In this episode of Retaili$tic, Madhav Pitaliya, Analyst at Coresight Research, discusses the critical back-to-school (BTS) shopping season, its significance for retailers and the economic factors influencing consumer behavior this year. The conversation delves into spending trends, the impact of new tariffs on retail pricing and supply chains, and the strategies that retailers are employing to navigate these challenges. With insights on category-specific tactics and a cautious outlook for the future, this episode provides valuable information for those in the retail industry.
Takeaways
Chapters
00:00 This Week in Research: New Reports and Data
02:03 The Importance of BTS for Retailers
03:35 Consumer Spending Trends and Categories
07:12 Economic Indicators and Consumer Behavior
11:51 Impact of New Tariff Regime on Retail
20:53 Retail Strategies Amid Tariff Challenges
24:08 Category-Specific Retail Strategies
34:11 Final Thoughts and Future Outlook
Check out the Coresight Research US Back to School series of reports to dive into US consumers' shopping expectations for the BTS season in more detail.
Welcome to Retaili$tic, the official podcast of CoreSight Research for July 1st, 2025. This week, we kick off our coverage of the back-to-school shopping season with senior analyst Madhav Pitalaya discussing the macroeconomic forces impacting this all-important retail tradition. But before we get to that conversation, let's review some of the research in the queue for this week.
Leveraging proprietary U.S. consumer survey findings, we will analyze how consumers celebrated Easter, Mother's Day, Memorial Day, and Father's Day in the second quarter of 2025. We will also assess holiday shopping expectations for calendar events in the third quarter, Fourth of July, Labor Day, and Amazon's Prime Day, as well as the end-of-year holiday season.
We will discuss major market trends and themes disrupting the U.S. apparel and footwear market, spanning AI-powered agility, the rise of resale and more. We'll offer insights on key trends that unfolded during China's 618 shopping festival. We'll preview Amazon Prime Day in India, which is set for July 12th through the 14th. And you can get our preview of the U.S. Prime Day as well.
Our upcoming monthly installment of our U.S. Store Tracker Extra Series will detail U.S. retailers' store closures and opening announcements from June 2025, as well as the square footage impacts of these developments. Our weekly US store openings and closures tracker and weekly UK store openings and closures tracker, both publishing every Friday, report on the latest store closures, store openings and bankruptcies. You can access all of these reports on Coresight.com.
Now let's talk with Madhav Pitalaya, senior analyst at CoreSight Research and an expert on retail trends. Thanks for being here, Madhav.
Thank you for having me, Philip. I’m excited to discuss these important issues.
Philip: I have to admit, I know the holiday season is huge for retail, but I’m a bit naive about back-to-school shopping. How important is this season for retailers, really?
Madhav: Back-to-school (often lumped together with back-to-college as “back-to-class”) is actually the
second-largest retail season after the winter holidays. It’s extremely important. Families stock up on
clothing, school supplies, electronics, dorm furnishings – a whole range of products – as a new school year approaches. For retailers, it’s a critical revenue driver and a barometer of consumer spending health. The National Retail Federation (NRF) notes that the back-to-school season is “an important time for retailers and consumers”. In dollar terms, it’s huge: for K-12 students alone, total back-to-school spending in the U.S. is expected to reach about $38.8 billion this year, which is the second-highest level on record (just shy of last year’s $41.5 billion record). And if you include college students, back-to-college spending is even larger – forecast around $86.6 billion. So combined, we’re talking well over $100 billion in consumer spending focused on education-related needs in 2025. That’s why retailers place so much emphasis on this season.
Philip: Those are impressive numbers. Why is back-to-school so large – what categories are driving that
spend?
Madhav: The spending covers a mix of essential categories for students. For families with kids in
elementary through high school, the biggest buckets are typically clothing and accessories, electronics,
school supplies (like notebooks, pens, backpacks), and shoes. For example, this year K-12 families plan to spend on average about $875 in total, with roughly $300 of that on electronics, $250 on apparel, $170 on shoes, and $140 on school supplies. Electronics have been a major driver in recent years – last year a
record 69% of back-to-school shoppers planned to buy a laptop, tablet, or similar device for their student. That pushed spending to new highs, since those devices are pricey investments (often used for several years). This year, interest in electronics is slightly lower since many families already bought new devices recently. Instead, we may see a bit more focus on replacing apparel and basic supplies, which are recurring needs annually. But overall, all these categories matter, and retailers strategize differently for each. We can delve into that later when we talk about how retailers are planning by category.
Philip: Certainly. Before that, one more thing on timing – I’ve noticed some stores start advertising “back-to-school” deals surprisingly early, even in the summer. Is the shopping really starting earlier nowadays?
Madhav: Yes, the back-to-school shopping season has crept earlier in recent years. Many consumers
don’t wait until late August; they start in June or July. In fact, NRF’s surveys found that by early July this year, over half (55%) of back-to-class shoppers had already begun purchasing school items. One reason is that retailers have rolled out summer sales events – for instance, Amazon’s Prime Day in July, and
competing promotions like Target’s Circle Week or Walmart’s Deal Days. Shoppers are taking advantage:
around 85% of back-to-school shoppers say they will use July deal events (like Prime Day) to buy
school necessities. Consumers have learned that some of the best discounts might come well before
the first school bell rings. Also, economic factors (like inflation or, this year, tariffs) encourage families to
spread out purchases and hunt for bargains, rather than doing one last-minute spree. One survey even
noted that about 34% of consumers are focusing more on discounts, and 28% plan to stick strictly to
essential items for back-to-school, given the current climate. So retailers that offer early-bird deals and
competitive prices in mid-summer are capturing those budget-conscious shoppers. The season now
stretches across the whole summer. In short, back-to-school is both highly significant and starting earlier – it’s a vital period where retailers can build momentum (and clear inventory) ahead of the holiday rush.
Historically, analysts even watch back-to-school as a predictor for the holiday season – a strong back-to-school often bodes well for year-end retail performance.
Philip: That makes a lot of sense. Let’s talk about the bigger picture now. We’re halfway through 2025 –
what are the economic indicators telling us so far about consumer spending and the retail environment?
Are consumers in good shape this year?
Madhav: Overall, the U.S. consumer has been resilient in 2025, though there are some mixed signals and
growing uncertainties. Let me break down a few key indicators:
Retail Sales: Consumer spending in retail has continued to grow this year. Through the first five
months of 2025, retail sales (excluding automobiles, gasoline, and restaurants) were up about 4.95%
year-over-year. That’s solid growth, albeit slower than the very high growth rates we saw when
inflation was peaking last year. Importantly, this ~5% growth is nominal, and inflation has been
running around 2-3%, so there is modest real growth in spending. For example, in May 2025, retail
sales were 4.4% higher than May 2024, while consumer prices were about 2.4% higher than a year
ago. So consumers are buying more, not just paying more. In April we actually saw an even
stronger retail jump (over 6% year-on-year) as some demand was “pulled forward” .
• Consumer Behavior and Confidence: Shoppers are becoming cautious but not retrenching
completely. The NRF’s CEO noted that some of the early-year spending surge was due to consumers
pulling forward purchases ahead of expected tariff increases. Now that that rush is over,
spending is normalizing. Consumers haven’t stopped spending by any means – consumer
fundamentals (like employment and wages) remain fairly healthy – but they are adjusting
how they spend. We see evidence that many consumers are “trading down”: choosing cheaper
options or value brands rather than cutting out purchases entirely. For instance, instead of
foregoing new clothes for their kids, a family might opt for more items on sale or from discount
retailers. This aligns with reports that uncertainty is rising, but households still have jobs and some
savings to support essential spending. In fact, one bright spot helping consumers has been lower fuel prices, which free up a bit of income for other purchases.
• Pull-Forward and Uncertainty: As I mentioned, we saw unusual patterns earlier this year due to the
new tariffs. In April, categories like electronics and apparel had a spike because both consumers and
businesses tried to buy certain goods before higher tariffs hit. That front-loaded some
sales. By May, that effect dissipated – for example, electronics sales dipped after April’s spike – but
year-over-year they were still up a few percent. So the underlying demand is there, just the
timing shifted. The phrase we’re hearing is “economic uncertainty is increasing.” Consumers know
prices might rise later in the year (due to tariffs and other factors), so they are a bit more cautious
now. But importantly, consumer sentiment hasn’t collapsed – people are still spending on priority
items. Major retailers like Walmart have noted that while shoppers are cautious on discretionary
buys, they “continue to celebrate holidays and will likely spend on back-to-school needs”. That
suggests basic seasonal buying (like back-to-school) is expected to hold up, even if people cut back
on more optional indulgences.
In summary, 2025’s indicators show moderate retail growth, easing inflation, and a consumer who is
value-conscious but still shopping. Employment is relatively strong and income growth is steady, which
provides support. However, there is definitely an undercurrent of caution due to things like interest rates
(which remain high), and especially the new tariff regime which could lead to price increases down the line. We’re in a bit of a holding pattern: spending is good now, but everyone is watching whether higher costs or other economic headwinds will hit later in the year.
Philip: It sounds like a “cautious optimism” situation – growth is there but everyone’s eyes are on the risks. You’ve brought up tariffs a few times. As a naive observer, can you walk me through what’s happening with the new tariff regime in the U.S. and why it’s such a big deal for retail?
The New U.S. Tariff Regime: Price and Supply Chain Implications
Madhav: Absolutely. This is a crucial development in 2025. In early April, the U.S. government – under
President Trump (who returned to office in 2025) – announced a sweeping set of new tariffs. Essentially
it’s a policy of “reciprocal tariffs” targeting countries that run large trade surpluses with the U.S.. The
announcement on April 2, 2025, really sent shockwaves through supply chains and the retail world.
To summarize the specific actions: the U.S. imposed a blanket 10% tariff on most imports from almost
all countries. That alone is significant – it’s like a universal import tax that raises the cost of a huge
range of consumer goods by 10%. But on top of that, certain countries were hit much harder. China, in
particular, faced an enormous tariff increase. Initially, an additional 84% tariff was announced on Chinese goods, which was then hiked to 125% additional in an executive order on April 9. When combined with prior tariffs, imports from China (and Hong Kong and Macau) are now subject to a staggering 145% tariff in total. This is an extraordinarily high tariff rate – it effectively makes many Chinese-made products more than double in cost for U.S. importers. Other countries saw specific rates too: for example, the EU was slated for 20% tariffs, the UK 10%, and several major manufacturing countries for apparel had elevated rates (the UK analysis noted Vietnam at 46%, Bangladesh 37%, India 27%, Turkey 10%, among others). These numbers reflect the “reciprocal” approach (roughly proportional to trade imbalances) and were the state of play at the time of writing in April.
Now, there have been some adjustments: less than 24 hours after the steepest tariffs hit, the administration announced a 90-day pause (a temporary rollback) for the hardest-hit countries.
That pause, effective April 10, reset many countries’ tariffs back to 10% for the time being. China’s,
however, remained very high (125% extra) despite the pause. Also, certain critical product categories got
exclusions – for instance, on April 11 the U.S. exempted some high-tech items like semiconductors and cell phones from these new tariffs. But broadly speaking, as we head into the back-to-school season, most imported goods are subject to at least a 10% tariff, and goods from China face punitive tariffs well
into triple digits. This is what we mean by a “new tariff regime.”
Philip: That’s a big change in the cost structure. Help me connect the dots – why do these tariffs matter
so much for retail and supply chains?
Madhav: They matter because modern retail supply chains are global. The U.S. retail industry relies heavily on imports for inventory – everything from the clothes on store racks to the components in consumer electronics are often produced abroad. When you suddenly slap tariffs of 10%, 50%, or over 100% on those imports, a few things happen:
1. Costs and Prices Rise: Tariffs are essentially a tax on imports. Someone has to pay that tax. In the
short term, many retailers and brands are grappling with whether to absorb those costs or pass
them on to consumers. If a backpack was sourced from China at $10, a 125% tariff means an
extra $12.50 in tax, making it $22.50 before the retailer’s own margin – a huge jump. Retailers might
try to absorb a portion to stay price-competitive, but ultimately a lot of these costs will translate
into higher consumer prices. We’re likely to see inflationary pressure building. In fact, UK analysts
noted that global inflationary pressures are an inevitable result of these tariffs. Even
supermarkets, which import relatively little directly, will feel it indirectly as the cost of many goods in
the supply chain increases. For shoppers, this could mean noticeable price hikes on a range of
products. Surveys already show consumers are noticing price increases – about 17% of U.S. back-to-
school shoppers said they’ve seen significant price upticks on items like pens, notebooks, and
backpacks, which are often imported. And the NRF’s economists have cautioned that meaningful
price increases are likely in the coming months as the tariffs filter through. So, higher prices are
a key implication.
2. Supply Chain Disruptions: These tariff changes didn’t happen in a vacuum – they were announced
and implemented rapidly, which caused a lot of turbulence in supply chains. There was confusion
about rules (customs had to issue new guidance, e.g. eliminating duty-free exemptions on small
shipments from China) and there were rushes to ship goods before tariffs took effect. One
report noted a mid-May “export rush” from China after the temporary tariff rollback was announced
– basically Chinese exporters and U.S. importers racing to get products out during the 90-day pause
window. This kind of rush can create uneven inventory levels: some retailers suddenly had a
glut of certain items (that arrived early), while others might face lulls later if they didn’t ship in time.
A UK supply chain analysis described how uncertainty itself caused disruptions, affecting the
availability of certain products in stores. So, retailers have had to adjust on the fly – expediting
some orders, finding alternative suppliers, and generally preparing for possible delays at ports or
customs. The logistics side becomes more complex; carriers have to handle more formal entries now
that even low-value shipments from China are taxed. Companies may need to build in more
inventory buffer. For instance, those practicing just-in-time inventory might increase safety stock in
case their shipments get stuck in customs. All of this is friction that makes the retail supply chain
less efficient, at least in the short term.
3. Sourcing and Strategy Shifts: Long term, if these tariffs persist, we’ll likely see retailers and brands
making more strategic changes to their sourcing. A 10% tariff on all imports creates an incentive
to find non-imported alternatives or negotiate harder with suppliers. And a 145% tariff on Chinese-
made goods is almost unsustainable – it’s prompting many brands to revisit their manufacturing
and sourcing plans immediately. Companies that have a big reliance on China (especially in
clothing and footwear, which is the most heavily impacted sector) are now in a bind. Many
fashion retailers were already diversifying away from China to places like Vietnam or Bangladesh,
but as we discussed, those countries ended up with significant tariffs too (e.g. Vietnam 46%,
Bangladesh 37% in the initial scheme). So retailers are accelerating moves to “diversify and
regionalize” their supply chains – for instance, exploring sourcing in countries not hit by extra
tariffs, or increasing production domestically or in Mexico (which, thanks to trade agreements, is
relatively spared). These shifts take time, though; you can’t flip your supply chain overnight. In the
meantime, some brands might try to renegotiate with U.S. retail partners, adjust purchase orders, or
even delay product launches. We’ve heard warnings that if tariffs stay at these levels, brands’ costs
will rise so much that prices will have to increase and margins will be decimated, putting jobs
and investments at risk. It’s a serious challenge that is forcing retailers to think strategically.
Philip: It sounds like a lose-lose: higher prices for consumers and headaches for supply chains. Are there
any mitigating factors or bright spots? For example, you mentioned a 90-day pause – has that given
retailers breathing room? And how are things looking as the back-to-school season approaches under this regime?
Madhav: There have been a few mitigating developments, yes. The 90-day pause (from early April to early July) on many tariffs gave retailers a bit of time to adapt. During that window, a lot of businesses pulled forward inventory – essentially stocking up on goods while the tariff rates were temporarily lower.
That should help availability for back-to-school. In fact, PwC’s consumer survey noted that while there might be some uneven inventory due to that rush, many retailers are expected to recover inventory levels
before the peak back-to-school shopping period hits. Another factor is that some governments (like
the UK and EU) are in negotiations to possibly reduce those tariffs. There’s a chance that by the time the
full tariffs come back, new trade deals or exemptions might alleviate some pressure – though nothing is
guaranteed. Additionally, as I mentioned, the U.S. carved out exclusions for certain electronics (like
smartphones, semiconductors), recognizing that hitting those universally would harm consumers. So
not every single item will see a price jump – for example, flagship smartphones might avoid a tariff-induced price hike due to those exemptions.
For back-to-school specifically, retailers have been planning proactively. They know this is a critical season. Many large retailers have said they were locking in supply and prices early. Some have diversified their assortments to include more domestic or tariff-free sourced options. And most are doubling down on promotions to ensure they move merchandise even if consumers are skittish about price tags. The spending surveys (like from NRF and PwC) suggest that despite these challenges, parents are determined to prioritize school needs – nearly 3 in 4 back-to-school shoppers plan to spend the same or more as last year, and over a third actually expect to spend more than they did in 2024. That resilience is encouraging for retailers. It implies that if they manage to get the products on shelves at a decent price, consumers will find a way to purchase what their kids need for school, even if it means cutting back elsewhere or hunting harder for deals. Retailer that manage their inventory well and clearly communicate value are likely to outperform in this environment. In short, tariffs are a major headwind – raising costs and logistical complexity – but the industry is adjusting quickly, and consumer demand for the season appears to be holding up so far.
Retailer Strategies for Key Categories in 2025
Philip: It’s impressive how adaptable the retail industry can be. Let’s talk more concretely about those
strategies. How are retailers and brands responding to these economic and tariff challenges in specific
product categories? For example, what are they doing differently in apparel versus electronics or school
supplies to navigate back-to-school 2025?
Madhav: This is a great question because strategy is indeed varying by category. I’ll break it down by some key segments:
•
Apparel & Footwear: These are among the hardest-hit categories by the new tariffs because so
much apparel is imported. As we discussed, clothing from China now carries an exorbitant tariff
(~145%), and even imports from other common sourcing countries have additional duties.
Retailers and brands in this space are pursuing a few tactics. Firstly, many are accelerating supply
chain diversification – for instance, shifting orders to countries with the lowest tariff burdens or
exploring near-shoring (producing in regions like Latin America) to mitigate risk. A number of brands
are re-evaluating their sourcing strategies and profit forecasts given the tariff impact. In the
short term, some apparel retailers are negotiating with suppliers to share the extra costs or invoking
contract clauses to adjust pricing. From a merchandising perspective, retailers might focus on
essential back-to-school clothing items (uniforms, basic jeans, shoes) and ensure those remain
priced competitively, even if it means tighter margins on those. They can then offset by having more
premium or fashionable items at higher price points for those willing to spend. Promotions will play
a role too – expect clothing retailers to offer strong back-to-school discounts to keep volume up,
while quietly adjusting prices upward on new collections if needed. Essentially, the strategy is to
keep customers coming in for affordable basics (despite cost pressures) and manage profitability
through mix and sourcing. Retailers with private label apparel lines may have an edge, as they can
more directly control production locations and costs. We’re also seeing some retailers time their
inventory – ensuring they imported a lot of fall merchandise before tariffs kicked in, to carry them
through the season.
•
Consumer Electronics: Electronics for students (like laptops, tablets, calculators) were a huge part
of back-to-school spending last year, and while demand might temper this year, it’s still significant.
The tariff situation here is a bit nuanced: many electronics are made in China, so they would face
high tariffs, but as noted, the U.S. exempted certain electronics (like smartphones and some
semiconductors) from the new reciprocal tariffs, and there was already an existing structure
of tariffs from prior trade policies. Retailers in electronics are focusing on value-added offers to
entice consumers who might be more budget-conscious now. For example, we might see more
bundle deals (a laptop that comes with a free printer or software package), student discounts, or extended financing plans (“buy now, pay later” options for expensive tech). Since many families
bought new devices in the past couple of years, retailers are also adjusting their marketing –
highlighting upgrades or accessories rather than pushing everyone to buy a brand-new laptop.
They’re aware of the slight drop in electronics interest (as last year’s purchases can last for years). On the supply side, electronics retailers and brands likely rushed in shipments of popular
items before tariffs and are working with distributors to avoid stockouts on key gadgets. Some are
even advocating for policy relief – for instance, making sure the government’s exclusions cover as
many school-related electronics as possible. Overall, strategy here is about maintaining sales
momentum through deals and financing, while carefully managing inventory and pricing so that any
necessary price increases (due to tariffs on components or accessories) don’t shock the consumer. A
practical example: if the cost of importing a certain tablet went up, a retailer might keep the sticker
price the same but offer a smaller gift card incentive than last year, effectively passing some cost to
the consumer subtly.
School Supplies & Stationery: This category – things like notebooks, pencils, folders, art supplies –
is highly price-sensitive and typically lower-margin. Even in normal times, retailers compete to be the
cheapest on basic school supplies because it drives foot traffic (think of those 25-cent notebooks or
$1 packs of crayons in weekly ads). Now with inflation and tariffs, the cost of these goods has risen
(paper costs, many supplies are imported from China or elsewhere). Indeed, the cost of a basket of
school supplies has been rising faster than overall inflation in recent years (one figure showed ~24%
increase over two years for supplies). Retailers know that nearly all consumers (over 90%) are
prioritizing low prices on school supplies when they shop. So the strategy is to double down
on value messaging here. Many big retailers are absorbing some of the increased costs on supplies
to keep those headline prices low – essentially using supplies as loss leaders. They’ll advertise very
aggressive deals on notebooks, paper, pens to get families into the store or onto their website.
Additionally, retailers are pushing their private-label (store brand) school supplies, which are
usually cheaper alternatives to name brands. By controlling the production (often outsourced to
lower-cost regions), they can price these competitively and still protect margins a bit. We might also
see bulk or bundle promotions – e.g. “buy 1 get 1 free” on packs of notebooks – to give the
perception of savings. Another adaptation is ensuring stock availability: nothing frustrates a parent
more than an empty shelf for a required supply item, so retailers are trying to keep the supply aisles
well-stocked despite any import delays. The emphasis in this category is promotions, price freezes,
and clear communication of deals to convey that the retailer is helping parents get everything on
the list without breaking the bank. It’s all about volume and loyalty: win the customer on cheap
supplies, and hope they’ll also pick up a backpack or clothes during the same trip.
Other Categories: Back-to-school season also boosts some other retail segments. Footwear is one
– it often goes hand-in-hand with apparel (new sneakers for school). Footwear faces similar tariff
issues as apparel, since a lot is imported from Asia. Shoe retailers are likely employing similar
sourcing shifts and selective pricing strategies. Then there’s the off-to-college segment: furniture,
bedding, small appliances for dorms. Those items (mini-fridges, microwaves, decor) can be affected
by tariffs too (many are imported). Retailers in that space, like home goods stores, are carefully
watching tariffs on furniture and household goods (which have fluctuated) and may have increased
domestic sourcing or early imports. Some are offering combos (e.g. dorm starter kits) to provide
value. Also, interestingly, we anticipate that off-price and thrift retailers could see a boost – when
new goods prices rise, budget-conscious families turn to second-hand or discount outlets. So some
retailers are highlighting their discount credentials.
Across all categories, a unifying strategy is clear communication and marketing. Retailers know
shoppers are anxious about prices this year, so they are emphasizing messages like “Our Back-to-School Best Price Guarantee” or “Score all your essentials for under $X”. They are using data-driven marketing – for example, targeting consumers with personalized coupons via email/text, because as studies show,
shoppers are actively looking for deals and even leveraging tactics like leaving items in carts to get coupon offers. Retail brands are responding by making sure they engage customers on those channels
(email, SMS) with timely, tailored promotions. The goal is to convince the customer that “we have affordable options for you, despite the headlines about inflation or tariffs.”
Finally, retailers are monitoring the situation in real-time. If, say, a tariff negotiation breaks in late July
and some duties are reduced, leading to lower costs on certain items, successful retailers will quickly adjust their pricing or promotions to pass some savings to consumers and capture goodwill (and market share).
It’s a very dynamic playbook this year. But the bottom line is, retailers are working hard to maintain value
for shoppers and secure the sales in each category, using a mix of sourcing ingenuity, pricing strategy,
and promotional savvy to navigate the economic challenges.
Philip: That’s a great breakdown. It really highlights how much analytical thinking and planning is behind
what we as consumers experience as just sales or stock on shelves. It seems retailers are pulling every lever —from supply chain shifts to marketing—to make this season successful.
Before we wrap up, Madhav, any final thoughts or advice for those in the retail industry listening? What
should they keep an eye on through the rest of the back-to-school season and heading into the holidays?
Madhav: I’d say the key is to stay agile and data-driven. Keep a close watch on a few things:
• Tariff Developments: The situation is still evolving. Any change in tariff policy or extensions of the
pause will have immediate effects on costs and possibly consumer prices. Retailers should be ready
to react – whether that’s adjusting orders, re-pricing items, or updating marketing if, for example,
tariffs get eased on certain goods. Conversely, if trade tensions escalate further (say tariff
exemptions expire or retaliation grows), having contingency plans (alternative suppliers, inventory
reserves) will be crucial.
• Consumer Sentiment and Behavior: This season will yield a lot of data on how consumers respond
to higher prices and economic uncertainty. Are they buying fewer items, trading down, or delaying
purchases? For instance, if we see that shoppers are only buying the bare minimum for back-to-
school, that could signal a tougher holiday season ahead. Retailers should analyze their sales in real
time – which categories are underperforming or over performing – and adjust. The good news is, as
we discussed, early signs show consumers are still spending for school. But they might be
prioritizing differently, so retailers might want to reallocate effort to the categories that are moving.
• Inventory and Supply Chain Resilience: Given the disruptions we talked about, it’s important to
monitor inventory levels closely. Sell-through rates may differ from previous years’ patterns due to
the early shopping trend and the tariff-induced timing shifts. The best retailers will use demand
forecasting tools and be ready to reorder or transfer inventory between stores if needed to meet
regional spikes in demand. Also, it’s worth continuing to build flexibility in logistics – for example,
having secondary suppliers or the ability to expedite shipments if a particular item suddenly faces a
shortage.
• Customer Communication: Lastly, I’d emphasize communication and transparency. Retailers that
can effectively communicate value – and even explain price changes if necessary – will retain
customer trust. Some retailers have been candid in press releases or signage about “higher costs”
and emphasizing the deals they are offering to help families out. That can resonate with consumers
who appreciate the honesty. This season is an opportunity to strengthen loyalty by showing that,
despite challenges, you’re on the customer’s side in helping them get what they need for their kids’
education.
Overall, I remain cautiously optimistic. Back-to-school 2025 has some headwinds, but it’s also
demonstrating how resourceful the retail industry is. If retailers execute well, they can still achieve growth and satisfy customers. And as always, a successful back-to-school season often bodes well for the all-important holiday quarter. So everyone will be watching the outcomes closely. It’s a pivotal moment to learn and set the tone for the remainder of the year.
Philip: Fantastic insights, Madhav. Thank you for unpacking a complex situation in such a clear, analytical way. I’m sure our listeners working in retail have plenty of takeaways – from category-specific tactics to big-picture trends.
Madhav: It was my pleasure. Thank you for having me, and I wish all the retailers out there a successful
season ahead.
Thanks, Madhav, and thank you for joining us. We hope you will come back next week when Deborah returns with a very special guest to discuss sustainability and the circular economy. If the topics we cover on Retailistic are important to you, come check out our catalog of over 7,000 reports, videos, and data resources on coresight.com. Have a wonderful day, and we'll see you next week.