Back-to-school Business Is Seen Getting Barely Passable Grades
By DAVID MOIN
Between extreme weather conditions, weakening consumer confidence and inflation, the climate for selling school supplies and clothes for students is chilly.
It’s still early days, but the 2024 back-to-school retail season is already barely getting a passing grade, according to prognosticating industry experts.
Inflation, blazing heat through much of the summer, weakening consumer confidence and a desire from many people to spend only on necessities and heavily discounted items are hampering back-to-school spending. While retail spending is up year-over-year — there was a surprising 2.3 percent gain in U.S. retail sales in June — most indicators point to consumer caution around discretionary spending.
“There is newness to drive demand. People will spend for something they don’t have in their closet, but I think it will be a more measured season,” said Dana Telsey, chief executive officer and chief research officer at the Telsey Advisory Group, citing new wide-leg, loose-fitting denim and Western boots as well as shorts, skirts and dresses driving some business.
“It will be a fair season,” commented Terry Lundgren, CEO of TJL Advisors and former chairman and CEO of Macy’s Inc. “We’re clearly starting to see consumers trading down and starting to pull back. Consumer spending has lasted longer than most people thought, and moving forward, the overall consumption numbers might remain generally positive. But the activity will shift more to the offprice category, and Walmart. Hopefully, Target will see a rebound. It sounds like Target is making the right moves to get back on track and Walmart is just doing great overall.”
Due to the recent extreme heat, “People are buying more to needs and that means more swimsuits, shorts and sandals,” said Evan Gold, executive vice president of global partnerships and Alliances at Planalytics, which uses weather data to help retailers plan inventories. Currently, spending on back-to-school in its early days appears modest, with the possible exception of buying dorm furnishings and electronics, Gold said.
Gold estimated that in July in the Northeast, unit sales of air conditioners would be up 16 percent from last year; fans would be up 10 percent; sun care up 6 percent; swimwear, up 5 percent; shorts up 3 percent; sandals up 2 percent, and water up 3 percent. Nationally, unit gains in the aforementioned categories have not been as big in July, with air conditioners and sandals around flat and fans, swimwear, sun care and water all up about 1 percent.
The outlook for back-to-school selling in August looks better, with the southern tier from Florida to California as well as the Pacific Northwest expected to cool off somewhat, Gold said. The Midwest and Northeast are expected to be warmer than normal in August which Gold said shouldn’t hamper back-to-school selling much, but could mean a higher percentage of summery clothes selling compared to fall apparel.
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