How to manage the challenges during the Back-to-school Season
It feels like summer vacation have barely begun, but the back-to-school shopping season is already in full swing.
Depending on the region, it lasts from July to September and is now generating record retail sales not only in the U.S. but also in Europe, that compare with Black Friday or the Christmas shopping numbers.
Hundreds of millions of dollars are spent on back-to-school purchases each year. The National Retail Federation (NRF) projects that $94 billion will be spent on back-to-school purchases this year, surpassing last year’s record total of about $73.9 billion with about $20 billion.
The new school year, especially starting school for the first time, is an important stage in life for many families, and is often celebrated in a big way. Retailers take the opportunity to target parents and relatives with promotions, buying not only school supplies but also small gifts for the children. According to a recent survey by Deloitte parents will spend more money on school supplies this year, while spending on electronic devices and clothing will decline slightly, with spending in the clothing category still among the biggest markets.
Changed spending behavior
Inflation is one of the main reasons many consumers will focusing more on necessities like school supplies this year. Uncertainty about the economy is also making many consumers more price-sensitive, causing them to rethink their buying habits for the upcoming school year. According to Deloitte Consulting LLP, “there are significant changes in what students and parents are buying for the upcoming school year compared to 2022 due to greater focus on in-person learning experience compared to virtual learning in 2022, which can strain supply chains that were set up based on previous patterns.”
Thus, retailers face the age-old problem of stocking the right products at the right time and in the right quantities without being able to rely on previous forecasting methods, as they cannot necessarily use the last two to three years as reliable benchmarks due to the extreme situation caused by the pandemic.
Shortage of school bus drivers
Even before the pandemic, the shortage of school bus drivers was a problem. But for a variety of reasons, including low pay or part-time contracts (5-hour workdays) and the number of professionals who have retired, the problem has worsened this year and will not be solved quickly in the foreseeable future.
And so, the shortage of school bus drivers left many parents and students struggling, considering that there are more than 480,000 yellow school buses nationwide, transporting an estimated 26 million students to and from school. This makes the U.S. school bus fleet the largest public transportation fleet in the United States.
Due to a shortage of bus drivers in many school districts, school officials have been forced to cancel some bus routes, leaving families to rely on private transportation as a substitute that they cannot easily afford. These costs are in addition to inflation and general price increases that already burden many households. As a result, many families are increasingly looking for Back-to-school special offers this year.
Challenges during the Back-to-school Season
Similar to the Christmas and Black-Friday shopping seasons, the Back-to-school season presents retailers with unique challenges as they must not only meet the increased demand for various products, but also take into account the limited demand period, just until school starts.
Here are some of the key challenges retailers and manufacturers face during this time:
The back-to-school season is characterized by unpredictable demand. As both parents and students buy not only school supplies and clothing in large quantities, but also other products that may be unrelated to school. To meet this variable demand in the short term, retailers and manufacturers should work together to ensure accurate forecasting and analysis, and share real time sales figures to make a realistic demand forecast and plan production accordingly to avoid shortages or excess inventory.
Warehousing and inventory management
The back-to-school season requires strategic inventory planning. Understocking can lead to missed sales opportunities, while overstocking leads to financial losses. Timely and frequent restocking based on actual sales is critical. In addition, implementing an efficient inventory management system and inventory optimization strategies can help keep stocks at an optimal level.
Logistics and transport
Timely delivery of products is critical. As with the bus driver challenges, there is also a driver shortage in the logistics industry. Logistics and transportation capacities are under heavy demand, bottlenecks and delays in freight and logistics services could lead to dissatisfied customers. Therefore, early planning of transport capacity and routes, and cooperation with reliable partners is essential to shorten or optimize delivery times and thus avoid bottlenecks.
Increased demand for labor
To meet the surge in demand, some companies are hiring seasonal workers across the supply chain. Quickly onboarding these temporary workers and integrating them into the existing workforce can be a logistical challenge and impact supply chain efficiency. However, training and a transparent communication can better prepare employees to meet seasonal demand and better adapt to the challenges of the back-to-school season.
Having access to the right information, at the right time, and enabling visibility to changes in supply and demand requires a real-time view across the entire supply chain. By using real-time data, logistics arrival times can be better determined, and supply and demand can be more accurately predicted. This enables accurate planning of supply and demand, which is particularly useful during the peak season.
To learn more about how to minimize supply chain risk, simply download the latest report.