Back-to-school retail spending predicted to rise 11 percent

July 21, 2016

U.S. back-to-school spending will grow 11 percent this year, a sign that families are more confident about the economy and ready to stock up on supplies, according to a survey from the National Retail Federation.

Families with children ranging from kindergarten through 12th grade will shell out about $673.57 this year, the Washington, D.C.-based trade organization said in a written statement. That’s up from $630.36 in 2015, when the number declined. In total, college and K-12 families will spend $75.8 billion, up from $68 billion last year.

The forecast brings a note of optimism to a retail industry beset by sluggish foot traffic and deep discounts. Department-store chains are mired in a sales slump, while other retailers have had to rely more heavily on promotions to get customers in the door. But Commerce Department figures from June show that consumers may be ready to spend again: Retail receipts rose 0.6 percent last month, beating estimates.

“Families are still looking for bargains, but there are signs that they are less worried about the economy than in the past,” NRF CEO Matthew Shay said in the statement. “Heading into the second half of the year, we are optimistic that overall economic growth and consumer spending will continue to improve as they did in the first two quarters of the year.”

More jobs

Payrolls climbed 287,000 in June, accelerating the most since October, according to the Labor Department. That’s putting more money in consumers’ pockets.

Deloitte LLP also predicts an uptick in back-to-school spending, though it put the average K-12 budget at $488. About 87 percent of parents intend to spend the same or more compared with last year, the firm said.

The average back-to-school budget for college is expected to fall slightly to $888.71, compared with $899.18 last year, the NRF said. But more families are shopping for college students, helping boost the overall spending level 13 percent, to $48.5 billion.

Cautious consumers

Parents have been wary about spending too much since the recession ended in 2009. They may finally be ready to splurge a bit, said Ellen Davis, NRF’s senior vice president of research and strategic initiatives.

“This might be the year that a parent says we’ll go spend on a laptop because we have more money in our pocket, compared to last year when we took it to the repair shop and tried to make it go for another year,” Davis said.

Still, the news may not be all good for brick-and-mortar chains. K-12 parents are increasingly turning toward the Internet, with 46 percent planning to shop online. That’s up from 36 percent last year, according to the NRF. Of those customers, 89 percent plan to take advantage of free shipping and 54 percent will use services like in-store pickup.

“We’re now conditioned to use digital as a way to help us aid in the shopping journey,” said Rod Sides, the head of Deloitte’s retail and distribution practice. “It starts on the sofa and ends at the store, and sometimes it ends at your mailbox.”


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