Will Back-to-School Sales Make the Grade?

Consumers are reportedly getting a head start on their back-to-school shopping this year. The National Retail Federation (NRF) says more families have already completed their school shopping for this year, compared to 2009, as they try and take advantage of discounts.

"It's good to see consumers responding to back-to-school sales and promotions," NRF chief executive Matthew Shay saidin a press release. "Back-to-school will be the first test for retailers and the economy as we plan for the holiday season."

But even though shoppers are heading to the stores earlier, they may be spending less. There are different schools of thought about how the season is actually going for retailers.

Sales Will Go Up...Or Down

According to a special report from the marketing research firm IBISWorld, back-to-school spending is expected to drop 0.2% to $19.56 billion this year. But that projection conflicts with predictions from the International Council of Shopping Centers, which forecast that sales from mid-July through mid-September would rise 5.4%, despite the U.S. retail industry's downward trend for the past two years. And the NRF is also expecting a rise in spending for school and college.

One analyst says the differences of opinion are not surprising, especially since consumers are skittish, weary and lacking in confidence as they gear up for this school year. "There's a lot of things going on in the economy that are fairly negative and concerning to them," says Alexandra Hutto, assistant professor of marketing at Metropolitan State College of Denver. "We've got tight credit, we have this jobless recovery, unemployment at a high level...we're seeing an increase in unemployment again. There's not a lot of stability there.

Hutto says parents are being judicious when it comes to school supplies and notes that clothing sales are suffering too, as parents purchase fewer new school outfits. While kids are always outgrowing clothing and parents may have to cave in to the latest fashion trend, "they'll maybe spring for those and make do with most of the hoodies and T-shirts they had [last year] and be very selective about what purchases they do make," she says."And they're being very conscientious about checking the sales fliers, surfing the net, looking for websites that will direct them to sales.

Internet Shopping Remains Popular

While sales elsewhere remain shaky, back-to-school sales have helped push Internet retail revenue up slightly. College-age kids in particular are very savvy when it comes to shopping via the Web. "The kids that are in college now were born with computers in their hands," Hutto says. "They're used to using apps, smart phones, PDAs, the whole gamut. They're very facile with their technologies, they know how to use the Internet to its full advantage, so they're surfing the Web to get the best prices, the best deals."

There's a "digital divide" between generations, when it comes to using the Internet for back-to-school shopping. "The Boomers are definitely more comfortable with brick and mortar [stores]," Hutto notes, "the Millenials are more comfortable with the Internet, and then Gen-X'ers straddle the two worlds. The Boomers certainly dabble with the Internet; they're getting more adept at it but they're not as fast as their children are."

Many college students are saving substantially by buying their textbooks online too. But Internet shopping can also have disadvantages, such as a longer wait as books are shipped. "You've got kids saying, 'Can you wait till I get the textbook [online]?'" Hutto says. "I actually had a student this summer who jeopardized his grade. His book came the night before the test, and he kind of blew the test. He saved two weeks of reading for the night before. So there are consequences."