Retailers Brace For Dreary Back-To-School Season

by , Jul 24, 2009, 9:50 AM
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JCPenneyWhile the malls may be full of hot new looks for back-to-school - expect plenty of neon, retro sneakers and hints of punk - retailers aren't expecting much.

 

A new survey released by America's Research Group and UBS Global Equity Research reports that 34.4% of parents are planning to spend less this year. And the reasons are hardly surprising: 41.8% says it's because they have less money, 40.5% say it's due to higher debt, and 8.2% say because they're worried about job loss.

The survey predicts a depressing drop of between 8.5% and 12%. Last year, with the weakening economy and soaring gas prices scaring consumers, back-to-school sales fell more than 5%.

Over half of American parents (50.9%) are trying to get their children to wear what they wore last year, and this year, only 33.4% of parents say they plan to spend more than $400. Last year the figure was 47.0%.

Like the last holiday season, the report predicts that retailers will have to resort to drastic markdowns to move apparel, with only 1.8% of those consumers surveyed willing to pay full price.

And while parents are typically vague at this point in the season about where they will shop, this year they are laser- focused on bargains. Only 13.3% are unsure (versus 35.7% last year), and they'll flock to value: 22.3% say they'll buy clothes at Walmart, up from 15.4% last year; and 10.5% at Target, up from 7.6% in 2008. Sears may also stand to gain, with 9.6% planning to shop there, up from 6.4% a year ago. JCPenney (11.4%) and Old Navy (6.1%) are holding even with last year's plans.

This study confirms predictions released last week by the National Retail Federation, in a survey that found 85% of parents say the economy is weighing on their back-to-school and back-to-college plans.

It forecasts that the average family with students in grades kindergarten through 12 will spend $548.72 on school merchandise, a decline of 7.7% from $594.24 a year ago, with total spending reaching $17.42 billion. About 85% say they have made some changes in spending plans as a result of the economy -- 56.2% are hunting for sales more often; 49.6% are cutting their budgets; 41.7% are buying more store brands, and 40% using coupons more.

The only category expected to see a gain this year is electronics, where spending is likely to increase 11%.

Austerity measures are extending past backpacks and highlighters. About 11% of families are paring spending on sports and extracurricular activities or sports, and 5.7% say the economy is impacting whether their children will attend a private or public school.

For college-bound students, spending is expected to increase slightly to $618.12 this year, the NRF reports, up 3% from $599.38 last year. But with fewer people planning to attend college this fall, total college spending is expected to decrease to $30.08 billion. (Undergraduate attendance has held steady, but the number who say they will participate in an advanced degree program is down -- 48.1% of respondents last year versus 38.9% this year.)

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