Back-to-school shopping season puts supply chains to the test

With summer ending and students either heading back to school or already back in class, retailers may be rethinking their supply chain strategies for back-to-school and other peak shopping seasons.

Hundreds of millions of dollars are spent on back-to-school purchases each year. The National Retail Federation (NRF) estimates that $94 billion will be spent on back-to-college purchases this year, about $20 billion more than last year. Back-to-school spending will top $41 billion, up from $36.9 billion in 2022.

Similar to the Black Friday holiday shopping season, the back-to-school season presents retailers with unique challenges as they must not only meet increased demand for various products, but also take into account the limited demand period.

Now’s a good time for retailers to evaluate how well they tackled those challenges this year and whether they need to make changes for 2024.

Changes in school supply spending

Inflation is one of the main reasons many consumers focused 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 school year.

According to a 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.

The greater focus on in-person learning this year could strain supply chains, the firm said.

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.

Bus driver shortage strains household budgets

Even before the pandemic, the shortage of school bus drivers was a problem across the US. But for a variety of reasons, including low pay or part-time contracts, and the number of professionals who have retired, the problem has worsened this year and won’t be solved anytime soon.

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.

Due to the driver shortage, many school districts have been forced to cancel some bus routes, leaving families to rely on private transportation. These costs are in addition to inflation and general price increases that already burden many households. As a result, many families needed back-to-school discounts and special offers.

Supply chain strategies for back-to-school season

All these variables and changes in consumer behavior pose supply chain challenges for retailers and manufacturers. Let’s look at four key challenges during the back-to-school season and how to tackle them.

1. Demand volatility

The back-to-school season is characterized by unpredictable demand. 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 for 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.

2. 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 essential. In addition, implementing an efficient inventory management system and inventory optimization strategies can help keep stocks at an optimal level.

3. Logistics and transport

Timely delivery of products is critical. As with school bus drivers, there’s also a driver shortage in the logistics industry. With logistics and transportation capacities under pressure, bottlenecks and delays in freight and logistics services could lead to dissatisfied customers. Early planning of transport capacity and routes, and cooperation with reliable partners is essential to shorten or optimize delivery times and thus avoid bottlenecks.

4. Increased demand for labor

To meet the surge in demand, some companies hire 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.