Back-to-School Spending Is Likely to Be Back to Pre-Recession Levels


After seeing lukewarm results in June, retailers can take heart: Back-to-school spending is headed back to pre-recession levels. But it's too early to celebrate since consumers still feel pressured financially and remain very cautious about spending in general.

A new survey from the National Retail Federation found American households will spend $55.1 billion shopping for back-to-school needs this year, including $21.4 billion for children in kindergarten through high school and $33.8 billion on college students.

Parents of school-age children will shell out $606.40 per household, an increase over the $548.72 per household spent last year and the $594.24 in 2008, shortly before the stock market freefall brought consumer spending to a halt. It's even better than the $563.49 spent in 2007, before the recession took hold.

Consumers Have to Be Lured to Buy

But retailers are not claiming victory yet. As the recent sales figures have shown, just because consumers are shopping doesn't mean they're spending freely. They have to be lured out.

"We're encouraged by the fact that parents are eager to start their back-to-school shopping this year, but the industry still remains cautiously optimistic about recovery," said NRF President and CEO Matt Shay. In a statement, he noted retailers will be looking carefully at back-to-school sales to gauge what to expect during the next big sales season, the year-end holidays.

So far, the consumer is not in a giving mood. Another survey from consulting firm Kantar Retail found most Americans feel they're doing just as poorly or worse now than last year regarding their jobs, income and debt level. And as the study noted, the recent stock market drops can only make things worse, making households feel poorer.

Intentions Change at the Mall

The survey found 23% of consumers plan to start back-to-school shopping in July, fewer than the 30% who did at the same time last year. That's one sign that shoppers could be holding out for late-season deals.

There was one bright spot: 21% of households plan to spend more this year than last, slightly better than the 19% who said the same thing a year ago.

But parents' intentions tend to change as they get to the mall. Last year's back-to-school season was expected to be a disaster but proved to be better-than-expected once the numbers were tallied. It marked a turning point in consumer attitudes and led, as well, to a better-than-expected holiday season.

"Appointment Shopping"

Since then, we have seen shoppers charge and retreat based on what promotions retailers are offering, and merchants are playing along. Retailers from Macy's (M), J.C. Penney (JCP) and Target (TGT) to even Toys "R" Us -- which is launching a "Christmas in July" sale -- are stepping up their game.

As the mixed bag of results have shown so far this year, consumers will come out for "appointment shopping," then hold on to their money until another appointment. And outside of the year-end holidays, there's no appointment as important as back-to-school sales -- to consumers or retailers.