Parents will be doing their homework before they head out to do back-to-school shopping, according to the latest spending forecast for the season.
The National Retail Federation, the industry's trade group, is expected to issue their back-to-school shopping forecast Thursday. Their outlook calls for sales to be flat with the year-ago period as parents practice restraint in their spending decisions.
The industry's estimate is not as optimistic as some other outlooks that have been issued in recent weeks. Earlier this month, Customer Growth Partners President Craig Johnson estimated a healthy increase of 6.2 percent for the season, arguing that consumers have been saving up for the season and are getting more comfortable with their own financial situation.
But more recently the forecasts have been more modest. This week, NPD Group said the majority of Americans would spend about what they did last year. The market researcher also predicts that shoppers will again delay purchases until later in the summer.
A delay in shopping can indicate that consumers are being cautious with their spending as it indicates that shoppers are waiting for better deals, to save more money to shop or that children are waiting to see what their friends are wearing before they stock up.
The NRF survey also predicts consumers will shop closer to the start of school.
Granted these forecasts tend to measure spending in different ways. Johnson's forecast projects total retail spending between July and September, while the NRF's forecast estimates how much of the total spending is generated by back-to-school and back-to-college expenses.
But the range of forecasts speaks volumes about the uncertainty surrounding the consumer's mindset these days. There has been anecdotal discussions about a return of a paycheck cycle as lower-income and middle-income consumers find more of their income gobbled up by gasoline and food costs. The paycheck cycle refers to consumers spending at the beginning of the month, then slowing down as they run out of money before their next paycheck.
Those who track the retail industry pay close attention to the back-to-school shopping season. First, it is the second-most lucrative shopping period behind the Christmas holiday shopping period. Also, many analysts believe shopping patterns during the back-to-school season can provide some insight into how the winter holiday sales will shape up.
"Families aren't opposed to spending on what they need, but parents what their children to take a good look around at what they already have before deciding what to buy for back to school this year.""
The NRF's survey, which was conducted by BIGresearch, estimates families with children in grades K-12 will spend an average of $603.63 on apparel, school supplies and electronics, within a few dollars of last year's $606.40 average. Total spending on grades K-12 is expected to reach $22.8 billion.
When cormbined K-12 and college spending will reach $68.8 billion, the NRF said.
Parents are often forced to buy new clothing for growing kids, but this year the clothing budget is being slightly trimmed as is projected spending on school supplies.
In order to meet this goal, those surveyed by BIGResearch said they would purchase more store-brand or generic items (39.9 percent), comparison shop online (29.8 percent), and shop sales (50.0 percent).
Why the pullback? Nearly half the respondents in the survey blame the economy. About 43.7 percent of those polled said economic conditions are forcing them to spend less in general.
"Families aren't opposed to spending on what they need, but parents what their children to take a good look around at what they already have before deciding what to buy for back to school this year," said NRF President Matthew Shay.
That said, don't expect consumers to just shop the discounters in a hunt for bargains. About 57.0 percent of those polled said they would head to a department store. That's up from 53.9 percent last year, and the most in the survey's history.
The NRF attributed this shift to popular private-label brands offered by some department stores as well as by specific promotions and innovative social media campaigns.
Still, the majority of shoppes will make at least one purchase from a discount store.
In addition, shopper are expected to continue their migration online, with 31.7 percent saying they will shop online compared with 30.8 percent last year. Drug stores also are becoming a more popular place to stock up on school supplies.
As for those who are college bound, the NRF predicts they are even more hurt by the economy than the younger students. Four out of five—some 83.7 percent—said the economy has hurt their spending plans.
Parents and students are projected to spend $808.71 on everything from apparel and electronics to dorm furnishings and food items. Last year, this group was expected to spend $835.71.
One area where the budget was cut sharply was on electronics. Spending in this category is expected to be down 11 percent, the NRF said.
Pam Goodfellow, director of consumer insights at BIGResearch, said this may reflect two trends. First, many of these students are already armed with the latest devices, and many popular items such as laptops have seen huge drops in price over the last several years.
Overall, many college students also will be making do with last year's items (29.7 percent) and spending less overall (44.6 percent).
Another reason why spending may be lower is that more students plan on staying at home while they study. About 52.9 percent, down from 51.8 percent in 2010, will live at home.
Unlike the younger students, a good number of those heading to college are starting to shop already. About one-quarter of college shoppers said they would start their shopping at least two months before school start, which is the highest percentage since NRF started conducting the survey in 2003.
Perhaps not surprisingly, more college shoppers will be buying items online. About one-third will shop online, compared with 28.6 percent last year.
(Correction: An earlier version of this story omitted Customer Growth Partners President's first name.)