This article originally appeared in the June 2016 issue of WiFi HiFi Magazine
After chatting with his two university-bound children, Greg Tobin, General Manager at D&H Canada, was left bewildered at how much technology plays a role in their experiences at school. From educational apps, to collaborative services like Skype, online webinars, computers, and more, the days of textbooks, notebooks, pens and paper getting a student through his post-secondary education are long over.
Preparing for college or university, especially if the student is leaving home for the first time, involves loading up with all kinds of gear to help meet the changing needs of the school environment, and start this next chapter in life.
This poses tremendous opportunities for retailers, particularly during the six-week period in August and September before and after the new school year begins, known as the back-to-school season. And technology is a key part of the equation. Millennials have grown up with technology, and know nothing but. Meanwhile, the education system is embracing it. So for students to keep up, a decent laptop and a smartphone alone won't cut it.
Ringing the Bell
In 2015, the U.S. National Retail Foundation (NRF) forecasted that back-to-school spending would reach US$68 billion, with the average family spending US$630 on mostly clothing and electronics.
While the 2015 back-to-school season in Canada saw a 7% decline in revenue sales for the IT space when compared to the year prior, according to NPD Canada, 2014 was the first growth period we had seen in several years. So even that slight decline was still good news for the industry.
Google Canada's Back-to-School Trends Report for 2015 found that the top-rising technology-related searches in 2015 were: Apple Watch, IPTV box, Samsung gear, selfie stick, Android watch, Xiaomi, Raspberry Pie, privacy screen, Android box, and wireless charger. This points to trends (and opportunities) far beyond just a computer and a trendy pair of Chelsea boots.
So what will these post-secondary students need to get them ready for a new school year?
Samsung is one of many vendors offering Windows-based computer/tablet hybrids; its new TabPro S runs on Windows 10 Pro, and comes equipped with a full-size ergonomic keyboard with trackpad and 12" Super AMOLED touch-screen display.
The Apple Effect & the Rise of the 2-in-1 Convertible PC
At the heart of any college/university experience is, as noted, the notebook. But student needs and desires are shifting in that category.
Last year, notebooks represented 45% of the revenue generated from the IT space during the back-to-school period, reports Darrel Ryce, Director, Technology and Entertainment at NPD Canada. "[They are] the strongest-selling category in terms of generating revenue. I don't see any category being bigger than notebooks for back-to-school." And while he notes that sales were flat in 2015 compared to 2014, it was still relative "good performance" given the growth in 2014.
While consumers, in general, might not be upgrading their notebooks as often as they used to, a student heading off to university is a perfect excuse to grab a new PC to send along with him.
This year, fuelled by devices like the Microsoft Surface, convertible 2-in-1 computers are poised to be hot sellers. They combine the functionality of a full-fledged computer, with a removable screen that can double as a touch-screen tablet. "They are among the most popular with students," confirms Rick Gaigneur, Supervisor for the Computer Sales Centre at the University of New Brunswick (UNB), "and they are seeing more adoption every day."
But the elephant in the computing room is Apple: last year, MacBooks accounted for about a third of the volume for notebooks, says Ryce.
Apple will undoubtedly keep a strong hold of its loyal customers, and is sure to generate healthy numbers once again. But the company's 2014 decision to pull out of all campus stores across Canada shifted focus in that retail sector toward Windows-based PCs. At the time, Apple sources said it was "financially unviable" to continue that strategy, arguing that most students were buying online or through major big box chains. Tom Cairns, Account Executive at Xcel Source Corp. and Campus Bookstore Representative for the Toronto-based distributor, says campus bookstores were hit hard by the decision, and most were forced to rethink their strategies. Not only in terms of the hardware, but the accessories they offered as well.
While Epson's EcoTank printers require a higher upfront cost, the ink only needs to be replaced every two years (!), eliminating both the recurring cost of ink cartridges, and the need to go out and buy them - two advantages any student can appreciate.
There was millions of dollars [of Apple gear] going through the campus stores in just about every institution in Canada, says Gaigneur. Though it was low-margin sales, the volume meant stores were still looking at losing a significant profit. "It's been rough," he adds. "Some stores didn't make it at all."
The good news: this opened the door for Windows-based vendors. And it's been a win-win. "The machines coming out from a number of companies are competing very favourably with the Apple products," says Gaigneur, adding that since so many things are now done on the Internet, the actual platform doesn't matter so much anymore.
"The key is for equipment to be "smaller, lighter, and more powerful," says Tobin, suggesting that the sweet spot is a device with a 12" or 14" screen and keyboard. "It has to be large enough that you can spend hours working on it, but light enough that you can carry it around everywhere, whether it's your friend's house, or the cafeteria or study hall."
But there's a downside to this trend: tablets are falling victim to the rise of the 2-in-1 convertible PC.
Interestingly, when we spoke with Ryce just before the back-to-school season two years ago, he referred to tablets as a "bright spot," showing 16% revenue growth and unit sales up 40%. Things have certainly changed.
Today, while Ryce says tablets still sit within the top-five IT products for the season, he wouldn't be surprised to see them drop off the list. "We haven't seen any significant changes in technology," he says. "If you bought one last year, or the year before or even before that, it's still going to work fine today."
What's more, as Gaigneur points out, students often need to be able to run specific programs for their courses, which cannot be done from a tablet.
Styli, like the Adonit Jot Dash (Atlantia) can make note-taking on a tablet (or a convertible device) during class much easier.
Even in the K-12 education market, tablets are quickly being replaced. There, it's by Chromebooks, where sales through distribution are up 83% in the past year, reports Ryce. Over 132,000 units have been sold into the education market. Revenue growth is also up 74%. Last year, during the back-to-school timeframe, sales of Chromebooks outside of distribution nearly doubled with growth of 83%.
Pete Gibel, Senior Vice President, Merchandising at Staples, notes that while tablet sales are down, higher-end models, like the iPad Pro, may strike a chord with some students. But he, too, believes that 2-in-1 convertible devices will be driving the category this year.
What about desktops? Interestingly, while Ryce says customers are also spending on desktops, Gaigneau says that, in the campus store market at least, they're "essentially dead." That is, unless the student is studying in a niche area, like animation and video production, or he's a big gamer.
But while students aren't spending big dough on desktops, they are still buying up monitors. For a college-age kid living in a dorm, having a TV isn't feasible. A monitor can be used as a larger screen for work, and double for entertainment as well, like gaming, or streaming/viewing TV shows and movies. According to Ryce, monitor sales were up 5% during the 2015 back-to-school season.
On the software end, the shift to downloaded and cloud-based offerings means boxed titles will likely see a decline. What's more, Gaigneur notes that most institutions offer programs like Microsoft Office as a free download on their Websites for students, negating the need to buy software at all.
The Enerplex Universal Jumpr Slate 10K Ultra Slim Chargepack 10,000 (Hitfar Concepts) is ideal for students because it's slim, with binder holes to secure it right into a binder or folder alongside assignments. It has dual 2.4 amp outputs; 5,100mAh versions are also available with either a tethered microUSB or Lightning and USB cable, with 1amp and 2.4amp outputs.
Computing Peripherals
There's some disagreement in terms of which computing accessories and peripheral categories are growing and which are declining. Either way, it will require a shift in thinking to better serve students.
"If you look at volume," says Ryce, "flash memory will be right at the top." In addition to USB drives at 16 and 32GB capacities, Staples' Gibel also expects hard drives to perform well, with 2TB being a sweet spot. Gaigneur agrees, though he believes we may see a decline going forward as students move toward cloud-based storage services like DropBox and OneDrive.
Ink cartridges generate a lot of volume and revenue, says Ryce: they were up 2% in 2015 from 2014. Multi-function printers, he adds, were up an impressive 14%. "Students are leaving home, and parents are sending them off with the printer and a few cartridges to get them through the semester," he explains.
"The printing market is a US$40 billion industry," adds Brian Baltezore, Product Manager, Consumer Imaging Division, at Epson America, Inc. "and it's been steady over the past few years."
Epson will be focusing this year on promoting two of its EcoTank printers to students and teachers: the ET-2550 and the ET-4550. Both come with ink refills that can be inserted into reservoirs, and last for up to two years. There's a higher up-front cost (the ET-2550 is $480 and the ET-4550 is $600) but significant savings in the long run.
Wireless keyboards are a hit with students. Belkin's Mobile Wireless Keyboard can accommodate and simultaneously connect to two devices at once. The kickstand props up the devices, and doubles as a protective case for the keyboard.
"If a student understands the math, and can afford to pay upfront," says Baltezore, "it's a better value for them." Replacement ink cartridges work out to about the same cost as standard cartridges: $62 for a full set.
But Gaigneur says campus stores are seeing a marked decrease in the sale of printers and related accessories. It's no surprise, given that many schools will accept essay submissions in electronic format, and more quizzes and course syllabuses are available online.
But, notes Baltezore, "we've been hearing about the paperless office and the paperless college for years and years. People are finding that they still like, in most cases, to have a hard copy to edit and share and take notes on and save."
And other features are making printers more attractive to students, like wireless and remote printing capabilities: the former allows printing from anywhere within the home (or dorm) from a smartphone or tablet, while the latter allows users to send a print job remotely using the Epson Connect app. "Traditional PC printing," says Baltezore, "is transitioning over to mobile devices."
Basic low-cost but high-margin accessories like cables are essential for post-secondary students, particularly those moving into shared housing. The Moshi 99MO023126 high-speed HDMI cable (Cesium) measures six-feet long, and can be used to connect a television, gaming console, or media player.
In addition to continued strong and consistent sales of calculators, Tobin feels styli will be on the rise. "Just as they say the pen is mightier than the sword," he muses, "the stylus is mightier than the pen." With apps like LiveScribe, users can take notes directly into a storage device, and use dictation apps. With text-to-speech, "you can sit and make your mac & cheese and have the text application read chapters of your book to you," he says.
While unglamorous, cables are a necessary part of the post-secondary student's setup. When a child is leaving the nest to set up home in a dorm or shared house, says Ryce, parents will need to get them a network cable, and maybe even HDMI.
Mice and Bluetooth keyboards are on the shopping list as well, Gaigneur adds. Ryce says keyboard sales (especially for gaming) were up 11% last year.
Appealing to both network needs and design sensibilities, the D-Link DIR-879 AC 1900 Exo Wi-Fi router makes it easy for students in shared housing to connect multiple devices; SmartConnect technology automatically assigns connected devices the best band for optimal wireless performance.
Helping Students ‘Go Mobile' is Key
All with whom we spoke agree that the biggest categories this season will be anything that assists a student in being more "mobile." Part and parcel with that is connectivity.
The changing way students consume, store, and acquire content actually plays beautifully into the networking business.
Students moving into a shared home will need a router to support the constant stream of online activity, like course webinars or lectures, Skyping with classmates and family, downloading materials, and streaming video, both for school and entertainment.
"The biggest change will be digital content in the curriculum," says Tobin. "And we'll see trickle-down effects because people will need more bandwidth, wireless infrastructure, and storage capabilities."
Beyond connectivity, headphones will continue to be on the back-to-school customer's radar, as will portable Bluetooth speakers. With the former, Beats maintains its brand power among millennials. (Yes, students, or at least their parents, will shell out $300 for a pair of Beats headphones.)
"For students," says Gibel, "there's definitely a cache with the brand. It's like a fashion item."
"Millennials respond to brands that engage them on social media," says Cairns, "and Beats has accomplished that."
In campus stores, more affordable headphones perform well, particularly as a backup purchase if the student forgot his pair at home. The rise in the use of services like Skype has also brought attention to headsets, notes Gaigneur.
With portable Bluetooth speakers, Gibel anticipates a good back-to-school peak, particularly with the Bose SoundDock. "SoundDocks are going crazy," he says.
Cairns believes that while entry-level Bluetooth speakers may level off, there's opportunity for growth at the higher end of the spectrum, with rugged and high-fashion models, for instance.
While smartphone sales don't necessarily rise during back-to-school, accessories for them do; notably, portable charging banks that can charge more than one device at a time; cables; and, to a degree, protective cases.
What isn't resonating with students, however, are wearables. Whether that's the result of price points, functionality, or both, the category just isn't there yet.
Downtime Entertainment
Examining some of the anticipated high-growth categories, one might wonder, as Ryce muses, whether we're paying for our kids to go to school to learn, or have fun. But we all deserve downtime, right? And gaming, movies, TV, and music, offer a welcome respite from days and nights full of gruelling school assignments.
Terms like "Android box" and "IPTV box" noted on the aforementioned Google Trends tech searches list, suggest that students are seeking out cheap ways to watch television. This presents opportunities to promote streaming boxes and sticks, like the Google Chromecast or Roku Streaming Stick; or Android boxes like the MyGica ATV line of media players.
Students want cheap ways to access TV, and the Android-powered MyGica ATV boxes may just fit the bill. Connect to a TV, and it uses the Kodi (formerly XMBC) media player platform for viewing content from the Internet, including sources like Netflix and YouTube, your own network, or other storage media. Shown here is the ATV1800E, the most popular model in Canada.
Those that aren't squeezed into a tiny dorm may also be willing to shell out for a small-screen TV so they can not only stream content for viewing by a large group, but also access local and live cable or satellite service, to catch the home team hockey game, or the local news. Ryce says 32" models tend to resonate best, likely due to both size and affordability.
Given that college-age students also happen to be the target gamer demographic, the tie-in with gaming peripheral sales during back-to-school is not surprising. Gear like gaming mice and keyboards, says both Gibel and Gaigneur, typically peak during this time. "There's a trend," says Gibel, "back to the old traditional PC gaming."
The Laptop Backpack
Naturally, whatever gear a student is carrying, a good backpack will be a necessity. "They walk around with backpacks all day, almost every day," notes Gaigneur. "Far more than the typical business traveler."
While laptop protection is critical, if a bag has an appealing brand and style, says Cairns, protection will be less of a factor in the decision. Gaigneur agrees on the importance of fashion. "Corporate black," he says, "isn't going to cut it with students unless it has something to make it a little bit prettier." But strength, durability, and padding are also factors in the purchase decision.
And spaciousness is key. "The more you can get into a bag," says Cairns, "the better." In addition to electronics gear, it also has to be spacious enough to hold the weighty textbooks that students are still expected to carry around alongside those tech gadgets, adds Gaigneur.
Style is just as important, if not more important, to students than function when it comes to a backpack. Female students, in particular, will appreciate stylish options like the Ogio Soho (Xcel Source), which features a padded laptop compartment, and several zippered compartments to organize all of their gear.
Avoid displaying backpacks high upon shelves: Gibel says the majority of Staples customers want to try them on to see how they feel.
The sweet spot price for a backpack: anywhere from $40 to $100. "We have a few that are $100-$110 that do well," says Cairns. "But once you get into the $130 and $140 range, they don't see much of an advantage over the $90 bag."
Back-to-School Equals Unique Opportunities for Bricks-and-Mortar
A recurring sentiment was that the back-to-school season presents unique opportunities for the physical retail channel. Sending a child off to college or university, or even to high school, is a significant occasion. And for many families, it's an experience that can't be replicated online.
"We don't just put our kids on a bus and send them off to university," muses Ryce. "We drive them there and get them up to the dorm, get them set up, and make sure everything is okay. Then they say ‘just get out of here, please,' and mom and dad drive away in tears."
Gibel asked his 15-year-old daughter this year if she was getting too old to go out shopping with mom and dad for back-to-school gear. She declared she wasn't. "I think kids find it to be an event to go back-to-school shopping with one or both parents, and touch and feel items," he says. "For back-to-school, the retail stores have accounted for the majority of our sales." (Of course, those store sales were helped last year by the departure of both Target and Future Shop in Canada.)
Printers, says Baltezore, perform particularly well in physical stores, as consumers want to touch and feel them, and see how they look. Epson offers services like weekend warriors that visit stores, like Staples, and help educate customers on the advantages of the new EcoTank line.
"I think there's a lot more happening during back-to-school than any other season," adds Ryce. "It's part and parcel of a pretty big part of life, so everyone wants to enjoy and take part in the whole process." You aren't going to get that from clicking a button on a computer.
For campus stores, Gaigneur believes that students appreciate the added value offered from buying within the school. This includes student discount pricing (which is offered from some manufacturers on things like notebooks), but also the staff's knowledge of the school's systems, practices, and tech setup, and their ability to offer on-site help. "A student can walk in and say ‘I'm going to be giving a seminar tomorrow in such-and-such lecture hall. What do I need to connect my computer?' And we know we're going to sell them the right item."
While Beats headphones resonate well with students, there's room for other brands that offer compelling features. The $140 JBL E40BT (Erikson Consumer) are wireless, and include ShareMe that allows the wearer to wirelessly share what he's listening to with a friend wearing another pair, whether it's music during downtime, or online lectures and webinars.
That said, we can't deny that millennials will sometimes opt for the convenience of purchasing online. Tobin says we're seeing more and more deliveries being made to dorms from the Amazons, Costcos, and Best Buys of the business. "Students are doing their research online, and if there's nothing in walking range, they are having it shipped."
Nevertheless, parents and students realize that heading off to college or university, whether it's for the first year or the last, is worth a trip to the store.
Bottom Line
There are two key takeaways here. First, the back-to-school season yields more than just increased sales in computers, calculators, and headphones. There are a number of products students will be seeking out to help them better meet the changing, more digitized, needs of the education system.
And that list will continue to expand as emerging technologies, which many schools are already adopting, like virtual reality (VR) headsets and 3D printers, become more affordable for personal use and purchase.
And second, if there was ever an occasion that could help bring more customers back into the physical store, this is it. In 2014, reports NPD, 42% of back-to-school sales occurred during the two weeks surrounding the Labour Day long weekend. It's worthwhile to consider a strategy to grab hold of both the early shoppers and the procrastinators. Do so, and they might stay with you beyond that pivotal first term.
In the end, notes Ryce, "it's all about outfitting [the students] properly with the technology they need to succeed and work in an university environment." And in today's world, when it comes to technology, a notebook is just the beginning.