Aug 4, 2007

Back-to-school spending could be a retail bustBy Jennifer WatersMarketWatch.com

Chicago – (MarketWatch) — Many retailers are bracing for what could be one of the toughest back-to-school selling seasons in recent years as consumers deal with credit worries, higher gas prices and a sell-off in the stock market.

With nearly one-quarter of the country’s population in school, the three-month period when students of all ages stock up on notebooks, electronics and new clothes is considered the second-most important shopping period for retailers, ranking only behind Christmas.

Typically, parents consider back-to-school as a “must-spend” event, but this year many will be tightening their purse strings.

“Parents are trying to cut back spending wherever they can as the money pinch tightens this year,” said Britt Beemer, chairman of America’s Research Group. “Retailers should expect a lackluster back-to-school season.”

ARG’s national survey of parents’ spending plans found that 48.7% plan to keep back-to-school expenses to a minimum. Of those, an overwhelming 90.3% said this is because they have “less money,” Beemer said.

Forecasts on spending vary wildly. The National Retail Federation projected that all back-to-school spending would tally $18.4 billion, up 6.9% over last year. But the International Council of Shopping Centers is expecting sales to climb 5% to $27 billion. Beemer doesn’t have a total spending estimate in his forecast, but said that spending will only rise 2.5% over last year.

Many retailers already have kicked off their back-to-school promotions and a bevy of them will do so this weekend when a number of states hold what’s become an annual tax-free shopping weekend for the season.

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