Richmond’s back-to-school sales tax holiday weekend has come and gone, and Labor Day (which the start of school must come after, according to Virginia law) is still to come. So let’s take a look at what, if anything, the barrage of tax holiday advertising for back-to-school merchandise accomplished.
There sure was a lot of it.
That, at least, makes sense, since, according to PointRoll, whose research has tracked consumer retail shopping patterns over the past three years, “Back-to-school season…represents a vital period for certain manufacturers and retailers who do some of their biggest business as families and students stock up on gear for the new school year, ranking second only to winter holidays.”
But much, if not all, of the other things they do makes little sense when you think about it analytically.
“[W]e’ve witnessed major retailers throw at it bundles, up-sells, bulk discounts, co-branded promotions, free shipping, buzz agents and every other conceivable sales trick,” writes Jonathan Salem Baskin in Advertising Age, “And yet it’s hard not to think that they’ve missed the boat.”
They have, in five significant ways.
Missed opportunity #1: Shifting timing instead of building sales
The premise behind the tax holiday weekend seems to be that if you get everyone to do their back-to-school buying over the same weekend, total sales will somehow skyrocket. Maybe the presence of all the parents buying back-to-school stuff at the same time will inspire an impulse-buying frenzy. Maybe the prospect of saving a big 5% on state sales tax will inspire spending 10% more on merchandise. Or maybe trenchant advertising will give one manufacturer an overwhelming gain in brand preference and share.
It won’t, for reasons discussed below.
If this were, say, New York (8.875%) or California (10.75%), the sales tax savings might make a bigger difference. But Virginia consumers can avoid our 5% tax in the comfort and convenience of their own homes, by buying online from vendors who offer free shipping (and often better pricing).
It’s not as if there were that much upside potential, either. “Kids grow up,” Baskin notes, “so lots of this year’s purchases are required to replace stuff from last year that no longer fits.” Also, all the notebooks that were written in and the pencils, pens, markers, crayons, etc., that did the writing.
But that’s a zero-sum game. The most tax holiday weekends can do is shift the timing, not the total amount or value of purchases. They work just like Cash for Clunkers or the first-time home buyers’ tax credit â€“ and you know how well those turned out.
Missed opportunity #2: Being out of touch with your audience
According to Baskin, back-to-school marketing “presumes that [stores and manufacturers] never before met their customers, and as if this is the first time their target audiences have gone shopping for school stuff.” This presumption is grounded in fantasy, not reality, because “[e]very family shopping for school this year had to shop for it last year, save those of newly minted kindergartners…They already know the game, from who has the best selection, sizing and quality, to when to catch the best prices…”
Which leads to the next missed opportunity.
Missed opportunity #3: Being out of touch with the calendar.
Tax holiday weekends and their attendant advertising work as if all parents were gluttons for punishment who did all the back-to-school shopping at once.
PointRoll’s analysis shows that “manufacturers and retailer of Apparel and Office and School Supplies (OSS) reduce their efforts by 75% from their peak at the end of August and prior to Labor Day.” The problem is, that’s just when lots of consumers are just starting to pay attention. Or they’ve lost it. PointRoll data show that parents are still interested in in apparel and OSS “into September and after school started” â€“ after the advertising has gone away. For computers, consumer interest peaks in early summer and tapers off by end of August â€“ mostly before the advertising starts.
Missed Opportunity #4: Same old same old advertising message
Since virtually all back-to-school shoppers have been doing this for years and know the ropes, Baskin wonders why “[t]he ad creative is frighteningly similar across brands, evoking variations on the theme of ‘we have low prices on whatever you’re looking for.'” It’s generic rather than specific, it’s self-referential instead of audience-oriented, it talks features (inventory and pricing) instead of benefits, and in any event, the parents have been hearing it over and over since their oldest kids started kindergarten, if not preschool.
So is it any wonder they ignore it?
Missed opportunity #5: Myopia
It’s as if kids spent only one year in school, or their parents had mid-term amnesia.
The marketers and their advertising treat each back-to-school period as if it were a discrete, unique event rather than one more step in a nine- to thirteen-year process. This approach throws away an opportunity to build long-term loyalties, which are important because the best new customer is a satisfied, loyal previous customer.
“[W]hy aren’t [advertisers] strategically marketing their…brands and selling an ongoing relationship with their customers instead of pitching tired old sales promos as if they were total strangers,” Baskin asks. He goes on to suggest some “ways retailer CMOs could recognize last year’s shopping behavior in order to prompt it this year.” Here are a few of them:
- Shopping Guides that alert parents to which stores have which merchandise in which sizes, with inventory updates. You could even customize this by giving parents a way to key in their kid or kids’ size(s).
- Replacement discounts for parents replacing items their children have outgrown in selected categories . The outgrown clothes go to charity (with appropriate publicity), the parents save money on replacements of the same brand, and advertisers save on the cost of wooing new customers by incenting repeat ones.
- “Frequent student” programs like airline frequent flier programs. Families accumulate points for their purchases from the brand over the years and can redeem them for specific rewards (maybe even participation in state prepaid collefe tuition plans).
As you can see, there are lots of boats (or, more appropriately, school buses) that apparel, OSS, computer and other back-to-school marketers are missing. Maybe it’s time for them to go back to school themselves, take some refresher Marketing 101 courses and come up with ways to improve their schoolwork next year if they don’t want to be left behind.