back-to-school kids

Retailers Use AI to Mine Social Data for Back-to-School Trends

Students across the country are returning to the classroom this month — some for the first time in more than a year. While early indications show strong late-summer back-to-school sales, retailers aren’t leaving anything up to chance. Widespread confusion around health policies, safety protocols, and required supplies that can vary by school are leading retailers to rely on social media and artificial intelligence to collect information on emerging themes and trends.

“The 2021 back-to-school season has taken on a unique profile compared to 2020 and prior years, driven by what’s largely going to be a physical return to school for many kids, though under much different conditions shaped by the pandemic when compared to 2019 and earlier,” says Philip Melson, client partner at Fractal, a firm that bring analytics and AI technologies to Fortune 100 companies.

The back-to-school shopping behavior of parents has changed in a number of ways. For example, customers started shopping for back-to-school supplies much earlier in the summer this year than previous years, and surveys show they spent more time planning to find the best assortment of deals. Inventory challenges and health concerns tied to physical shopping also changed the way people shopped for school supplies in the early summer.

According to the National Retail Federation, total back-to-school spending across K-12 and college students is expected to grow by more than 6% over last year. This increase will be driven by kids having outgrown many of their shoes and clothes, and not having purchased replacements during virtual schooling, as well as the mix of excitement and anxiety around kids physically going back to school for the first time in a year. A much higher proportion of back-to-school shopping has been done online in 2021, not just as a way to avoid physical stores, but also to allow for parents to cherry-pick the items they want from different retailers.

Another difference that seems to be more pronounced this year has been the importance of social media in parental back-to-school decision-making. Melson says parents are relying as much, or more, on their friends and family connections through social media as they are formal marketing channels to guide their back-to-school preparations. This has opened the door for more retailers to use AI to mine social media data for insights tied to emerging themes.

“Outside of the more integral use of social media, back-to-school may not drive materially different uses of AI among retailers when compared to other key selling seasons. However, the relatively narrow scope of product categories and customer missions in this season yields retailers a degree of focus,” Melson says. “AI-related efforts can be trained on competing against their rivals in a few areas like dynamic pricing, sending customers compelling messaging, promotions or recommended items to drive engagement, competitive assortment benchmarking, and improving inventory management to boost in-stock levels and fulfillment speed.”

Through the lens of back-to-school, Melson says he’s seeing brands getting especially creative in the way they tie AI to the customer experience. For example, retailers have been deploying computer vision for apparel and footwear try-ons to instill confidence in purchases and reduce the likelihood of returns. 

Brands are also developing increasingly sophisticated item recommendation engines based on customers’ purchase histories, current baskets, and many other signals.

Holiday Predictor?

Going beyond back-to-school, Melson says brand retailers are already looking at the holiday season and assessing the best ways to implement AI to make in-season adjustments using continuous test-and-learn processes. Holiday sales and back-to-school sales have a strong correlation. While supply chain issues could hurt some retailers, experts are optimistic about back-to-school sales based on comparisons to last year.

“Back-to-school in 2021 should be viewed as a high-stakes natural experiment by retailers leading into the holiday season given the significant shifts in the marketplace and in consumers’ mindset and purchase behavior since last year’s holidays,” Melson says. “Retailers should evaluate their back-to-school performance more closely than they may have in past years for insights on what worked and what didn’t, from an omnichannel and customer-centric lens, so their holiday programs can be fine-tuned.”

Stephanie Miles is a senior editor at Street Fight.

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