their customers,” he said. “And we see national chains expanding local franchises or adjusting their store sizes and layouts. Retail is always evolving, and successful retailers continue to evolve.”