Sales tax holiday starts today, but then what?
Joyce Smith / The Kansas City Star
Retailers have been rushing out their back-to-school promotions since early in the summer.
So far, it’s been working.
On Thursday, major retailers released July sales figures and many companies, including Costco Wholesale Corp., Limited Brands, Target and Wet Seal, reported better-than-expected sales. Today’s start of the tax-free holiday in Missouri — which exempts taxes on certain apparel, school supplies and electronics for all consumers — should continue that momentum.
But then what?
The consensus among retail experts is that August’s report card won’t look so rosy.
Perhaps because of higher gas prices, big energy bills this summer and ongoing worries over the economy, many consumers are putting off their back-to-school shopping until after school starts, or even later, maybe even into December’s holiday season.
“People are feeling very reticent about spending. The debacle in Washington was just one aspect of it, this sort of general concern that things are not going to get much better any time soon,” said Wendy Liebmann, chief executive officer of WSL/Strategic Retail, New York-based retail consultants.
Liebmann said back-to-school shopping, which traditionally runs from mid-July through Labor Day, will be a “tough season” for many retailers. The average consumer, she added, will be “very focused on buying what they need and not necessarily what they want.”
Back-to-school shopping has gone far beyond jeans and crayons to become the second-biggest buying season of the year after the Christmas holiday. Consumers are expected to spend $68.8 billion this year, though well below the $462 billion spent during the holidays in 2010.
Retail experts are generally forecasting a flat sales season and lower profits because of heavy discounting. The National Retail Federation expects families to spend an average of $603.63 this season, down barely from 2010’s $606.40.
Back-to-school shoppers on the Country Club Plaza had varying price points this week. Some were looking for bargains on khakis for school uniforms but then splurging on Sperry Topsider shoes to spruce up those standardized outfits.
Erin Burroughs, 13, of Liberty was on a quest for style but at bargain prices. Before school starts she plans to pick up fabric at JoAnn Fabrics and Crafts to make some of her own clothes, get some Toms shoes online, and a graphic tee at Delia’s in Zona Rosa in the Northland.
Rachel Honig, 18, who will be a freshman at the University of Missouri in Columbia, was shopping with her mother Wednesday on the Plaza. They weren’t actively looking for sales, but found some great deals anyway, including two dresses at the Hemline clothing store, both discounted 75 percent. But Honig is waiting until this weekend to get an Apple MacBook Pro and save about $120 during the tax-free holiday.
Discounters will be the most popular shopping destination, according to the federation’s recent back-to-school survey of more than 8,680 consumers.
Still, department stores are making a comeback. For example, they’re offering exclusive private labels to draw people in. Nearly half of college shoppers and more than half of families with children in the K-12 grades plan to head to department stores this year. Those are the highest totals for both groups in the eight years the federation has been doing the survey.
“Macy’s and Dillard’s are all about promotion — more promotion, more value. They are coming closer to discounters,” said Jeff Green, president and chief executive officer of consulting firm Jeff Green Partners in Phoenix. “No one comes in there thinking they are going to buy a full-priced product.”
Other sales trends from the back-to-school survey:
•While electronics have steadily grown in the last few years, this year the number of people planning to buy electronics decreased. But that may be because they are no longer waiting until the start of school to spend, but instead are purchasing what they want and need throughout the year.
•College seniors are becoming thriftier by shopping store brand and generic products — perhaps because they didn’t make enough over the summer. The survey showed more students plan to make do with last year’s items, shop for sales more often, shop online to save money, and share or borrow textbooks instead of buying.
•Parents will be swayed more by value than price. For example, they might purchase a new laptop if it comes with a free one-year warranty.
There are few “must-have” items again this year except for the perennially popular denim. Melissa Goff, Macy’s spokesman, said girls will be snapping up skinny jeans, jackets, Bermuda shorts and flared pants, and boys will want the skinny skater styles of jeans and Levi’s.
“More evident than ever, retailers need to recognize who the customer is and what the customer needs,” said Jerry Talamantes, Dillard’s spokesman.
Liebmann of WSL Strategic expects online retailers to do well. “The good news is Christmas is a ways away,” she said. “We need some distance from the economic madness. Consumers will be in control. … not to spend tons but to spend wisely.”