Despite Forecast for Increased Sales, Retailers Pump Up Promotions
by Doug Desjardins
Mass merchants and department stores are stepping up back-to-school promotions this year to entice a consumer base that is showing signs of pulling back on spending.
The good news for retailers is that consumer spending on back-to-school items is expected to increase 11% to $606.40, according to a survey conducted by the National Retail Federation. But as retail sales show signs of slowing after rebounding earlier this year – sales took an unexpected 0.5% drop in June – retailers are now worried that those projected sales gains may not materialize.
“Retailers are in a pickle, having bought into the consumer recovery and increased inventory levels to support the hypothetical demand,” said Brian Sozzi, an analyst with Wall Street Strategies, who said the June dip in sales shows that consumers are “pausing to reassess their personal finances.”
Cheryl Holland Bridges, director for the Center for Retailing Studies at the Maya Business School at Texas A&M University, agrees that retailers will have to work extra hard for sales this year with consumers still cautious.
“People have a different relationship with their money today,” said Bridges.
“They may buy only three tops instead of six.”
Target got its back-to-school promotions underway in July with “door-buster” sales similar to those it stages during the holiday season. Specials include an Epson all-in-one printer, scanner and copier for $29.99, a mini-fridge with a dry-erase board door for $89 and notebooks and folders starting at $1.50.
Wal-Mart countered with special price of $298 for Compaq Presario laptops from Hewlett-Packard along with bargains on more basic items such as a 2-pack of boys khaki pants for $25 and a Texas Instruments calculator for $19.82.
Wal-Mart launched its back-to-school sale in late July - a few weeks later than usual – to compensate for an unusual consumer trend. “Now, like it has been for several seasons, customers are shopping much closer to the event,” said Wal-Mart vice chairman Eduardo Castro-Wright. “We are focused on delivering on our “save money” promise on top brands for school supplies, electronics, home and apparel.”
Kmart, which tends to center its back-to-school promotions on young celebrities, has chosen Selena Gomez for its 2010 event. Kmart is selling a line of teen apparel under the Dream Out Loud by Selena Gomez banner with a variety of dresses, skirts, tops and accessories all priced under $24.
J.C. Penney is marketing its apparel for teen girls through a promotion with Seventeen Magazine. The department store chain is using Seventeen’s Web site to create a virtual reality world where girls can try on the latest fashions. Macy's is staging a similar promotion with its Mystylelab.com, a Web-site that showcases teen fashions and allows teenagers to post their own fashion photos.