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Battle for Back-to-School Market Share Intensifies

The season that's seen as a pressure cooker for such chains as J.C. Penney, Kohl’s and Abercrombie & Fitch begins in less than two weeks.

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Polyester dress by Xhilaration at Target. Fossil belt and Frye boots at Belk.

Kyle Ericksen

Cotton T-shirt from Joe Fresh at J.C. Penney's and Signature by Levi Strauss & Co.'s cotton denim jeans at Kmart.

Cotton T-shirt from Joe Fresh at J.C. Penney's and Signature by Levi Strauss & Co.'s cotton denim jeans at Kmart.

Kyle Ericksen

Target's Xhilaration cap.

Target's Xhilaration cap.

Kyle Ericksen

In less than two weeks, the back-to-school season begins in what’s seen as a pressure cooker for such chains as J.C. Penney, Kohl’s, Aéropostale and Abercrombie & Fitch, as they each seek a reversal of fortune.

Gap Inc., starting to build momentum, must still turn in a good b-t-s run to prove it’s on a bona fide turnaround course, while a once-struggling Abercrombie turned in a solid 2012, but suffered declines in the first quarter of this year. Aéropostale has reengineered its collection, soon to be unveiled in a national relaunch, in an effort to stabilize recent uneven performances.

Macy’s, Nordstrom, Belk and The Children’s Place have the wind at their backs, while Target and Wal-Mart are expected to come out of the season OK, as they tend to do each year by selling consumables and basics. “We are ready for back-to-school. This is our most important season, and the team has been laser-focused on delivering a successful event,” said Jane Elfers, president and chief executive officer of The Children’s Place.

“Our kids business has been stellar for the past year, with low-double-digit increases,” said Kathryn Bufano, president and chief merchandising officer of Belk Inc. “We had an excellent Easter selling tons of maxi and flip flop dresses, and for boys, uniforms and dress up was big. Denim is one of our strong suits, and we’ve seen big increases in activewear. Under Armour for boys and girls launched just a year ago with us, and we will have it in 200 stores for back-to-school.” On the other hand, “Juniors has been up and down,” Bufano added, noting that junior dresses and denim were strong last spring, while some tops and wovens weren’t.

At Penney’s, “This is a comeback season for us,” said Betsy Schumacher, senior vice president and general merchandise manager of children’s. “Last year, we just did not have the inventory. We disappointed a lot of people, but we’ve spent a lot of time focusing our assortment and reenergizing private brands. We have totally rethought our denim, from an inventory standpoint and from a fit and styling standpoint,” Schumacher said, adding that jeggings, skinny fits, washes, destructed details, studs, color for girls’ denim, military, pleather, varsity and preppy jackets are key trends and items.

RELATED STORY: Penney’s B-t-s Strategy Seen Key to Revival >>

As b-t-s floor sets emerge at stores across the country this month, retailers, suppliers and consultants — speaking anonymously — projected sales, on average, to be “flattish” to 3 or 4 percent ahead for the season. Inventories have been planned conservatively, and parents and kids are expected to continue to shop cautiously, to a degree at the end of July and early August, and reserve much of their budgets until after school starts and students have the opportunity to check each other out for what looks cool and appealing to them.

“With teenagers, it’s not necessarily about making the massive purchase in August,” said Emilia Fabricant, executive vice president of Aéropostale. “They go out and buy initial outfits. Then go to school and see what everyone is wearing. I believe it will be two waves” of shopping. “Teenagers are evolving. They’re constantly online. Constantly getting new ideas. Girls want to amp up their wardrobes whenever. How they develop their style used to be influenced by girls and guys at school. Now there’s also information online, and information sharing is much quicker. We have nine million Facebook fans. We will be communicating on a daily basis. We’ll hit their lifestyle touch points, their music, their TV. We are going to talk about anything and everything that interests them. There will be information, conversation and a sharing of our products,” Fabricant said, citing motorcycle jackets and boots; relaxed boyfriend looks; sweaters, and the “blue story” in denim that’s destructed and detailed with zippers and patchwork, as important items and trends.

Retail sources said b-t-s 2013, more so than last year, is fraught with challenges brought on by exorbitant gas prices, higher payroll taxes, unemployment still being high, the nation’s declining birth rate and intensified competition for market share spurred by newer entrants into the kids apparel sector. Those new players include P.S. from Aéropostale, Crazy 8 and H&M kids, as well as fast-fashion chains like H&M, Zara and Forever 21 that compete with teen chains. The concerns get substantiated today, with the National Retail Federation, along with the BIGinsight research firm, projecting that parents have shortened their b-t-s shopping lists and that those with school-aged children will spend an average of $634.78 on apparel, shoes, supplies and electronics, down from $688.62 last year. College students and their families will spend an average of $836.83 on apparel, electronics, dorm furnishings and more, down from $907.22 last year. For b-t-s, the second-biggest consumer spending period next to holiday shopping, BIGinsight surveyed 5,635 consumers from July 1 to 8.

RELATED STORY: Forever 21 Teams With Marvel for B-t-s >>

“The good news is that consumers are spending, but they are doing so with cost and practicality in mind. Having splurged on their growing children’s needs last year, parents will ask their kids to reuse what they can for the upcoming school season,” said NRF president and ceo Matthew Shay. “It’s important to note, however, that spending levels are still well above where they were a few years ago.”

Retailers also have the record-high stock market, the slowly improving economy and their improving management skills working in their favor. “Retailers have done a really good job controlling inventory, flowing product and reacting to consumers’ buy-now, wear-now mentality,” observed Tom Burns, senior vice president at The Doneger Group. “Timing is key. Retailers are more tuned in and aware daily and hourly. That’s where technology plays a big part.”

Experian, a firm that provides consumer insights to different sectors, predicted that more retailers are reaching out earlier to consumers in July rather than waiting until August. In terms of online shopping searches, Experian said the peak week is July 29 to Aug. 5, versus the week of Aug. 4 last year. “We expect this peak week trend to continue as retailers try to extend the back-to-school season by starting earlier — a trend we’ve seen happen with the holidays and in particular Black Friday promotions,” said Bill Tancer, general manager, global research, Experian Marketing Services. Experian also reported that more retailers will offer deals through social networking sites, and that last year, e-mail offers from retailers with coupons or identifying savings had the highest unique click rate. Couponing and sweepstakes continue to be widespread, given the industry’s unwavering promotional posture, and will accelerate as Labor Day approaches. “A lot of the marketing activity is still planned around promotions and special events,” said Kathy Bradley-Riley, senior vice president and general merchandise manager at Doneger. On the fashion front, “There’s been a good evolution of styling. It’s acceptable with enough newness to motivate [consumers] to buy, but I don’t think there is huge change,” Bradley-Riley said.

Retailers are banking heavily on turns toward moto and boho styles, and a return to blue denim that’s washed, torn, patched up and devoid of last year’s kaleidoscope of colors. Faux leather, like pleather jackets and pleather accents on knits, are also seen as important.

Among the early b-t-s bestsellers, Belk’s Bufano cited little cowboy boots from Rampage, and lace, crochet and anything feminine and vintage, as well as graphic Ts with skulls, crosses, owls and birds. Belk will distribute its first direct mail piece Friday, a catalogue with about 40 pages with the “Be True” theme.

“We have a huge increase in social media,” Bufano said. “With Facebook alone, there’s about 33 percent more posts during back-to-school, and this month, Belk launched on Pinterest and Instagram with weekly posts.” In August, Belk stages an Instagram sweepstakes for the best-dressed junior or Millennial customer. Belk is also staging kids fashion shows at all of its 300 stores and will conduct a kids model search, giving one winner exposure in Belk catalogues.

RELATED STORY: Belk Gives Back for B-t-s >>

At Penney’s, Arizona is the most important private brand for b-t-s, particularly in denim, while another private brand specializing in activewear, Xertion, is also key. “The active trend in kids is so strong. We didn’t really have active in girls last year,” Schumacher said. Leggings, performance fabrics and neons are selling, she added. Penney’s first b-t-s merchandise flowed in this week, emphasizing shorts and short sleeves. Lightweight sweaters, longer sleeves and jackets arrive in early August. “We try to make sure we are seasonally appropriate from a flow standpoint,” Schumacher said.

Last year, Penney’s shoppers complained they couldn’t find the cash wraps fast enough, after many were eliminated as part of Penney’s reinvention. So this year, Penney’s has added 2,800 “carts,” which are like mini cash wraps, in 700 stores, as well as handheld point-of-sale devices for associates.

Macy’s b-t-s season should get a lift by four new brands that weren’t sold at the store last year: Keds and Teen Vogue in the mstylelab juniors area, and Maison Jules and QMack in contemporary, known as Impulse, supplementing other key b-t-s private brands, including Bar III, Rachel Rachel Roy, American Rag and Material Girl.

Among the upcoming events is a contest from Aug. 13 to Sept. 11 where mothers take photos of their kids on the first day of school and submit it to Macy’s Facebook page for a random drawing to win $500 Macy’s gift cards. There will be five winners. Aug. 10 will be Teen Vogue day at Macy’s, with fashion shows, live music and a chance to win a shopping spree, a trip to New York and consultation with a Teen Vogue style expert. In a new guerilla marketing tactic, Macy’s will put its name on pizza boxes and coffee cups at about 100 college campuses, encouraging students to text 62297 (Macy’s) for a chance to win $20,000 to help pay off their student loans or tuition. “We have some exciting events that are very different this year versus last year,” said Martine Reardon, Macy’s chief marketing officer. “Texting, Facebook and social media [overall] are playing such an important role. A lot of our creative is built around hash tags and texting.”

Target is going to school, literally, by creating glass-enclosed dorm rooms on five college campuses in August and September, filled with products for students to shop, and establishing BullseyeUniversity.com, similar to the “Big Brother” reality show, set in dorm rooms furnished with Target merchandise.

Target built a b-t-s ad campaign for the grade school set using kids who are not actors, to capture real confidence-boosting classroom situations, such as building a volcano that erupts in science class. A social media component of the campaign, “Kids Got Style,” asks parents to share photos of their kids showing off outfits they put together themselves.

RELATED STORY: Modest B-t-s Increases Expected >>

Sears is going all-out with jeans and colored pants for girls, boys and young adults, offering 1,000 different styles. Key brands include the Kardashian Kollection, Gloria Vanderbilt, Bongo, Lee, Jaclyn Smith, Levi’s, True Freedom and Canyon River Blues. The Kardashians will decorate their jeans, which will be displayed in certain store windows and given away through a sweepstakes. Also, Sears is launching a microsite with a link to Team Up to Stop Bullying, an organization that offers resources and advice for kids, parents and teachers.

“Yo Momma” jokes take a tasteful turn in Kmart’s campaign featuring kids in a playground hurling flattering Yo Momma one-liners at each other, such as “Yo Momma is so fashion-forward, when the future calls, they want those high tops back” and “Yo Momma is so fiscally responsible, she got all that on free layaway,” pointing to a boy’s outfit. Kmart has a big social media agenda, launching vines for Millennials and their moms, and will have shoppable videos on YouTube.

H&M is touting fashion and price and was inspired by downtown street fashion and rock ’n’ roll with graphic prints, bold colors, bright sneakers, floral leggings and frilled floral skirts.

To underscore low prices, Wal-Mart’s ad campaign will feature b-t-s basket challenges, where consumers shop Wal-Mart and a competitor for the same items and compare prices. Wal-Mart is touting more than 250 school supplies for less than $1. Bestsellers so far: two-pack glue sticks priced 50 cents; one-inch binders, 97 cents, and a box of 24 crayons for 50 cents. Wal-Mart plans to sell 42 million boxes of crayons. “We know that back-to-school costs add up,” said Duncan MacNaughton, executive vice president and chief merchandising officer of Wal-Mart U.S. “We aren’t playing games with our prices. The prices we advertise now will be the same low prices all season long.”

NEXT: B-t-s at Children’s Place, Macy’s >>

CHILDREN’S PLACE DETAILS B-T-S

After pulling off a strong 2012, and after a sluggish April, The Children’s Place managed a decent spring season. Here, Natalie Levy, executive vice president of merchandising and design, pinpoints the chain’s strategies and the trends for back-to-school.

WWD: What are the key fashion trends and items?
N.L.:
Skinny legs for both boys and girls. Jeggings continue with new prints and expanded colors for girls. Skinny jeans in denim as well as colored denim are new for boys. Animal is big in the kids market in all silhouettes — dresses, skirts, cardigans, jeggings and accessories. Boho is a key trend with embroidery, peasant details, fringe details for both sportswear and accessories.

WWD: What is expected to be new and important for this season?
N.L.:
Colored/skinny bottoms for boys is the newest trend. High-low dresses and skirts are newest for girls. Licensed graphic Ts with emphasis on Hello Kitty, Disney and Marvel being key themes.

WWD: What are some new and interesting marketing campaigns or tactics?
N.L.:
Our overall theme is “The Place for Back to School — Greatest Hits!” Our b-t-s campaign focuses on key items and expanded presentations to win this b-t-s season. We are running a b-t-s sweepstakes in conjunction with Parents Magazine, where we are asking kids to tell us what they want to be when they grow up, with the grand prize being $10,000 to use towards their college tuition — it’s called Cash for Class. We are also partnering with Disney to film a spot at one of our locations in California. The spot will be featured on the Disney Channel for three weeks during back-to-school. In addition, we have lots of in-store events planned to hype the tax-free events that will be running from the end of July through the middle of August.

MACY’S MIND-SET FOR B-T-S

• Fashion marches to a military beat as a utilitarian chic aesthetic takes over with rescaled and recolored prints, structured fits and unexpected details on cargo vests, pants and jackets.

• Denim is still a staple; skinny jeans for her and newness from vintage blues, moto details and sophisticated, distressed looks that take her from the desk to dinner. For guys, denim means versatility and a streamlined fit in chambray wovens, denim vests, jackets and graphic T-shirts.

• Americana for kids with stars, stripes and conversational prints for girls; boys see authentic and vintage inspirations from Fifties workwear.

• “Circus Life” themes for kids with a rainbow of color, playful abstract shapes and fanciful prints.

PHOTOS BY KYLE ERICKSEN; MODEL: AUDREY/VNY AND EVERETT K/NEW YORK MODEL MANAGEMENT; HAIR BY MARCOS DIAZ; MAKEUP BY JEN MYLES USING M.A.C. COSMETICS; PHOTO ASSISTANT: ZHE ZHU; FASHION ASSISTANT: EMMIE MARTIN; STYLED BY KIM FRIDAY

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