Consumer Nation
- Wandering Through Toy Land
- Sam Adams Brewer Crafts Beer for the Granddaddy of All Marathons
- Luxury Shoppers Are Back—and at Full Price: Saks CEO
- In Sin City, Greed Is Not the Main Attraction
- Toymakers Hope Parents Are Ready to Splurge
- Feeling 'Worlds Better' About US Economy: Marriott CEO
- Fighting Fashion Counterfeiting, One Tote Bag at a Time
- A Profitable Polyvore Struts Its Stuff at Fashion Week
- Retailers See Happier Valentine's Day
- Young and Fashionable: Gen Y Flocks to Online Luxury
RSS FEED
MOST SHARED
- More Asset-Buying Depends on Economy: Bank of England
- RBS to Pay Out $627 Million in Bonuses Despite Loss
- Japan Manufacturing Mood Dips to Levels After Quake
- Household Debt, Not Politics, Worry for Australia: Economist
- Japan's Sumo Belly Flops to $50 Million Debt
- 7 Undervalued IPO Stocks That Could Rebound in 2012
- Credit Agricole Posts $4.1 Billion Fourth Quarter Loss
- Break-Up, Greece Cause Huge 2011 Dexia Loss
- What if Mitt Romney Had Been President in 2009?
- The Rise and Fall of a Multibillion-Dollar Ponzi Scheme
- Wandering Through Toy Land
- Dell Is Done, But Don't Discount HP: Analysts
- Comcast Deal Could Spell Trouble for Netflix: Analyst
- Reading the Tea Leaves in RIM Shake-Up
- Sam Adams Brewer Crafts Beer for the Granddaddy of All Marathons
- Stocks to Give Up for Lent
- You Want Retail Customers? Give Them Deals: Analysts
- NJ Governor Chris Christie to Warren Buffett: 'Just Write a Check and Shut Up'
- 7 Undervalued IPO Stocks That Could Rebound in 2012
- More Asset-Buying Depends on Economy: BOE
- Stocks Sputter as Investors Seek Next Catalyst
- Winners and Losers in Obama's Corporate Tax Plan
- Santorum Takes Heavy Fire in Arizona Republican Debate
- Volcker Rule Threatens Recovery: Finance Ministers
- Next Bank of England Governor: The Race is On
- HP, Dell Watch Rising China Labor Costs for Apple
- China Internet Firm Qihoo Says Citron Allegations False
- Romney Proposes Slashing Top Tax Rate to 28 Percent
Retailers Should See Strong Back-to-School Season
Text Size 
News Editor
Even though the kids have barely gotten settled into the routine at summer camp, in retail land it's already getting to be that time of year again: back-to-school season.
 |
Jupiterimages | Comstock Images | Getty Images Customer Growth Partners expects this year's back-to-school season to be the best one for retailers since before the recession. |
If you headed out to the mall this weekend to hit the Fourth of July sales, you were likely greeted at the door with a taste of a fall. At Old Navy [GPS
Loading...
()
], for example, quilted jackets and school uniforms were prominently on display. (Nevermind that customers still have many weeks ahead to use any bathing suits they snagged on clearance.)
And the catalogs arriving in the mail from Pottery Barn Kids [WSM
Loading...
()
] and other retailers are chock full of backpacks and lunch boxes.
That also means it's time for analysts to turn in their back-to-school retail sales forecasts.
Craig Johnson, president of Customer Growth Partners, said Tuesday that he expects back-to-school spending to climb 6.2 percent to $467 billion between July and September from the prior year. If this proves correct, it would be the best back-to-school spending growth since 2006.
Johnson points to several reasons for his optimistic forecast. First, disposable personal income has been on the rise, up 3 percent from last year's level.
Households also have healthier finances, according to Johnson. The 91 percent of the population that is employed has been cleaning up their debt loads, and household debt service ratios are down to 11.5 percent of income, according to the Federal Reserve. That's the lowest level since 1995.
Meanwhile, personal savings rates, which spiked to 8.2 percent two years ago during the recession, are returning to more normal levels, Johnson said. Right now, the rate is about 5 percent, which is just a touch above the historical 4 percent norm.
 |
The decline in back-to-school sales in 2009 was the only decline in back-to-school sales on record. |
Johnson's back-to-school forecast comes just ahead chain-store sales reports for June, which are expected to show a 4.6 percent increase in same-store sales from the same period last year, according to Thomson Reuters estimates.
Last year, retailers reported a 3.1 percent gain in retail sales during June.
June is not an exceptionally important one in the retail calendar. Retailers typically use the time to clear out spring and summer merchandise to make way for the back-to-school items. But June sales will be watched closely for what it says about the health of consumers.
In May, consumer spending was hurt by rising gasoline and food prices as well as by concerns about the economy.
Johnson expects consumers are savvier shoppers now and are able to navigate these concerns.
Still, consumers will be greeted with higher apparel prices when they do their shopping for the fall.
"We anticipate average ticket price increases of 5 to 10 percent for apparel, and higher percentage increases for low-cost items where cotton costs predominate," Johnson said. "But the key is what the out-the-door average selling price will be, as strapped consumers resist higher prices for lower-cost commodity goods, while upmarket consumers barely blink at $5 or $10 increases for items from $80 on up.”
How retailers manage this dynamic will separate the well-managed companies from those that are not. Johnson expects the stronger performers to use the inflation to add value and generate a higher gross margin.
The news will be very different in the consumer electronics category. Johnson expects anemic topline dollar growth in the sector as falling prices offset rising unit sales.
He expects strong demand for tablets, eReaders and smartphones, and for Best Buy [BBY
Loading...
()
] to lose customers to Amazon [AMZN
Loading...
()
] and Apple [AAPL
Loading...
()
], the fastest growing consumer electronics retailers.
Questions? Comments? Email us at . Follow Christina Cheddar Berk on Twitter @ccheddarberk.
Data is a real-time snapshot *Data is delayed at least 15 minutes
