As the initial results came in for this year’s back-to-school retail spending forecasts, the numbers were about where I thought they might be: down a couple of percentage points. It’s a modest dip, and certainly nothing to be alarmed about given the degree to which back-to-school spending has spiked over the last decade (average back-to-school spending has increased 42 percent over the last 10 year period). So why is it that these numbers are raising some eyebrows among industry analysts and observers?
What is noteworthy about the initial back-to-school predictions is the degree to which they highlight the predictive uncertainty surrounding seasonal spending. Professional forecasts and surveys released by analysts and industry groups were remarkably widespread, with predictions that seemed to be all over the map. In fact, in the decades that I have been working in the retail industry, this might be the widest disparity among different predictions from that I can recall. This week’s Now Trending explores these different predictions and what they mean:
- The National Retail Federation’s (NRF) Back-to-School Spending Survey (conducted by Prosper Insights & Analytics), found that both K-12 and college-age students and their families planned to spend less in 2015 than in 2014. The K-12 spending figure on “electronics, apparel and other school needs” was expected to be $630.36 per family, down from $669.28 in 2014. That represents a 6% drop in spending. Overall spending was expected to drop from $75 billion to $68 billion, an even more precipitous drop of 9.3%.
- According to Forbes, which reported on numbers released from a Consumer Pulse survey from Rubicon Project, 56% of parents plan to spend more money on back to school shopping this year than in 2014.
- The International Council of Shopping Centers (ICSC) released the results of its survey that suggested more than two-thirds of parents are planning to boost their back-to-school spending (a number larger than at any other time in the last four years).
Keep in mind, these are reputable and experienced industry experts, utilizing sophisticated surveys and analytical tools to make these forecasts — all of which were very different. A one-year drop of close to 10% would be an enormous drop, and yet none of the exaggerated forecasts were accurate, either on the negative side or the positive side. The interesting question of course is why: why was there such a wide range of such dramatic predictions, what does it tell us about the state of the industry and the economy, and what does it mean for the future of back-to-school (and seasonal/holiday) retail spending?
Overall, however, I would not be surprised if 2015 is the beginning of a “new normal” with respect to back-to-school numbers. Apparel isn’t going to get any more expensive anytime soon. Discount retailers are on the rise. Technology is becoming cheaper all the time. This year, which right now may seem to be unique, or an anomalous blip on the industry radar screen, may instead be heralding some bigger long-term structural changes that will continues to manifest themselves in the years ahead. After reading my thoughts in this week’s Now Trending, what do you think of this year’s back-to-school spending forecasts?