• by Sarah Mahoney , August 9, 2011

While the conventional retailing wisdom has long held that back-to-school spending is a major indicator of how consumers will behave during the holiday season, experts say it's time to hunt for a whole new set of tea leaves.

On one hand, "there's the uptick in July results for stores like Nordstrom, Saks Fifth Avenue and Victoria's Secret, none of them your typical back-to-school destinations, Ted Vaughan, a partner in the Retail and Consumer Product Practice at BDO USA, tells Marketing Daily. "And that bodes well for the holiday season."

On the other, he points out, there's the stock market's wild ride and plenty of downbeat economic indicators, "including an unemployment rate that isn't much better than it was last year at this time."

That puts retailers in the dicey position of balancing increased costs and the consumer's quest for value when stocking the shelves for Santa.

The result? A more elaborate game of cat and mouse, as consumers stretch out their shopping timeframe in order to wait out better deals. "There will be some level of discounting going forward, but it isn't going to be the type we've seen in the last few years," he says. "Likely, it will be timed to the sales-tax holidays many states have about this time each year."

Others are seeing the same trend. "Whatever families spend, what's absolutely certain is the time between back-to-school shopping and the first day of school has been decreasing every year," notes Brand Keys founder and president, Robert Passikoff, in its recent report on back-to-school spending. "This situation is exacerbated by retailers advertising over a longer period of time, offering good-better-best deals, and an absolute sense of entitlement on the part of the consumer."

The survey found that 72% of shoppers intended to wait till the end of August and shop just before schools open.

That means, BDO's Vaughan says, that there's a major question mark hovering over stores when it comes to the holiday season. "The volatility in the market coupled with the resiliency of back-to-school season even in the face of economic uncertainty means that back-to-school is no longer a strong indicator of how holiday sales will fare," he says. "Holiday inventories may reflect this uncertainty.

Most sales projections for back-to-school have ranged between flat and tepid. Brand Keys recently predicted a 3.2% percent increase, and an average spending of $602.