Back-to-school spending forecast

Next to winter holiday shopping, Americans spend more money during the back-to-school and –college shopping season than any other time of the year. In 2009, $47.5 billion was spent, according to the National Retail Federation. Retail market experts expect school shopping season 2010 to be on par. Others—above par.

“Back-to-school season 2010 may be the best in a few years,” said Michael P. Niemira, staff vice president, chief economist and director of research for the International Council of Shopping Centers, Inc. (ICSC).

“The arithmetic is very favorable,” he said. “Still, from the retailer’s standpoint, I suspect that the overall picture is still one of much caution. Partly—because it’s not a smooth sailing retail environment. It’s still considerably choppy.”

But will the touch-and-go economy affect this season’s spending trends?
Short answer? “No,” says Niemira.

He said ICSC and similar organizations now have clear evidence, dating back to about September that the retail recovery is at hand and continues to unfold.

“We think such will likely be the story ahead through the back-to-school season,” said Niemira. “The recovery in retail spending will continue. Even if it’s not strong, I believe it to be a relatively healthy picture.”

So has the economy forced parents to be less brand conscious and more focused on costs? Niemira thinks so. 

“The recession’s certainly brought about that and I don’t think it’s changed, even though we’re about a year past the recession.”

Any new trends?

“We’ll likely see better performance—in particular, in family clothing,” he said. “But while apparel is usually the bulk of back-to-school sales, and should continue to be,” said Niemira, “it will be interesting to see how the new iPads will factor into the grand scheme. They could certainly be a part of the electronics story this year.”

How does the National Retail Federation feel about back-to-school 2010? Michael Gatti, senior vice president of communications for NRF, says it will help to consider 2009.

According to the 2009 Back-to-School Consumer Intentions and Actions Survey from the National Retail Federation (NRF), 85 percent of Americans in 2009 said the economy is affecting their back-to-school and back-to-college plans, specifically:

• 56.2 percent of shoppers will hunt for sales more often,
• 49.6 percent will spend less overall,
• 41.7 percent plan to purchase more store brand/generic products, and
• 40.0 percent plan to increase their use of coupons.

The NRF report for 2009 anticipated most back-to-school category spending to decrease, with one bright spot: electronics—notably laptop and desktop computers and other computer equipment—where spending was expected to increase 11 percent.
While discount stores were the most popular destination for shoppers, drug store spending rose substantially. Still, more than half of all shoppers headed to department stores.

NRF’s 2009 back-to-college survey, conducted by BIGresearch found college students and their parents planned to spend an average of $618.12 in 2009, compared to $599.38 in 2008. In fall 2009, fewer people attended college than the previous fall, causing total college spending to decrease to roughly $30 billion. 

The survey also found 12.8 percent of respondents say the economy will impact where a student lives, with many choosing to save money by living at home. In 2009, 58.5 percent of college students lived at home, compared to 54.1 percent in 2008 and 49.1 percent in 2007.

So how will 2010 compare? “We expect to see improvements,” said Michael Gatti, “albeit slight improvements. Slow and steady.”

Back-to-school shopping season is generally considered to stretch from mid-July through the beginning of September. Niemira says most sales occur in August. However, he said, sometimes the season extends into mid-September as students like to see what other students (er—students’ parents) are buying.

Ask any parent what they want to see and the likely response: “Sending the laundry duties back to campus,” or, “Seeing the a.m. school bus pull away.”

A potential spoiler?

According to MarketWatch.com: The consumer sentiment index unexpectedly plunged 9.5 points from 76 to 66.5 in July as Americans became increasingly concerned about the U.S. economic recovery’s strength and lackluster job growth. That decline in the index, based on the Reuters/University of Michigan Surveys of Consumers, brings the metric to its lowest level in 11 months. A Bloomberg survey had expected July’s consumer sentiment figure to dip to 75. This survey shows a clear trend in the consumer viewpoint: Americans may know the economy is growing, but they remain very concerned about the nation’s ability to create jobs, and about their personal financial situations.

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