On June 29, 2023, individuals can be seen walking around the University of North Carolina Chapel Hill campus in Chapel Hill, North Carolina, according to Eros Hoagland’s photograph. Alicia Browne, the director of housing administration at the University of Alabama, has observed a change in what college students bring with them on move-in days in recent years. In addition to essentials like pillows, comforters, and laptops, students now arrive with mini fridges, headboards, Keurig coffeemakers, and even air purifiers. Some students even hire decorators who deliver linens, custom-made curtains, and other furniture or decor orders on designated vendor delivery days created by the university.
Browne believes that dorm spending has grown significantly over the past decade, but has exploded even more due to the influence of platforms like TikTok and other social media sites. These platforms showcase fancy dorm room setups, prompting students and parents to invest in creating comfortable and aesthetically pleasing living spaces. Additionally, some parents feel compelled to make up for the missed experiences their children had during the pandemic by splurging on their dorm rooms. The desire to ensure their students have the best start to school possible, including a comfortable living situation, leads families to be willing to pay more for dorm decor.
The increase in back-to-college spending presents a significant sales opportunity for retailers this fall. According to the National Retail Federation and Prosper Insights & Analytics, college students and their families are expected to spend an average of about $1,367 per person, an increase of about 40% since 2019. This surge in spending not only benefits retailers financially but also allows them to establish relationships with a new generation of younger shoppers. Marshal Cohen, chief retail industry advisor for Circana, emphasizes the importance of cultivating these relationships at a vulnerable age, as strong retailers can retain customers over time.
Retailers like Target, Walmart, and Kohl’s, which have experienced a decline in sales of big-ticket items and discretionary purchases, may particularly benefit from the back-to-college boom. While these retailers still face challenges in other areas, such as falling sales overall, the increase in back-to-college spending presents an opportunity for them to recover some losses. The earnings reports from these retailers in the coming weeks are expected to shed light on sales trends and performance.
However, it’s worth noting that some forecasts for the new school year are not as positive as the NRF’s estimates. Deloitte predicts a 10% decline in back-to-school spending for kindergarten through high school students, indicating that consumers are prioritizing necessities and seeking out lower-priced retailers or deals. The firm did not provide a forecast for back-to-college spending.
Households are not only planning to spend more due to inflation, but survey respondents also anticipate purchasing more new merchandise and big-ticket items like electronics and furniture compared to the previous year. This growth in spending is accompanied by an opportunity for retailers to gain market share in the college market. The bankruptcy and closure of Bed Bath & Beyond have left a void that competitors like Amazon, Home Goods, and Ikea can fill. Retail analyst Cristina Fernandez suggests that Target, in particular, may benefit from this market shift due to its range of student-friendly products, convenient store locations, and proximity to college campuses.
Retailers have taken various approaches to attract college customers. Companies like Williams-Sonoma have created landing pages and pop-up shops with specific merchandise for college students setting up their first apartments or dorm kitchens. Walmart and Target are featuring college-friendly items on their websites and social media platforms, appealing to students with a range of products from throw pillows to mini fridges. Companies like Shipt and The Container Store have also adapted their strategies to cater to college students.
Dormify, a direct-to-consumer retailer, is seizing the opportunity created by Bed Bath & Beyond’s closure. The company has seen a 15% increase in average order value this year compared to the same time last year. Dormify’s growth has been driven by college students who want uniquely decorated rooms that reflect their personalities. Social media, particularly TikTok, has played a significant role in amplifying this trend of showcasing dorm room decor to a wider audience.
As college students strive to create aesthetically pleasing dorm rooms, a certain level of competition has emerged among students. Kate Reppeto, a senior at the University of Mississippi, has witnessed peers overspending to create the nicest looking dorm. While Reppeto aims to be creative and budget-conscious in her decor choices, she acknowledges the pressure to conform to these unspoken competitions.
In conclusion, the increase in back-to-college spending presents a lucrative opportunity for retailers. The influence of social media, the need to make up for missed experiences, and the desire for comfortable and aesthetically pleasing living spaces have all contributed to this surge in spending. Retailers like Target, Walmart, and Kohl’s can benefit from establishing relationships with college students at a crucial age. However, challenges in other areas and forecasts of declining back-to-school spending for younger students highlight the complex landscape retailers face.
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