According to NRF’s annual survey, total spending is expected to rise to $75.8 billion from last year’s $68 billion. The survey conducted by Prosper Insights and Analytics supports the shopping cycle of stocking up versus making do.
Families follow a pattern of spending that increases once a year as they stock up on supplies, only to drop the following year as they make do with items that can last longer. Items like backpacks can be stretched into two years of use. In the third year of the cycle, families have to replace clothing that is outgrown and items that aren’t usable.
A lackluster start to the retail year means that back-to-school’s contribution will be even more important to the full year’s earnings and Wall Street analysts are keeping a watchful eye. RBC Capital Markets analyst Brian Tunick pointed out Abercrombie & Fitch and Nordstrom are expecting the greatest sequential improvement since they had significant declines in the first half of the year.
“While traffic may have slowed somewhat in the first half of July, as a clearance-heavy period, our greater focus will be on late July and initial August commentary during second-quarter earnings,” said Tunick. He is also very mindful that there are fewer tax-free shopping days this year versus last year. Overall there are nine fewer tax-free days and fewer states participating in tax-free holidays. Florida only has three days and Massachusetts eliminated them altogether.
“Heading into the second half of the year, we are optimistic that overall economic growth and consumer spending will continue to improve as they did in the first two quarters of the year,” said NRF president and chief executive officer Matthew Shay. “We fully expect retailers to be aggressive with offering great deals both in stores and online for back-to-school shoppers. And retailers will keep a close eye on inventory levels as families spread out their shopping throughout the summer.”
According to the survey, K-12 consumers plan to spend $9.54 billion on clothing and $5.12 billion on shoes. Parents say they will spend on average $235.39 on clothing and $126.35 on shoes.
College consumers plan to spend $7.49 billion on clothing and $3.84 billion on shoes. The average college-age shopper will spend $211.33 on clothing and $70.39 on shoes. College students spend more on electronics as laptops are big-ticket items that are a necessity.
The increase in spending is attributed to growing consumer confidence. A few more families will be shopping for sales and comparing prices online, but those that said they would be spending less has dropped.
“The budget-conscious consumer is not forgetting about price, quality or value, and we continue to see this when it comes to back-to-school shopping,” Prosper principal analyst Pam Goodfellow said. “That is why many parents are taking advantage of shopping early, scouring ads and Web sites for the best deals, and taking advantage of free shipping with online purchases.”
Discount stores are still getting the bulk of the K-12 back-to-school dollars as 61 percent said that is where they will go, but they are losing share to online retailers. Forty-six percent of parents said they would do their shopping online, which is a dramatic jump from last year’s 36 percent. Free shipping was the biggest reason for the change, along with the option to buy online and pick up in the store.
College shoppers are also mostly going to discount stores, but at 44 percent it’s the lowest level in the survey’s history. In an unusual twist, college shoppers are not shopping online as much as they have in the past, dropping to 38 percent from last year’s 39 percent.
Both groups say they plan on starting their shopping earlier as they try to spread out their increased budgets.