With the price of essential classroom, dorm room, and clothing items highly inflated, back-to-school (BTS) shopping may look a little different for students this year.
The NRF recently published its annual back-to-school and back-to-college surveys. According to this data, 38% of consumers said they are cutting back in other spending areas to cover the cost of items for the upcoming school year.
Back-to-school shopping can begin as early as the second week of July and last through end of September. Including collegiate level students, the NRF expects BTS spending will total to nearly $111 billion in 2022.
As funds are being rearranged or set aside specifically for classroom and college necessities, companies selling popular BTS items such as office and school supplies, dorm room and home furnishings, and clothing must put their best foot forward to meet increased demand.
As always, this starts with mastering transportation and getting on the shelf.
Back-to-School Sales & Gross Profit Opportunity
As the retail industry has evolved throughout the last decade, most retailers have begun to institute strict compliance programs to encourage suppliers to deliver to distribution centers on time.
Continually failing to meet these standards can add up to significant costs for any brand. But even more costly is the fact that late deliveries can keep a vendor’s product off the shelves.
The table below demonstrates the gross profit opportunity available to brands who can meet retailer’s expected delivery performance standards.
How On-Time Delivery Impacts Gross Profit*
|Annual Revenue||On-Time Delivery Performance||Gross Profit|
*This example assumes the $1M company operates at a 45% gross margin.
In this example, the difference between hitting retail suppliers’ average delivery performance (77% on time) and hitting the performance retail partners expect (95% on time or better) is $81,000 in pure margin.
In addition to tanking their gross profit, brands that continually fail to meet standards are at risk of damaging their retail relationships and hurting their chances of growth.
Back-to-School Shelf Opportunity
|2022 Expected Revenue||Weekly Revenue||Average Non-Edible Out-of-Stock Rate (as of July 2022)||Amount Lost to Out-of-Stocks in One Week|
|$111 Billion||$2.13 Billion||7%||$149.4 Million|
Based on IRI data, the chart above tracks in-stock levels at leading U.S. retail stores versus total domestic annual sales data for 2022.
Using Zipline expert calculations, the revenue opportunity cost left on the shelf in one week would be $149.4 Million. This is an extremely conservative estimation, as the calculations are based on the assumption that demand for BTS items would remain the same throughout all of 2022. During the BTS season (mid-July through the end of September), this figure will likely be MUCH higher due to increased demand.
That $149 Million represents the opportunity to win over new customers by keeping your committed shelf space stocked and win expanded shelf space when retailers need to fill gaps left by non-performers.
This is a top line revenue opportunity gained simply by meeting your retail and distribution partners’ fulfilment expectations. Keep in mind that 66% of CPG buyers stated they have stopped working with suppliers over delivery issues.
That shelf space can be yours.
Value of a Specialized Logistics Partner
The most forward-thinking brands are looking at their retail-optimized supply chains differently.
No longer is logistics an expense. Vendors that view logistics as an investment, on which they can eventually see a return, stand to fare better. They can expect to improve organizational performance and subsequently their retail relationships, which can be vital in unlocking untapped growth.
The best logistics providers typically take a consultative approach to service. This looks like locating improvement areas and making suggestions that can increase performance, lowering costs in the process. With a deep understanding of complex supply chain functions and specialized industry knowledge, the best providers can help enterprises better understand how their operation needs to perform to meet customer demand and cut costs in the process.
A logistics provider equipped with the latest shipping technology can make distribution network suggestions that can reduce overall spend and improve on-time percentages, like consolidation programs or warehouse reconfigurations.
Win the Back-to-School Season With Zipline
Retail logistics solutions consultants at Zipline Logistics can help brands master their most important customer relationships.
We believe in creating seamless partnerships with our customers. That means making your goals our goals and working to meet them. We help even multibillion-dollar companies lock in the right capacity partners to achieve the best possible freight outcomes and uncover new savings potential.
Interested in learning more about what we can do for you?
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