Back-To-School and the Economy
Carlie Owens
Back-to-school commercials and sales in local stores during the summer is heartbreaking to many students and teachers. To them it means back to everyday life. But to companies that create and sell these back to school products, it is like their Black Friday. Back-to-school purchases include anything ranging from electronics to simple things such as erasers or pencils. The increase in spending during 2016 from 2015 is up to $75.8 billion from 2015’s $68 billion (included K-5 through college). For clothing, supplies, shoes, and electronics alone, the spending is at about $27.3 billion. “That spending breaks down to $9.54 billion on clothing (which 95% of surveyed families are buying), $8.27 billion on electronics such as computers or calculators (57% plan to buy), $5.12 billion on shoes (94% plan to buy), and $4.37 billion on school supplies such as notebooks, folders, pencils, backpacks, and lunchboxes (96% plan to buy)”(Kline). With competition increasing between stores such as Walmart, Target, and online stores (such as Amazon), the invisible hand was seen as prices remained to stay low even as the demand for products grew closer to the school year beginning. This allows less trade offs and opportunity costs for families who need to decide what and how much to buy. 
As seen from the image above, during the past 7 years,” ‘Families are still looking for bargains, but there are signs that they are less worried about the economy than in the past,’ NRF President and CEO Matthew Shay said”(Smith). So annually, when those dreaded back-to-school ads start popping up everywhere, children get sad, but companies that sell and produce these back-to-school products know that their sales are going to increase.
Work Cited:
Kline, Daniel B. "Back-to-School Shopping Growth Suggests Improved Economy." The Motley
Fool. N.p., 15 Aug. 2016. Web. 04 Oct. 2016.
Smith, Ana S. "Back-to-School and College Spending to Reach $75.8 Billion."National Retail
Federation. N.p., 21 July 2016. Web. 04 Oct. 2016.
People were probably still worried about the great recession that took place from 2007-2009. This would explain why the price spent for school supplies are going up. Since it has been seven years since the recession people are probably getting over what happened and are spending more money again.
ReplyDeleteIt is really surprising that back-to-school spending are up to $75.8 billion. If we look from a family perspective, the maximum spending would be $20 to $100(depending on the student/kid's grade), it does not seem much expensive but if we look the spending as a whole, it blows our mind. Every public or private school sends the list of school supplies (of each class) as a requirement rather than an option, to meet the requirements students and parents got to multiple store to buy the supplies in an efficient way. This situation gave an advantage to different companies and stores to grab attention from consumers(in this case families) through advertising and keeping sales. We could consider school supplies as an elastic good because majority of the families tend to look for less cost and more quantity products. There are stores and companies that compete on each other by giving the best sale as possible and to gain profit as possible. Overall, school supplies are important to every single student which will result in families spending more on these school supplies.
ReplyDeleteBack-to-school sales are a great example of the inelasticity of necessary goods. No matter how much kids and adults alike dread the thought of going back to school, school supplies are a necessity so consumers will always buy them no matter what. The fact that school supplies have such a high demand due to their necessity opens the door in the market for competition, which is why, as you mentioned in your blog post, competition between businesses like Walmart, Target, and Amazon is so high during back-to-school sales. I also found it very interesting how both the back-to-school and back-to-college graphs are slowly increasing over time; we have a constant demand and growing necessity for school supplies. In conclusion, I agree that no matter how the public feels about going back to school, the sales on back-to-school products will always continue to increase.
ReplyDeleteIt is very fortunate for us that back-to-school sales are competitive since the products are not just recommended, but required most of the time. If there was a monopoly on school supplies that already huge figure of spending would likely double, or even triple. This would spell out huge gains for that one company, maybe Target or Walmart, but for the rest of us, our pockets would end up feeling pretty empty. The back-to-school sale is one which makes me grateful we live in a fairly competitive economy. However, the amount of spending on back-to-school supplies is steadily increasing. I wonder if that amount is proportionate to the growing population or if the companies are slowly raising their prices in unison, like a trust. Whatever it is, it seems we are safe for the moment.
ReplyDeleteIt always amazed me how cheap the individual school supplies will cost, like 25 cent notebooks and $3 flash drives. Then I see the total my mom pays for mine and my brothers supplies, and I understand how these suppliers are still able to make their money back. It most likely costs only a fraction of a cent to make a pencil, so selling a pack of 12 for a dollar fifty comes out to a lot of profit. Hopefully, these prices will continue to stay down, because shopping for school supplies every year gets tiring and expensive.
ReplyDeleteIt is not a surprise to me that the amount of money consumers spend on back to school items increases each year. From 2015 to 2016, the sales and profit increased by $75.8 billion dollars. Notwithstanding the people whom reuse supplies each year, lots of families like to buy new each year. Personally, I do as it makes me feel refreshed and ready to start the new year. Each year, the money I spend on back to school items probably increased as my taste in things went up as well. Teens like to have name brand items, however I guess it equals out, because in elementary school you could spend hundreds of dollars on just art supplies alone. Once you are in high school you don’t need that anymore. The competition between stores, like Carlie said, has increased: that doesn’t surprise me. The output of items that they are putting on their shelves must lead to a surplus of items once fall hits because by that time, children are already in school. Overall, it’s fascinating to me how much people spend each year on school supplies, however it doesn’t surprise me that it is a lot, especially due to sales that entice people to buy things they probably don’t even need.
ReplyDeleteBeing a student and seeing the crazy price for the total of my school supplies every year, I can relate to this topic a lot. While products may seem low in price, it all adds up and in the end, companies know you'll still buy it. I did like that they chose not to up the prices of things though to help the families avoid trade offs and opportunity costs. Another tactic that companies could try is to cut prices and perhaps families will buy more since the prices are lower. In the end, companies know that people will buy their back-to-school items, so they don't feel much need to drop prices.
ReplyDeleteWithout a doubt, retail companies get an abundance of customers and, subsequently, they receive copious amounts of money. When the companies know that people need these products, there’s no reason for them not to pounce on the opportunity and give the prices a wee nudge. This is kind of like stores stocking their shelves with the latest christmas gear around the holidays, or stocking swimwear at a beach location in the summer. And it’s no wonder that the total amount spend isn’t really fluctuating, the trend continues on a steady climb upwards. It closely mirrors the path of the U.S. inflation rate over the same time period, and as there becomes more demand with an increased population, the prices will indubitably skyrocket.
ReplyDeleteI've always been thankful that the prices for back to school items have are at a cheaper cost due to the amount of materials that schools require for the year. Yet the profit the companies make still continues to amaze me. With the ever growing and changing world, it's obvious that people are compelled to spend more when they see a bargain on an item, no matter what it. This causes a demand curve to shift to the right, for the price is lower at specific quantities while maintaining a higher demand than usual. This demand gradually turns the table and profits the companies to a great extent. No matter what though, it's still incredibly beneficial that the prices remain low, for spending hundreds of dollars every year just for the essential school supplies is difficult when there are so many other things out there that need more financial attention.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteI think it is interesting to now understand why back to school prices are so low during the back to school season, which is because the economic law of Quantity Demanded and Supply effecting price. Since there is so many more consumers during this season and the supplies are available, the prices are able to drop significantly. Being a student at a high school, I can emotionally relate to this topic and understand the importance of these low prices, as I often have to purchase new supplies each year. Companies attempt to economically analyze their prices and demand for the goods to come up with a price that will potentially bring in the most revenue (and hopefully profit). Economics of back to school is an easy way to understand the basics of economics on a real world level.
ReplyDeleteI agree with Evan. Putting back to school prices into the perspective of micro-economics helps me understand why prices drop significantly year after year. And it is because the quantity demanded is the equal to the number of consumers needing to purchase back to school supplies which is at a constant increase. Lucky for us, and all other people still in school, prices are dropping as a result.
ReplyDeleteGoing back to school, millions of Americans need new supplies. This creates a huge demand school products, and due to school supplies being necessary, the goods are inelastic. No matter what, students will buy the goods. This will lead to competitions better huge suppliers for a large market share of the annual back to school sales. The revenue from all these sales, are staggering! $75.8 billions dollars is a huge sum of cash that all companies want a piece of.
ReplyDeleteI am very thankful that we live in a very competitive economy for many items, including school supplies. Many times you get the class lists for supplies and you're thinking to yourself like "Am I going to need to go out and buy all of these things?" So you look around your house, find some reusable things, but still need to buy others. If the school supply realm was a monopoly, boy would my wallet be looking pretty dried out. I am very thankful for the back to school sale which is driven by our competitive economy because without it, I would be spending loads of money more than I do today on school supplies at the start of the year.
ReplyDeleteAlong with everybody else, I am glad that our free-martket economy allows for competition which drives prices down for school supplies. An area of school supplies where there is no competition is graphing calculators. Because everything is so standardized and regulated with regards to calculators, we have to pay over $100 for old, clunky pieces of technology at the same time when competition in the cellphone market has produced smaller yet much more powerful devices for a similar price.
ReplyDeleteI love how you said that a business’ back-to-school sale is like their Black Friday. It’s true because you see a ton of people rushing into stores like Target and Walmart to get supplies at a very cheap price like people do on Black Friday. Not only is back-to-school beneficial to businesses though, but this time of year is also beneficial to parents because they can buy a ton of school supplies for extremely cheap prices. What’s awesome about our free market economy is that there are monopolistically competitive markets where these firms like Walmart and Target compete for the same supplies, but at various prices and various brands. They essentially have price wars to try and win business. Although it hurts the firm’s profits, it provides a huge benefit to consumers so people who can’t afford a ton of school supplies can go out and buy some at extremely low prices. So when we see back-to-school ads, we can get excited for extremely low prices! In the wise words of the Staples guy, “WOW!! That’s a low price!!”
ReplyDeletehttps://www.youtube.com/watch?v=zRDd-QqPCkA