Aug 11, 2009

Back-To-Basics Seen For Sluggish Back-To-School Retail SalesBy Karen TalleyOnline.WSJ.com

New York, NY–It’s going to be pretty bare bones when it comes to back-to-school shopping, with sales this year shaping up to be even worse than 2008.

“Necessities,” “value” and “basics” were the words most used by Citigroup’s retail analysts on a conference call Monday to describe how consumers will approach what is traditionally the biggest buying period of the year after the Christmas holiday.

The National Retail Federation has already predicted that back-to-school spending per household will fall over 7% from last year’s dismal season.

Consumers will be shopping with smaller budgets, meaning that products from personal computers to pencils will have to be sharply priced, the analysts said.

Department stores are likely to face the biggest challenges, with mall traffic unlikely to see an uptick soon.

Retailers like J.C. Penney (JCP), Target Corp. (TGT) and Kohl’s Inc. (KSS) may see some benefits because of their private-label apparel lines, said Citigroup retail analyst Deborah Weinswig.

Target, however, does face continued competition from Wal-Mart Stores Inc. (WMT), which has been making a big marketing push for back-to-school dollars.

Retailers are also looking at later back-to-school buying this year because Labor Day falls further into September. Also, teenagers may hold off spending until school is under way to check out what their friends are wearing, Weinswig said.

Read complete article.