As parents begrudgingly trudge back to offices after two years working from home, their children, especially those college-bound, are likely looking forward to returning to in-person classes come the fall.
Providing these perpetually under-capitalized undergrads with the right back-to-school gear might be a problem, however. Inflation and recession fears and another year of onerous school loans may combine to put a damper on students or their parents making new PC purchases.
One thing retailers won’t have to worry about, however, is supply chain issues leading to PC inventory procurement problems.
“I do not expect supply chain to negatively impact BTS sales because many of the consumer IT OEMs have experienced supply chain improvements during the past 30 to 60 days,” assures Fred Towns, president of distributor New Age Electronics.
“Supply chain issues have mostly been resolved to meet the current level of demand as consumers pull back on spending to deal with higher cost of living,” agrees Eric Smith, director of Strategy Analytics connected computing devices. “We see retailers having a better time getting ahold of laptops and tablets for the new school year.”
From the PC supplier side, Chris Babson, Lenovo’s global education portfolio director, confirms that his company has “been able to remain flexible and minimize [supply chain] impact and are confident that we are past the most difficult part of this industry issue.”
PC Market Saturation
Even if retailers can fill their back-to-school computing inventory needs, how will what they stock sell? After all, both parents and kids stocked up on work- and learn-from-home computing gear during the pandemic.
Overall, CTA projects that laptop sales in the U.S. will decline 10% YoY for the year, a calculus that includes extreme market demand changes for both consumer and enterprise devices. Globally, according to a recent IDC report, PC shipments fell 15.3% year-over-year during the April through June quarter, noting that “with education PC appetite saturating and consumer demand stagnating, the U.S. PC market is staring at another quarter of double-digit decline across most segments.”
“This year, we anticipate some [back-to-school] market softness,” affirms Linn Huang, IDC research vice president. “Recession and inflation are big culprits, but the fact of the matter is after nearly two years of hyper growth in the education market, saturation has set in. Some refresh will drive strength in the coming two years, but market signals are weak for this current year.”
Inflation creates a vicious circle for retailers, of course, as it causes prices to rise, which, in turn, creates higher prices that further dampens demand. According to Strategy Analytics, mobile computing device ASP has risen 13% compared to last year.
As a result of the PC market and economic uncertainties, many retailers are delaying product purchase plans. “Many retailers are telling us back-to-school has been off to a slow start this year but are expecting to see it ramp up in August,” New Age’s Towns confirms. Lenovo’s Babson told TWICE that his company’s “Back to School” sale will begin in August and run through the final weeks of summer.
Different PC Needs, Price Points
But the college PC market isn’t a monolith. “Many students may focus on certain aspects of computers – such as one that is powerful enough for video creation and editing, or one that is thin and light enough to take to their classes, or one for gaming with friends,” opines Eric Ackerson, Acer America’s senior product marketing and brand manager.
PCs, of course, are not the only tech students need or want in their dorm rooms or carry around in their backpacks. “Console gaming is still extremely hot [but] it is difficult to find PS5s and Xbox Series X in the market,” Towns notes. “During the pandemic, this became an even more important way to communicate with friends.” Towns also believes VR, such as the Oculus, audio – especially headphones, and e-transportation such as e-bikes and scooters will be popular back-to-campus tech buys.
While students and professors are returning to classrooms, remote learning will still play a role, even on campus. “The goal is to have flexible, reliable, durable technologies that allow for synchronous and asynchronous teaching and learning,” says Lenovo’s Babson. “We continue to see a strong demand for hybrid classroom solutions and management tools. Speakers, cameras, and communication hubs that allow for collaboration and communication both in class and outside of it continue to be a focus.”
Where Do Retailers Focus?
Given a soft PC market, where should retailers focus their back-to-school device inventory levels, their demographic market targets, and their sales promotions? As Towns notes, the higher end of the PC market may provide the best sales and profit opportunities.
“Considering inflation and fear of recession, it’s surprising that the lower-priced products are not selling to traditional levels,” Towns observes, citing an inventory glut of low-end Windows devices for education. “It’s possible that shoppers who needed a PC secured one over the past 12 months or are opting to keep older models longer. The high-end consumer tech products are the ones moving in the market right now.”
Higher-priced PC products that encompass a fuller array of features may be more attractive to higher achieving and more ambitious scholars. “This generation of students embodies the creator persona and as a result, they want one device that can handle all their needs,” advises Acer’s Ackerson. “They create presentations, video projects, and run social media accounts for their classes and work, while also managing their own small businesses and side-hustles.”
The challenge as always, of course, is up-selling budget-conscious buyers, convincing them that “good enough” won’t optimally prepare them for the competition in both the academic and the professional worlds beyond, and making sure the customer is not merely satisfied.
“While hitting a specific price point will always be important to many back-to-school shoppers, more consumers know that spending a little bit more money can really maximize their investment and let them address multiple needs,” Ackerson adds. “Today’s back-to-school shoppers are smarter than ever and know what brings them value.”