Fung Global Retail & Technology projects that back-to-school spending will reach near-record levels as consumers quit saving and start spending.
Fung’s managing director Deborah Weinswig said that the macroeconomic backdrop was the reason behind the positive outlook. She noted that gas is cheaper than last year, inflation is moderate, unemployment is healthy and wage growth has picked up. She pointed out that housing prices have gained and the savings rate has dropped.
Weinswig said that bts spending is expected to rise 2 to 3 percent versus last year’s increase of 0.4 percent. Millennials are now becoming parents of school-age children and beginning to enter the school shopping picture. She also said that the National Retail Federation found when that figure is combined with back-to college the total could rise 11.5 percent to $75.8 billion. Plus, the average total bts spend per family is expected to be $673.57, nearing 2012’s $688.
She said that 95 percent plan to buy clothing and accessories and will spend $235 on average. That’s an increase of 8.1 percent. The hot items are expected to be jewelry and handbags. Fashion trends for bts include the puffer vest, longline vest, cotton joggers, faux-leather joggers, military jackets and bomber jackets.
There are three things that retailers are doing that are also helping to boost spending, said Weinswig. Merchandise tie-ins like “Finding Dory,” the discounts where customers spend in order to save and new mannequin displays are motivating consumers to spend. She described displays that pull together entire looks and then provide all the products right beside the display are leading to more sales.
Consumers are also expected to begin shopping earlier this year. Weinswig said that increased social media campaigns are driving shoppers to start to picking up items now instead of waiting until school starts.
The Fung research showed that 26.1 percent plan to shop at least 2 months before school starts versus last year’s 19.9 percent. Conversely, only 33.8 percent will shop three weeks prior to school starting versus last year’s 42.8 percent.
Weather is always a factor for shoppers and this year will be no exception. Planalytics, which analyzes weather patterns for retailers, said that August is warmer in the Northeast this year, but cooler on the West Coast. Sarah Levenson, a client services manager at Planalytics said to expect better numbers from out West for August. The heat in the Northeast will cause challenges to bts apparel shopping.
Last September was the warmest since 2012 and this year is expected to be much better. Levenson said she expects a cooler trend and when people have a hint of cool weather, they tend to want to start shopping.
Weinswig said that last year’s shopping was characterized by people trying to make do. They scoured the house for supplies and managed with the clothes on hand. This year, people are feeling better about their economic picture. She also noted that with kids growing, parents can only put off clothes shopping for so long.
Shoppers will be headed to discount stores and department stores as they begin spending. If the earnings from Macy’s Inc. and Kohl’s Corp. are any indication of what’s to come, it does look like retail may get good grades for this year’s back-to-school spending.