Summer Is Here and So Is Back-To-School Buying Season

Date : 07/02/2012 @ 9:29AM
Source : Dow Jones News
Stock : Staples, Inc. (SPLS)
Quote : 10.25  0.0 (0.00%) @ 2:05AM

Summer Is Here and So Is Back-To-School Buying Season

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(This article was originally published Sunday.)

   By Karen Talley 

Summer is barely here and it is already time for back-to-school--shopping, that is.

Young people wearing flip-flops and bright cutoffs and tops are starting to be met in the mall by more somber colors and longer pants, ushering in the annual back-to-school buying season.

At a Macy's Inc. (M) store one recent morning, full-price, navy-blue Levis and brown-and-beige T-shirts were lining the main aisle, more in keeping with fall looks. Nearby, tanks and white pants were going for 40% off.

Target Corp. (TGT) had up to 70% off sleeveless shirts and shorts, while a manager said the retailer began putting out back-to-school merchandise a week or two ago, and would likely be finished by the end of next week.

A J.C. Penney Co. (JCP) was still flush with summer merchandise, with nary an autumn offering to be found. The department store has been having trouble moving product since it virtually dropped promotions. A lack of buying may have played a role in Penney's abundance of summer wear.

One indicator of how the summer is playing out will come Thursday, when retailers release their June sales figures for stores open more than a year. The 20 retailers that report are expected by Thomson Reuters to show a 1.2% rise, with growth limited by strong comparisons from last year and signs of economic duress.

The early arrival of fall merchandise, an annual rite as retailers try to outgun each other, is still a bit jarring to some shoppers. "I wish they'd wait a scooch more," said Pamela Cappello of Hicksville, N.Y. "We haven't even been on our summer vacation yet."

After Black Friday and Cyber Monday, back-to-school season "is the No. 3 seasonal occasion our customers shop us," said Paul Okimoto, marketing vice president at RadioShack Corp. (RSH).

The company will start advertising next week, "sooner than in prior years, because we know consumers are starting to think about their electronics purchases long before returning to campus," Mr. Okimoto said.

This year, RadioShack will be focusing on college students because they are a more profitable audience and RadioShack's products skew to this group, Mr. Okimoto said. In addition to smartphones, RadioShack sells ancillary electronics products like cables and chargers.

Consumer electronics play a major role in back-to-school buying. The older the student, the more the purchasing of gear like personal computers and smartphones. Younger students also are increasingly using technology in their classwork, making consumer electronics' piece of the back-to-school pie even bigger.

Other stores are also in the spirit of things. Teen retailer American Eagle Outfitters Inc. (AEO) announced a back-to-school contest whose winner will be featured in the company's spring promotional campaign. Office-supplies retailer Staples Inc. (SPLS) rolled out products this week including binders in new, patterned designs. Staples also is offering discounts through its "Back-to-School Savings Pass."

There is plenty at stake. Nearly $70 billion was projected by the National Retail Federation to be spent on back-to-school and college merchandise last year. That puts the July and August period ahead of all other holidays except Christmas, at $471.5 billion. The trade group hasn't yet made its projection for this year.

But in an NRF survey of consumers with school-aged children, 80.4% said the U.S. economy will impact their school spending plans this year. The figure, while down from 86% in 2011, still suggests how the lion's share of consumers are feeling about their financial condition.

"We've seen 23 straight months of year-over-year U.S. retail-sales growth," said NRF spokeswoman Kathy Grannis. "But at the same time key factors like sentiment and consumers' overall attitude about a strong economy are slipping."

In fact, there may already be some cautionary signs. Summer inventories are "still rather robust for it being a week from July 4," said Eugene Fram, professor emeritus at the Rochester Institute of Technology's E. Philip Saunders College of Business. "There are few 'holes'" in merchandise offerings.

While there is no hard evidence more back-to-school buying will be done online, indications are it certainly won't slow. Retailers that focus on apparel and other categories in demand during back-to-school season posted a 16% increase in online sales during the second quarter, according to Mercent Corp., which supplies software that helps retailers sell on the Web.

From laptops to sneakers, back-to-school buying "has actually seen a bit of a shift to online, just like everything," said Doug Hart, partner in BDO USA's retail practice. "It's no longer a just going-to-the-store type of event."

There are mixed opinions about whether back-to-school shopping is a good indicator of how much consumers will spend during the Christmas season. What is bought is a good bellwether for what is hot in terms of merchandise. But there is enough of a gap between the fall months and the Christmas-buying period for economic conditions and sentiment to shift.

Write to Karen Talley at

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