Big-Box Briefing: This back-to-school season is all about low prices and social trends

This year’s back-to-school promotions aren’t entirely different from last year. But some of the deals are much deeper or widespread than in the past. Walmart, for example, is saying it has the lowest prices in seven years on some items, and Target is saying its entire selection of school supplies costs less than it did last year. These deals come amid elevated concerns about affordability, especially surrounding the continued war in Iran.

“Customers are even more hypersensitive to value and ensuring that the dollar goes further. … It’s always about value, but this year even more so, given the inflation environment,” Marshall Warkentin, president of U.S. retail for Staples, told Modern Retail in an interview. He said the company has locked in 2025 pricing on all key back-to-school items, like 25-cent folders or a 65-cent pack of pencils. “We looked at the different ways that we could demonstrate to customers that we’re paying attention, recognizing that folks are feeling it in their wallet.”

Target said in June that more than 50% of its back-to-school assortment is new this year and that thousands of items are exclusive to Target across categories such as apparel, school supplies and dorm decor. “Back-to-school and back-to-college are big moments for families, and at Target, we believe shopping for them should be inspiring and joyful — an opportunity for delight as you find everything you need,” Cara Sylvester, chief merchandising officer for Target, said in a statement in June. “We’ve put together an assortment with more trend-forward style, great design and unrivaled value than ever before.”

In mid-July, Walmart announced that it would have its lowest prices since 2019 on the 14 most popular school supplies. It did not disclose the exact items but said some cost as little as 25 cents. Walmart also said it has more than 1,300 additional price rollbacks compared to last year. One week after that announcement from Walmart, Target put out another press release saying nearly all of its school supplies are at or below last year’s retail prices.

Midwestern mass retailer Meijer said in July it would drop prices by up to 50% on nearly 200 essential items for the school year, including more than 50 school supplies like glue sticks, crayons, markers and pencils for less than $1. It also said it would discount some groceries for the back-to-school season to under $2, including instant oatmeal, pancake mix, syrup, peanut butter and grape jelly.

Walmart is also featuring back-to-school lunch baskets, a collection of lunch-food items curated to hit an average cost of $2 per meal; as well as a “college grocery haul” of products like ramen, protein Pop-Tarts and water bottles totaling under $35.

On the topic of trending items and brands: Target in June announced a collaboration with women’s lifestyle brand LoveShackFancy with apparel, accessories, beauty products and school supplies largely priced under $25. The retailer positioned this partnership as meeting a need for “affordable and inspiring” products for the new school year, including products popular on social media. Walmart in its back-to-school announcement also highlighted butter-themed items (inspired by the popularity of butter-themed squish toys) and licensed merchandise from the film “KPop Demon Hunters,” among others. Walmart has also expanded its selection of “sensory and fidget tools,” a Walmart spokesperson noted.

For creator content partnerships, Target has partnered with teachers and students on social media, including Katie Lynn Ward, Keldric Holmes, Armaan Talreja and Kamryn Hall. Walmart is working with creators and influencers to develop “hundreds of pieces of content” for back-to-school, according to a Walmart spokesperson. Warkentin, the Staples U.S. leader, said that retailer is encouraging and training associates to post about the company on social media. Staples Baddie, he said, was the groundbreaker — referring to a Staples employee in upstate New York who saw success in promoting the brand on social media.

Warkentin said fashion-oriented products — like Sincerely Jules planners — and licensed products around brands like Spider-Man, Pokémon, Bluey and Super Mario are growing beyond Staples’ expectations or what they’ve seen in years past.

Staples is also doing giveaways alongside qualifying purchases in stores and online throughout August to incentivize shoppers. These include free Eccolo journals from Aug. 2-8, free Paper Mate Ink Joy pen 2-packs from Aug. 9-15 and free NeeDoh Groovy Glob squishy toys on August 23, taking advantage of a recent viral product trend.

Polly Wong, president of retail marketing firm Belardi Wong, said brands and retailers are introducing new products for back-to-school every couple of weeks rather than through one fall assortment. She also said e-commerce has changed shopping behavior to be more continuous browsing over several months rather than one big back-to-school shopping date, and that consumers are budgeting and waiting for promotional events.

Retailers “want to give you a reason to keep buying,” Wong said. She added that they “also want to avoid having a promotional cliff; they don’t want to just rely on late July and early August, so they’re intentionally creating promotional moments throughout the season to smooth out demand and protect their margins.”

In a report on the back-to-school season, adtech company Verve said clothing is the fastest-growing purchase category for both K-12 and college shoppers. The firm, which tracks how consumers interact with retailers through web searches and AI conversations, also found that Amazon makes up almost two-thirds of named-retailer back-to-school searches, four times the share of Walmart and seven times that of Target.

Still, Verve’s chief operating officer, Mishel Alon, said shopping has become mission-based rather than retailer-based for shoppers. That is, consumers have a product in mind and are looking for the best place to find that specific item. He said it is now more important than in the past for retailers to influence the consideration phase early in the shopper journey, when they are researching products on ChatGPT or TikTok.

“The real competition is happening before anyone even visits a retailer, and that has evolved a lot over the past few years, especially with the evolution of LLMs and AI,” Alon said. “By the time they reach Amazon or Target, much of the decision has already been made.”

What we’ve heard

“There are markets that we just can’t be in with a traditional-size Best Buy store, but they’re markets that absolutely make sense for Best Buy from a reach perspective. … We also know that when we put a store close to a customer, it doesn’t just change the customers’ behavior in the frequency of the visits of the store; … it changes their behavior digitally, as well.”

–Incoming Best Buy CEO Jason Bonfig tells CNBC why the retailer is opening smaller-footprint stores

Numbers to know

10,000: Number of advertisers using Vibe.co, a connected TV advertising platform acquired by Walmart in a deal that finalized this week, according to Walmart.

31%: Year-over-year increase in late-July fuel costs, according to DAT Freight and Analytics, which tracks transportation costs on a weekly basis.

$15.7 billion: Total second-quarter sales for Florida-based Publix, up 1% from the same period a year before, according to Supermarket News. Publix said sales growth was reduced by the Medicare maximum fair price program that lowered prices on 10 prescription drugs beginning in January, per the outlet.

What we’ve covered

Kroger’s AI shopping assistant has ads at launch

Kroger has made advertising part of its AI shopping assistant on day one, following the implementation of advertising features on competitors’ chatbots. Last week, Kroger launched an AI assistant within the websites and mobile apps of most of its grocery banners, excluding Harris Teeter. The assistant included product listing advertisements at launch, according to Kroger Precision Marketing, the grocer’s retail media business. For other assistants, this feature has typically been introduced later.

Amazon says groceries and essentials are growing ‘meaningfully faster’ than the rest of its Stores business

Amazon said sales of groceries and everyday essentials grew “meaningfully faster” than the rest of its Stores business, which includes Amazon.com, Amazon Fresh and Whole Foods Market. The launch of new delivery services, like Amazon Now, has been crucial to fueling the sales of essential products. Amazon Now offers delivery in 30 minutes or less on thousands of essential items — a competitor to Walmart’s fast-delivery services. Amazon’s online Stores revenue was up 15% year over year.

What we’re reading

The creator of Walmart’s vibe-coding tool Code Puppy is leaving for AI startup Pydantic

Michael Pfaffenberger, the creator of Walmart’s internal vibe-coding tool Code Puppy, is leaving the company after one year to go to AI startup Pydantic. That is according to a memo reviewed by Business Insider. The assistant helps developers write, edit and test software. It was also recently in the news after Walmart cut down usage of the tool following high demand.

Best Buy picks Nordstrom alum for CFO

Best Buy named former Nordstrom CFO Anne Bramman its next chief finance officer, beginning Aug. 19, CFO Dive reported. This comes alongside the promotion of Jason Bonfig to the CEO position; he begins in November. “Overall, we like this hiring,” Telsey Advisory Group analysts said in a financial note. “It pairs incoming CEO Bonfig with a consumer and retail expert who has financial and operational experience. And, importantly, she brings fresh perspective from outside the company.”

NRF finds shoplifting stabilizing as online fraud grows

The average number of shoplifting and merchandising theft incidents overall fell for the first time in several years, according to the National Retail Federation, per Retail Dive. The organization attributed the decline to investments in “technologies, training and measures to harden stores, enhance deterrence and response, and train employees to prevent and de-escalate incidents.”