In today’s volatile economic climate, retailers are under immense pressure to make every pricing decision count — particularly during high-stakes retail seasons like back-to-school (BTS). Success during BTS season will demand a strategic and agile approach, moving beyond manual and spreadsheet-centric pricing methods to embrace data-driven insights and artificial intelligence-scaled precision. Understanding the prevailing consumer mindset, the impact of tariffs, the science of effective promotions, and the art of intelligent markdowns will be paramount for retailers aiming to thrive in this environment.
The Worried Consumer
Consumers will be looking to economize as much as possible this BTS season and will be very budget conscious when making purchasing decisions. One positive aspect for retailers, however, is that BTS remains one of the retail events with very high commitment from shoppers — most parents will do whatever it takes to give their children the resources they need to be successful. In some cases, even a worried consumer may look to cut back elsewhere and still spend normal amounts during BTS season.
Tariff Impacts
Across all retail segments, tariffs loom large for suppliers, retailers and shoppers alike. In addition to the challenges retailers face from rising costs, there’s also evidence that some of the larger, big-ticket electronics items that often are purchased during BTS may have been purchased in advance in anticipation of rising prices later in the year. While tariffs will drive margin and cost pressure for retailers, businesses can leverage analytics and pricing AI tools to better negotiate cost increases with their suppliers. Gone are the days of just accepting cost increases and passing them on directly to consumers.
Promos Matter
As with all holidays, promotions play a major role in whether a retailer will be successful during BTS season. This is even more true at a time when consumers are increasingly concerned about their own personal finances and the direction of the economy. A lot of profit and operational efforts are wasted on ineffective promotions; retailers need to maximize their focus on the promotions that drive the best impact on the products consumers care most about.
One other key promotional consideration is that students will often have a list of items to purchase for BTS, and the decision to buy one brand often leads to zero sales for similar products. As such, retailers should be very cognizant of the indirect impacts of promotions, including cannibalization, affinity, and stock-up behaviors, to have a holistic perspective on how their promotions will actually perform. Advanced AI pricing and promotional technologies can help solve for some of these complexities.
Smart Markdowns
Having a savvy markdown strategy is critical to BTS success. The classic retail error? Waiting too long to begin marking down products that consumers have already abandoned. The other common mistake is applying a one-size-fits-all approach to marking down BTS items. BTS is a highly regional event because school start dates vary greatly from state to state and district to district. The ability to have a nuanced, localized, data-informed markdown strategy in place for BTS can be a game changer for retailers while driving better value finds for consumers.
Final Thoughts
The 2025 BTS season will challenge retailers to be more adaptable and insightful than ever before. Navigating the complexities of a budget-conscious consumer, the pressures of tariffs, the critical role of targeted promotions, and the strategic necessity of smart markdowns will define success. Retailers that embrace advanced analytics, leverage AI-powered tools, and commit to data-informed decision-making will be best equipped to optimize their strategies, protect profitability, and ultimately meet the evolving demands of families preparing for the academic year.
Matthew Pavich is the senior director, strategy and innovation at Revionics, an AI-driven price optimization solutions provider to enterprise retailers.