TLDR: For the 2025 back-to-school season, retailers are strategically employing AI tools, price freezes, and diversified sourcing to combat the impacts of inflation and tariffs. Consumer spending is projected to slightly decrease, leading shoppers to seek bargains and American-made products. AI-powered product discovery and personal shopping assistants are emerging as key technologies to help consumers find deals and optimize their purchasing decisions.
As the 2025 back-to-school shopping season unfolds, retailers are deploying a multi-faceted strategy to navigate a challenging economic landscape marked by persistent inflation and fluctuating tariffs. This year, consumer spending for back-to-school items is anticipated to see a slight dip, with projections from the 2025 Deloitte Back-to-School Survey estimating total spending at $30.9 billion, a marginal decrease from $31.3 billion last year. This makes it the second-biggest selling season, trailing only the year-end holidays.
In response to these pressures, major retailers like Target, Walmart, and Dollar General are implementing price freezes on essential back-to-school staples, maintaining 2024 price levels. Target, for instance, announced in June that it would freeze prices on 20 ‘must-have’ items, ensuring they could be purchased for under $20 in total, and reintroducing a popular $5 backpack. Similarly, Dollar General is offering all its core back-to-school items at 2024 prices, alongside over 70 items priced at $1 or less.
Tariffs on imported goods, which constitute a significant portion of back-to-school merchandise, are a major concern for both retailers and consumers. To mitigate these costs, many retailers began stockpiling inventory earlier in the year and are actively diversifying their sourcing, including exploring reshoring production to the United States. Madhav Pitaliya, an Analyst at Coresight Research, noted that ‘Retailers are using a mix of sourcing ingenuity, pricing strategy, and promotional savvy to navigate economic challenges.’ This proactive approach also helps maintain in-stock levels throughout the season.
Consumer behavior is also shifting, with a growing interest in American-made products. The Deloitte research indicates that 48% of consumers plan to prioritize American-made goods for the back-to-school season, a sentiment particularly strong among Gen Z (62%). Additionally, about a fifth of back-to-school shoppers, according to PwC’s 2025 Back-to-School survey, intend to use AI tools to find online deals. Adobe’s research cited by PwC further supports this trend, showing that 55% of U.S. consumers use generative AI for research, 47% for product recommendations, and 43% for seeking deals.
Artificial intelligence is playing a pivotal role in this year’s shopping experience. Retailers are integrating AI-powered product discovery tools, such as personal shopping assistants, into their platforms. Walmart, for example, has been testing an AI-based personal shopping assistant to help customers quickly find products and discover new items. The PwC report explicitly recommends that ‘Retailers should ensure their [BTS] deals are discoverable for AI …and consider incorporating AI-driven product discovery into their platforms.’
Despite the growing adoption, consumer trust in generative AI for shopping remains moderate. Deloitte’s research found that while 33% of parents plan to use generative AI for back-to-school shopping, only 22% trust it. Its popularity is significantly higher among Gen Z (67%) compared to millennials (34%). The primary uses for AI in back-to-school shopping include comparing prices/finding deals (66%), summarizing product reviews (44%), generating shopping lists (42%), discovering products (36%), receiving personalized suggestions (32%), and budgeting (31%).
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Furthermore, resale and thrift stores are gaining traction as consumers seek savings, with 21% of Deloitte survey respondents planning to shop at these outlets, a slight increase from the previous year. Conversely, interest in department stores has seen a notable decline. Mass merchants and online retailers, however, continue to attract a larger share of shoppers, with 83% and 68% respectively, reflecting a broader trend towards value and convenience.
