July 20, 2009

Retailers see glimmer of hope in consumers’ back-to-school plans

By Maria Halkias/ The Dallas Morning News

Pent-up demand is the big back-to-school hope for retailers.

While the recession is still weighing on shopping plans, fewer consumers (64 percent) expect to cut back-to-school spending compared with last year when 71 percent said they were pulling back, according to an annual survey released today by Deloitte.

Shoppers said they plan to spend with caution as 74 percent intend to buy more items on sale and 65 percent said they’re buying only family necessities.

Almost half, or 45 percent, said they will shop at different stores than they usually do to find lower prices, and 90 percent said they will shop discount and value department stores.
“That’s an opportunity for some retailers,” said Sherrie McEvoy, a partner in Deloitte’s Dallas office. “If they do it right, they may keep those customers when the economy rebounds.”
Almost one-third (32 percent) said they are saving more, a full 10 percentage points above last year. As a result, more people may be in a position to give in to some pent-up demand, especially since children and teen apparel retailers had bigger-than-expected sales declines in June, McEvoy said.

Back-to-school spending is forecast to be down 7.7 percent from last year, according to the National Retail Federation. Households with students in grades K-12 are expected to spend an average of $548.72 on school merchandise, compared with $594.24 in 2008.

Bright spots this year may be school uniforms and electronics. Uniform sales are forecast to be up 3 percent to 5 percent, said New York-based school uniform company French Toast, which closely tracks school district dress-code policies. Electronics spending is expected to be up 11 percent, the National Retail Federation said.

J.C. Penney Co. is expecting the season will be at least a week later this year, as more states move their sales tax holidays into August. This year, Penney created a shopping Web site for teens. Kohl’;s has one, too, with a big backpack shop. Target also organized its back-to-school categories. Old Navy says its discounts are “for the whole family.”

Back-to-college spending is almost twice as much ($30.08 billion) as K-12 spending, the National Retail Federation said. It also starts earlier. Last week, Wal-Mart’s sale circular was devoted to brightly colored dorm gear from towels to lamps. The Container Store is hosting 20-percent-off college nights through July.

This year, the Texas Legislature added school supplies from pens and pencils to calculators and crayons on the list of tax-exempt items during the state’s sales tax holiday Aug. 21-23.
With a lower unemployment rate than many states, Texas should have a comparatively better back-to-school season, McEvoy said. The jobless rate rose to 7.5 percent in June, the Texas Workforce Commission said on Friday. That is the state’s highest rate in more than 16 years, but below the national rate of 9.5 percent.