AI reshapes back-to-school shopping as Minnesota consumers try to make every dollar count

Timmy and Julian Thomas both knew exactly what they were searching for. Armed with their smartphones, the teens scanned apps on Monday as they zigzagged through the racks of the Dick’s House of Sport store in Minnetonka on the hunt for back-to-school items.

It’s crunch time for students and their parents in Minnesota and across the nation to fill backpacks and outfit kids for the new school year. And it’s a year that will see retailers compete more for limited dollars.

Twin Cities parents of K-12 students say they are spending $676 for school items, about the same as last year, according to a survey this summer by consulting firm Deloitte. Nationally, the average is $586.

“The shopper, they are looking for value over loyalty,” said Deloitte’s Minneapolis managing partner Matt Marsh in an interview. “They will stretch their dollars where they can.”

Retailers and shoppers alike are turning to tech, especially AI, for help. Target, Best Buy, Walmart and others are using enhanced search functions and personalization features on their websites and apps that help customers find products most relevant to them. And store workers are using different tools to predict demand and provide better customer service.

The weeks leading up to the start of school are some of the more important ones for retailers. They are viewed as a barometer of economic health and consumer sentiment, and they can foretell how retailers might perform during the all-important holiday months.

The Thomas boys, who are both students at Maranatha Christian Academy in Brooklyn Park, were given a healthy amount of freedom to shop for their back-to-school wardrobe, which their mother said has been an intentional lesson for them on how to budget.

“They know how to use some technology and apps to know where to get the cheapest items and to see if they can save $15 to $20,” said Kinna Thomas, 46, of Maple Grove. “I am letting them make those decisions because I think it will set them up longer term.”

As they looked for pants and shorts on Monday morning at the Dick’s at Ridgedale Center, it was easy for Timmy Thomas, 13, and Julian Thomas, 15, to get distracted by the rows of brand-name sneakers and sweatshirts on display.

“I usually look at the new fashion trends on TikTok,” Timmy Thomas said.

He picked up a pair of Adidas’ popular Samba low-top sneakers, and with a few taps on his phone, checked the price of the shoes on luxury apparel site Goat. Dick’s price was $6 less.

The Thomas boys’ list of must-haves included what they spotted on social media. They also ordered items from online retailers Goat and StockX, including New Balance 2002R sneakers Julian Thomas snagged for his collection.

Clothes, Julian Thomas said, can be an important part of a student’s return to school “so you can feel fresh and confident about yourself.”

Their mother also is relying more on technology, searching online and picking up the exact items that are on her sons’ back-to-school list as opposed to printing out a list and trying to match it in a store.

“I can’t handle the stress related to, ‘Did I get the right pencil pack?’” Kinna Thomas said.

The Deloitte survey found that about 17% of Minneapolis parents plan to use generative AI during their back-to-school shopping to read product reviews, economize and save time. Nationwide, a third of parents plan to use social media to shop, up from 21% in 2023.

As living costs remain high, price has become more important than brand loyalty for many shoppers with more than two-thirds of parents both locally and nationally willing to shift brands if the preferred brand is expensive. More parents indicated they would shop at affordable retailers as opposed to preferred ones.

About 40% of parents in the Minneapolis area plan to buy pre-owned products.

The National Retail Federation (NRF), which releases its own shopping survey data, said the total expected back-to-school spending for this year is predicted to be $39 billion compared with $41 billion last year.

“Consumers are still spending, but if I can compare it to a music dynamic, it’s changing,” said NRF Chief Economist Jack Kleinhenz, in a NRF webcast late last month. “It was more of a forte music and now we’re like a mezzo piano. It’s much [more] moderated.”