July 21, 2009
Higher-end retailers and clothing stores nationwide are expected to see another year of declining sales during 2009’s important back-to-school season, the consulting firm Deloitte said Monday.
Sixty-four percent of respondents to an online survey that Deloitte conducted earlier this month said they plan to spend less money than last year on back-to-school items. Forty-three percent said they will cut back spending by more than $100, and 81 percent said they specifically plan to pare back clothes-buying.
The results show a slight bit more optimism than last year, when 71 percent of respondents said they would scale back purchases. But considering that consumers are anticipating closing their wallets even more after an already down year, some stores could be hit hard, said Dave Rooney, who leads Deloitte’s consumer business practice in Colorado.
“Folks are going to focus on necessities, necessities sort of being in and niceties being out,” Rooney said. “Discounters and the dollar stores are going to do well. And higher-end retailers and clothing stores will bear the brunt of this (spending decrease).”
Back-to-school sales typically make up about 15 percent of retailers’ total sales, making it the second most important season of every year behind the Christmas season.
Though it is a less discretionary season than in December — school children have to have a certain amount of items to begin the year — many retailers look at it as an indicator of what is to come, Rooney explained.
According to the 1,044 U.S. consumers polled for the survey, 70 percent said that economic conditions will impact their buying behavior. The biggest ways in which that will play out include people looking to buy more items on sale (74 percent), buying only what their family needs (65 percent), buying more lower-priced items (55 percent) and using more store coupons (55 percent).
Almost half of the respondents — 45 percent — also said they plan to shop at less expensive stores than they usually do. Discount stores like Wal-Mart and Target are likely to be the beneficiaries of such consumer down-scaling, Rooney said.
Clothing was by far the item that respondents felt likely to cut back on the most, followed by shoes (49 percent) and supplies (32 percent). However, 41 percent of customers, about the same percentage as last year, said they still will seek out “green” products, which are typically more expensive than other products.
While shoppers last year were cautious in their spending mostly because of the escalating prices of gas and food at the time, this year’s jitters revolve around the unemployment rate, which has hit 7.6 percent in Colorado. Twenty-two percent of survey respondents indicated that someone in their household had lost a job, while an additional 17 percent expressed fears of job loss.
Also, 32 percent of those surveyed said they are saving more money, a boost of 10 percentage points from last year and a figure that Rooney used to argue that the changes in back-to-school buying habits may be permanent rather than temporary.
“To the extent that people have extra money nowadays, they’re saving that money, where in the past they used to tend to spend it,” he said.
The Deloitte survey came six days after the National Retail Federation released a survey predicting that back-to-school spending will decline 7.7 percent this year. The average family is likely to spend $548.72 on school merchandise, compared to $594.24 in 2008, that survey stated.
“The economy has clearly changed the spending habits of American families, which will likely create a difficult back-to-school season for retailers,” NRF President and CEO Tracy Mullin said in a news release. “As people focus primarily on price, strong promotions and deep discounts will ultimately win over back-to-school shoppers this year.”
For further information, visit: http://www.bizjournals.com/denver/stories/2009/07/20/daily14.html