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Spending Predictions Vary for Back-to-School

8/18/2008
August 18, 2008 -- With summer coming to a close and school right around the corner, parents and students alike are making a mad dash to do their back-to-school shopping. As gas and food prices rise, research findings show that this season will benefit some retailers and present a challenge for others.

Nielsen Says One Stop Shopping is Key

A recent report -- "Nielsen Forecasts U.S. Sales of More Than $1.5 Billion in Back to School Supplies," from The Nielsen Company reveals that consumers won't be skimping on supplies, despite widespread concerns about a pending recession. The company forecasts 2.6 percent growth (or more than $1.57 billion) in school and office supply sales during the core back-to-school selling season that began in mid-July and goes through early September.

While Nielsen predicts that sales will increase, consumer spending will be prevalent at certain retailers over others. Because consumers are combining their trips to conserve gas, many stores that sell items across a variety of categories -- grocery stores, drug and mass merchandiser stores -- will end up selling more back-to-school products than competing specialty stores.

James Russo, vice president of marketing, food and beverage sector for Nielsen, sums up the findings: "Consumers may be cutting back in terms of discretionary spending, but they are not about to send their kids to school without the necessities. While we don't expect to see a drop in back-to-school sales in this economic downturn, we do foresee changes in where consumers shop for back-to-school items, along with the prices they are willing to pay."

Deloitte Says Consumers will Cut Back

Contrary to Nielsen's findings, is a Deloitte LLP survey called "Challenging Back to School Shopping Season Ahead," which revealed that consumers will spend less on school supplies this year compared to last. However, in line with the Nielsen report, Deloitte says nine in 10 consumers will shop at discount/value stores.

Stacy Janiak, Deloitte's U.S. retail leader comments, "These survey results indicate that consumers will likely stick to the basics this fall, and parents may be saying 'no' more often as they head to the register. Retailers should focus on areas that will contribute to profitable growth, such as adapting their merchandising and promotional activities to increase loyalty among existing customers and attract new customers."

In the same survey, 90 percent of respondents say they will change the way they shop for back-to-school items, including:
> 70 percent will buy only what the family needs
> 68 percent will buy more lower-priced items
> 46 percent will shop at different, less expensive, stores than usual
> 45 percent will put off buying certain items for as long as possible to wait for sales
> 27 percent will research more products online, to find the best price

Reaching a Consensus

Although the outlook varies, both companies report that consumers are gearing their shopping habits towards the same type of retailer. According to Deloitte, survey results "indicate that this year the vast majority of consumers (88 percent) will do their back-to-school shopping at discount/value department stores."

Russo concurs: "Consumers are clearly shifting to value and one-stop-shop channels as they seek to optimize shopping trips."
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