Gadgets and Clothes Top Back-to-School Shopping Lists

Discussion
Jul 19, 2006
George Anderson

By George Anderson

Mom and Dad are going to be plunking down more dollars this year as they send their kids off to the school.

That’s the findings of the National Retail Federation’s (NRF) 2006 Back-to-School Consumer Intentions and Actions Survey, which projects the average family will spend $527.08 on clothes, electronics and other merchandise this year. That number is up substantially from the $443.77 spent last year.

One area of significant growth will be in the sale of computers and other electronics. Last year, according to the NRF, sales of these items for the back-to-school season fell dramatically. This year, according to the association’s projections, sales of electronics will reach $3.82 billion, up from $2.06 billion in 2005.

Tracy Mullins, NRF President and CEO, said the back-to-school season is important for retailers beyond the sales brought in during the time period.

“The back-to-school shopping season serves as an important bellwether for the holiday season by helping retailers pinpoint emerging trends and popular products,” she said. “Retailers will be tracking the performance of apparel and electronics very closely to ensure that their stores have the right merchandise mix for the fourth quarter.”

Consumers in the back-to-school market in most regions across the country are expected to increase purchases this year. The one notable exception is in the Northeast U.S. where the NRF projects consumers will come down from the $513.07 they spent in 2005 to $456.38 this year.

As might be expected, discounters are expected to attract the largest numbers of consumers looking to buy for back-to-school. Roughly 72 percent of consumers say they will be shopping in discount stores for back-to-school merchandise.

Department stores are likely to see substantial improvements in their back-to-school numbers as the number of consumers who say they will shop in these stores moved up from 39.7 percent last year to 53.3 percent this year.

Electronics outlets and specialty clothing stores can also expect to see increased traffic with 30.9 percent of consumers indicating they will shop these outlets. Last year,
18.8 percent of back-to-school shoppers went the specialty store route.

Discussion Questions: What do you find most interesting about the findings of the National Retail Federation’s back-to-school study? What will back-to-school
sales tell retailers about the upcoming Christmas shopping season?

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8 Comments on "Gadgets and Clothes Top Back-to-School Shopping Lists"


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Camille P. Schuster, PhD.
Guest
14 years 7 months ago

With increased gas prices and the threat of increased heating prices, it’s difficult to understand why the price of back-to-school purchases will increase significantly – except that inflation has also increased.

Barry Wise
Guest
Barry Wise
14 years 7 months ago

I find it interesting that the NRF is projecting substantial sales increases across the board in department stores, specialty clothing and electronics, along with projecting that majority of back to school shoppers will also be shopping at their local discount store. With today’s high energy costs, along with the conflicts in the Middle East, it would seem that many shoppers would more conservative in their purchases this back to school season. Also, I believe that unless there are changes for the good in these two areas of concern, that 4th quarter retail sales may be flat.

Don Delzell
Guest
Don Delzell
14 years 7 months ago
The key point here is a possible shift of purchasing from Q4 to Q3. High end electronics and computers, if indeed they do, shifting from holiday to BTS spend patterns could be huge. These are not disposable or repeat purchases, so any spending shift would be worth noting. Without regard to the overall numbers from the study, the addition of iPods, laptops, and so forth to the BTS spend should have a substantial impact on Q4. Caution to the retailer: not only should you NOT take any Q3 trend in “new age” BTS categories and extrapolate to holiday, but it would be wise to assume the increase will come directly out of the holiday projection. This will be conservative, but isn’t it better to run lean than to be glutted? These items have very little seasonality, have no sizes and few color issues, so arguably, are low inventory risks. Yet because of all of the previous characteristics, they make extremely high turn items (which is nice because the per item gross is very low).
Mark Lilien
Guest
14 years 7 months ago

The NRF/BIGresearch survey lacks credibility. The huge increases forecasted for spending (up 19% to $527.08), electronics (up 85% to $3.82 billion), department store shopping (up 34% to 53% of the population), and specialty store shopping (up 64% to 30.9% of the population) raise survey method doubts. It’s great that the direction is so positive, but if the actual numbers resemble the survey results, this will be the best back to school season in at least 30 years. Who believes that will happen?

Bill Robinson
Guest
Bill Robinson
14 years 7 months ago
How do retailers plan for a great back to school season? Most base their forecast on last season sales in the various back to school categories. But as any parent knows, the closer you get to school opening, the more likely it is for retailers to be out of stock. And most retailers have a very narrow understanding of the lost sales they incur because of out of stock. Busy moms trust their local store to have a complete assortment of writing pads, pencils, pens, and notebooks. When the store is out of stock, mom will drive to a better stocked store and never come back. Lost sales are computed based on seasonal SKU/Store level rates of sale times a substitutability factor. In addition you have to consider the number of times your out- of-stock results in a lost customer times an average annual spend. A better strategy for back to school seasons is to add in lost sales from the previous season to last season’s actual sales. Then consider local factors such as changed… Read more »
Ryan Mathews
Guest
14 years 7 months ago

So, all these children of affluent parents don’t already have computers? I’m afraid I’m with Mark on this one. There’s a critical difference between wearing rose colored glasses and hallucinating.

Stephen Baker
Guest
14 years 7 months ago

I would agree that NRF results are way off; they almost always are. As an analyst in the technology space I can tell you unequivocally that this will be the best BTS for notebook PCs, an amazing feat given that sales have been up in excess of 30% for each of the last three years. While some may think the market is saturated, there are new processors, new price points and lots of new reasons to buy or upgrade for high schoolers, college age and others. For the last few years, everyone has tried to tamp down notebook sales expectations for BTS and they have blown them away every time; this year will be no different.

Simon Poulton
Guest
Simon Poulton
14 years 7 months ago

It also seems curious that these projections are up so much excluding one of the more affluent areas of the country where they are going to be down.

(Also Target has revised their July numbers down – and they should know!)

This view is not so much rose coloured, more like fuchsia.

wpDiscuz

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