Experts predict back-to-school price cuts sooner than later
Posted on Sunday, July 13, 2008
Back-to-school shopping is just around the corner — one chain has declared it officially under way — and retailers are deploying a variety of tactics to attract shoppers suffering from high gasoline prices and other economic woes.
Retail experts expect only limited gains, if any, over a year ago and give discount stores the edge. That trend was evident in last week’s retail sales reports for June, which showed Wal-Mart Stores Inc. and other lowprice chains making the biggest year-over-year gains.
New clothes will top most shopping lists if historic patterns serve as a guide. Last year, back-to-school shoppers spent $ 7. 5 billion on apparel alone, according to the U. S. Census Bureau.
But shoppers also will be looking for traditional school supplies such as pens, notebooks and glue as well as cell phones, laptop computers and, for college-bound students, dormitory supplies.
“It cuts across a lot of categories,” said Patricia Edwards, a Seattle-based fund manager for Wentworth, Hauser & Violich, Investment Counselors.
Back to school ranks behind Christmas as the second mostimportant shopping event of the year.
The National Retail Federation and BIGresearch LLC, a Worthington, Ohio, market research firm, put 2007 ’s back-toschool spending at $ 18. 4 billion. This year’s survey is scheduled to be released July 22.
Staples Inc., known mainly as an office supplies retailer, took it upon itself to declare July 8 the official start of backto-school shopping.
The company cited a study it commissioned showing that most mothers shop two to four weeks before school begins. Many schools start classes in mid-August, but some start as early as July, said Katie Sullivan, a Staples spokesman.
She said the company’s customer research found that shoppers, primarily mothers, wanted to know when the best assortment of school supplies would be in stores.
“We found that this was a great day to jump-start the backto-school shopping,” she said.
J. C. Penney is among the most aggressive of midtier retailers this year, launching five new exclusive or private-label brands.
“We’re really focusing on the lifestyle brands we’re offering teens this year,” spokesman Kate Parkhouse said.
Fabulosity is an apparel line aimed at the teen market; Le Tigre and Decree are new juniors apparel brands; and White Tag apparel is for young men. Dorm Life includes a number of products including towels, rugs, lamps and bedding designed for college-bound shoppers.
Advertising for the products is based on the 1985 teen-genre movie The Breakfast Club, with re-created scenes from the movie featuring actors wearing Penney brands.
Parkhouse said Penney has not made any back-to-school sales forecast.
“Right now, it’s all about market share and it’s all about innovation,” she said. “That’s why we have such a push for new brands.”
Bentonville-based Wal-Mart, biggest of the retailers, is urging shoppers to “do the math” and compare its prices with others. Its core message is unchanged, spokesman Shannon Frederick said: one-stop shopping and unbeatable prices.
“Certainly we know that it’s tough economic times,” she said.
Shoppers entering the nongrocery side of the Wal-Mart Supercenter in south Rogers are met immediately by bins in the main aisle filled with pens, pencils, crayons, markers, index cards, glue sticks, hand sanitizers, backpacks for $ 10 and $ 15 and “do-the-math” signs.
Off to one side, in the seasonal section, are more notebooks, folders, three-ring binders, globes, calculators, printer paper and other supplies.
Frederick said the back-toschool setup should be complete in stores this weekend.
Target Corp., Wal-Mart’s chief competitor, says it will feature backpacks, school supplies and other products in a partnership with the Disney Channel and its original movie Camp Rock featuring the poprock band the Jonas Brothers. The Minneapolis-based discount chain has about 1, 500 U. S. stores, compared with Wal-Mart’s more than 4, 100 stores.
Wisconsin-based Kohl’s Corp. is banking on the star power of musical artists such as Lenny Kravitz, Avril Lavigne and Hayden Panettiere to promote its denim apparel lines.
Julie Gardner, Kohl’s executive vice president and chief marketing officer, said that its campaign is designed to appeal to mothers as well as teens.
“While teens are undoubtedly an important shopping group for the back-to-school season, research shows that moms also spend for themselves during this time frame,” she said.
A TOUGH ENVIRONMENT George Whalin, a longtime retail consultant based in Carlsbad, Calif., is not anticipating great results this back-to-school season: Too much economic turmoil, he said. “Pricing will be very aggressive by pretty much everybody,” Whalin said. “It will be probably one of the worst ones we’ve had in a while. The retail business is not healthy right now.” Department and specialty stores, in particular, probably will not do well, he said. Camille Schuster, a marketing professor and retail consultant in Escondido, Calif., forecasts a back-to-school shopping season focused on basics. Children will need clothes to replace what they outgrew since last school year, and basic school supplies, she said.
“I’m not sure there’s going to be as many fun things sold this year,” she said.
Economic stimulus checks are largely already spent, she believes, and retailers will be pressured to move merchandise they have already ordered.
“The price cuts are going to come sooner and deeper than they usually do,” she said.
Edwards pointed out that, among apparel retailers that appeal to teenage customers, higher-priced Abercrombie & Fitch Co. and American Eagle Outfitters Inc. reported sales down from a year ago. Their stock prices also have gone down.
Lower-priced Aeropostale Inc. has seen sales gains and its stock has responded accordingly.
“Even the teens are trading down,” she said.
“It’s going to be about price. Generally speaking, I think it is the people who deliver the goods with the lowest cost that will do the best.” To contact this reporter: spainter@arkansasonline. com
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