I need to buy things, but can't afford to. If the job market would improve, I'd be right out there shopping, but as it is, even important things are going to have to wait.
Back-to-School Blues
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The National Retail Federation (NRF) is forecasting 2.5% growth in overall sales from last year, to $20.1 billion. Expect same-store sales, though, to come in flat or negative compared with 2007.
"More parents say they'll be sticking to the bare essentials this year," says Britt Beemer, who runs America's Research Group (ARG), which tracks industry trends. He also points to this year's bleak summer job market for teenagers compared with years past, another choke point for their discretionary cash. About 19% of high school and college back-to-school spending, he estimates, comes from teens' summer earnings, with mom and dad picking up the balance.
Beemer just lowered his own same-store sales forecast to -3% from -1.5% from 2007, as consumers put off purchases. In fact, he questions whether the traditional "back to school" concept even applies this year, since ARG's surveys indicate that many families plan to delay school-related buys until well into the fall, running right up against the November-December holiday season.
With spending tight, about 73% of late summer shoppers plan to visit discounters like Wal-Mart, Costco and Target, according to the NRF, while department stores and specialty shops feel the pinch. Beemer thinks that while all three of those chains figure to do well, it's Target that has the best chance to stand out.
"Target is more of an 'on-trend' discounter," he says, more likely to pick up the spillover as teens cut back on American Eagle Outfitters and other specialty chains. One potential bright spot among department stores: J.C. Penney, known for its creative and aggressive promotions during key selling seasons. The company's commitment to more stand-alone stores also figures to be a decent hedge against the 10% to 14% drop in mall traffic that's expected this year.
Penney's recent product introductions include young adult brands like Fabulosity, a hip hop line for teenage girls, and Dorm Life, a series of home goods for college students, like irons and laptop bags. The company's Web site includes a "Get That Look" video featuring teenagers in the high school library clad in the store's latest duds.
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