Before Lori Koster loaded up her 4- and 6-year-olds and headed out for the annual back-to- school shopping excursion, she carefully counted last year’s remnants of pencils, glue sticks, markers and crayons to make sure she didn’t make an unnecessary purchase.
“A dollar here, a dollar there. It adds up,” said Koster, 31, of Berkley, Mich.
Frugality is foremost in the minds of many consumers, who are feeling the pinch of high gasoline prices and the tough economy as they gear up for the back-to-school shopping season, second only to Christmas in dollars dropped at retail stores.
Today’s average gas price of $3.06 a gallon is 73 cents more than it was a year ago, when back-to-school spending per family dipped for the first time in two years.
Frugal shoppers such as Koster have many retailers on edge as they push their back-to- school deals in hopes of getting a chunk of the estimated $17.6 billion that will be spent this year for school clothes and supplies.
The lack of a real “must-have” item for the season also is worrying retailers, who are marketing back-to-school gear earlier and with more zeal.
“Retailers have been very aggressive, very early in promoting back to school,” said Wendy Liebmann, president of WSL Strategic Retail, a New York- based marketing and retail consulting firm.
Apple is giving away a free iPod nano to students who purchase a Mac computer. Circuit City is providing computer diagnostic exams for free – a $40 value. And students and teachers can get 50 percent off additional PC service, such as adding extra memory or virus software.
Early last month, American Eagle Outfitters ran a promotion offering two free movie tickets to a million customers for simply trying on a pair of jeans.
“The freebie thing, that’s the thing that’s really stunning to me,” Liebmann said. “It seems much more aggressive, and it’s all about getting more traffic to the stores.”
Consumer surveys to predict back-to-school sales aren’t much help in forecasting how this season will shape up. In one survey, families say they plan to spend $83 more this year than last; in another, they say they plan to cut back.
Consumers aren’t the only ones sending mixed messages. Despite solid July sales for some retailers, many are jittery. Target lowered its sales forecast, and the National Retail Federation shows sales overall have been steadily trending downward all year.
JC Penney saw total department store sales increase 5.5 percent in July and comparable store sales go up 4.9 percent, but the retailer remains circumspect.
“While the company is entering the back-to-school selling season with positive momentum, it continues to take a cautious approach toward future guidance given macroeconomic conditions,” the company said in its July sales report Thursday.
Higher gas prices can be a double whammy for retailers, especially discounters whose shoppers are more affected by higher gas prices. Not only do consumers have less money to spend in stores, but some also make fewer shopping trips to save on gas.
“I’m really cautious now with just driving in general,” said Antionette Dhanekula, a resident of Clinton Township, Mich. “I’m really getting cheap on where I’m willing to go and where I’m not.”
Caution aside, consumers surveyed by the National Retail Federation say they’ll spend more this year. The average family will spend $527.08 on school clothes and supplies, $83 over last year’s average of $443.77, the trade group found.
Electronics – pricier and increasingly popular – is one reason for the rise in average spending, said Scott Krugman, spokesman for the National Retail Federation.
In past years, a calculator was the extent of technology needed for school. These days, computers, MP3 players and cellphones are on the list.
Total spending on electronics or computer-related equipment – such as home computers, laptops, PDAs and calculators – is estimated to increase by more than $1.5 billion, according to the trade group.
While back-to-school sales could provide a welcome boost for retailers, sales overall so far in 2006 are flat or down, Krugman said. Total sales growth from the first quarter of the year has been steadily decreasing: from a 7.8 percent increase in the first quarter to an expected 4.6 percent sales growth for the fourth quarter.
“Even though back-to-school spending is up, if the rest of the population isn’t spending for school … then you’re going to get to that 4 percent number that we’ve been seeing,” Krugman said.
