Retailers Cash in on College Kids

Back-to-Campus Sales Are Soaring Thanks to Promos From Wal-Mart and Others

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Back-to-school marketing used to be all about lunchboxes, No. 2 pencils and sturdy shoes. Today, it's all about laptops, cellphones and extra-long sheets.
Container Store: Retailer's microsite shows variety of dorm-room style ideas.
Container Store: Retailer's microsite shows variety of dorm-room style ideas.

Recognizing that college-bound students drive a whopping $47.3 billion in spending annually, the country's major retailers have for the past few years been storming the campus. And it's paid off: Though the average back-to-college shopper's budget is up 43% percent since 2003 to $956.93, according to the National Retail Federation, dorm dwellers are spending a whole lot more, an average of $1,529.45.

Not by accident
That hasn't happened by accident. Mike Gatti, executive director of the Retail Advertising and Marketing Association, said the category got going about a decade ago and has been growing rapidly ever since. "The retail industry has really taken this up over the last few years, to help grow the items available for purchase," he said. "And so the kids and the parents are spending more."

The trick now for retailers is to get them to buy for longer periods of time. "Back-to-school shopping has been extended over three months," said Al Frank, Los Angeles partner-in-charge of retail and consumer products at Deloitte & Touche. "Nobody feels like they have to buy their clothes in July."

A big reason behind the season's extension is Wal-Mart. The big-box retailer started the fireworks by lowering its prices on 16,000 back-to-school items after the Fourth of July holiday, and many discount chains followed suit.

"Our customers are really feeling the pinch right now with higher food prices and rising energy costs," said Kory Lundberg, spokesperson for Wal-Mart. "And so we rolled back the prices on back-to-school needs." Wal-Mart also initiated several college-friendly programs, including free shipping to the nearest Wal-Mart for items bought online. There's also a "money card," which parents can load and their kids can spend, with an option to have balances sent by text message every morning.

Electronics have had a major impact on dollars spent, particularly for laptops, iPods and smart phones. Apple has been offering free iPods with the purchase of a laptop as a fall promotion for several years. Buyers have to apply for the educational discount to qualify.

The new way to party
"College parties used to be about going out to the local bar; now it's back at the dorm watching YouTube," Mr. Frank said. "Who's got the best computer? That's where everyone's going to be."

That, of course, requires rugs, throw pillows and -- according to niche retailer Container Store -- organizational items to tone down the chaos of a cramped shared space. The company has a microsite where college students can decide their "dorm organizational style" (fashionista, sports fan, rock 'n' roll) and pick from a list of "must haves," including everything from a fridge cart to a USB keyboard vacuum.

To reach its target audience, Container Store holds "college nights" around the country, closing down its stores to let college students browse, nibble Cheez-Its and enjoy a 20% discount. Container Store sent out invitation kits in advance of the event, complete with name tags and dorm catalogs. The events were packed, and people sometimes waited in checkout lines of 30 minutes or longer.

Get them while they're young
"We really feel like college is the start of our business -- first the dorm, then the first apartment, and then first home," said spokeswoman Elaine Luce. "It's a big focus for us because it's about organizing a small space, and our whole business is about organizing."

Container Store, which handles marketing in-house, has held college nights for 13 years, but each has gotten more sophisticated. This year the company took out banner ads on and Facebook, urging college kids to attend the event and allowing them to send viral invitations to friends.
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