As consumers and retailers tighten spending, suppliers are bracing for a highly promotional back-to-school season.

Many back-to-school sales got underway this month and are expected to peak by late July or early August. Nearly half (45%) of consumers purchasing for K-12 students and 37% of college shoppers will be seeking out sales promotions, according to the National Retail Federation. That’s up from 30% and 28% in 2019, respectively. And 39% of consumers purchasing for K-12 students and 33% of college shoppers will buy private label or generic brands, up from 24% and 19% in 2019.

This increase in budget-conscious consumers haven’t been lost on retailers. Executives from Ulta Beauty, Macy’s, Ralph Lauren, and Nordstrom all noted in releasing earnings last month that consumers are being more selective as inflation remains high. And Walmart CEO Doug McMillon said at the chain’s annual meeting that the retailer will launch more back-to-school merchandise at opening price points than in 2022, including notebooks, pens, and pencils. Walmart hasn’t been immune to the recent “economic whims” but is better positioned than other retailers because of its reputation for low prices, CFO John Rainey said.

“Retailers are being cautious with loading back-to-school inventory,” said Tom Tedford, President at office products supplier Acco Brands, whose portfolio includes the Mead, Swingline, At a Glance, and Kensington brands. As a result, retailers will likely seek to replenish inventory again in Q3.

Additionally, because many retailers continue to sell off excess inventory built up over the past year, it’s expected they will place smaller orders, suppliers said.

Overall, revenue related to U.S. back-to-school sales has risen 24% during the past five years to hit $34.4 billion in 2022 (a 5.8% increase from $32.5 billion a year earlier). In the case of back-to-college sales, revenue rose to $28.3 billion last year, up from $26.7 billion a year earlier (an increase of 5.9%).

Clothing and footwear have typically accounted for the largest portion of back-to-school merchandise. Foot Locker, for one, will rely on promotional discounts to drive demand for sneakers and has brought in Adidas’ Samba and Gazelle footwear to help spur sales, CEO Mary Dillon said.

“What has happened over the years is retailers have put more pressure on licensees to carry inventory and chase product,” a licensing executive at an apparel supplier said. “It’s become more of a chase business than an [order] booking business. Now that the supply chain issue for the most part has gone away, it has shifted to retailers booking less up front.”

And while back-to-school shipments have resumed a normal cadence in starting to arrive in Q2, they were also “the largest component” of Acco Brands’ 9% decline in Q1 revenue, due largely to earlier shipments in 2022, said CEO Boris Elisman.

“There always has been that cloud hovering regarding the economy and worries about a potential recession are still out there,” a licensing executive said. “Retailers in general are lighter [on orders] because they had to cut back, but their chase business has been stronger than last year.”