Although firecracker remnants may still dot the nation's sidewalks, retail forecasters are already talking about back-to-school, the lead-in to -- and often a telling performance indicator of -- the holiday shopping season, when stores generate a disproportionate chunk of their annual sales.
The improved macroeconomic environment -- lifted in part by higher discretionary personal income and a lower unemployment rate -- is setting the stage for retail sales gains in the back-to-school period, according to Customer Growth Partners, the market research and consulting firm, and trade association the International Council of Shopping Centers, in just-released forecasts.
And everything from the latest models of tablet computers to jeans in bold colors will heat up sales, experts predict.
"The back-to-school shopping season is more than just for students, with some 7.2 million teachers and other school employees going back to work and among the pool of potential shoppers," Michael Niemira, vice president, chief economist and director of research for the ICSC, told DailyFinance.
The Macroeconomic Picture
The ICSC is forecasting back-to-school sales will rise 3% year-over-year to about $39 billion. That figure includes electronics, family clothing, shoes and book sales for July, August and September.
"Consumer fundamentals have improved relative to the same time last year, which is clearly a positive," according to the ICSC report. For one, the unemployment rate in May 2011 dropped to 9.1% from 9.6% in May 2010. "Not a lot of improvement, but some," the ICSC report says.
What's more, the Consumer Conference Board's Consumer Confidence Index in June was at 58.5, down from 61.7 in May, but "marginally stronger than in June 2010," the report says.
Based on growth in disposable income and pent up shopping demand, Customer Growth Partners is even more bullish on the back-to-school selling season, predicting that retail sales will rise 6.2% from 2010, to a record $467 billion, Craig Johnson, president of the firm, told DailyFinance. (That estimate includes all retail sales except automobile, restaurant, gas and home improvement sales for July, August and September.)
CPG's robust outlook reflects the growth in disposable personal income -- 3% above last year's level -- among the portion of the population that's still employed, Johnson says.
"Year in and year out, growth in disposable income is the single factor most closely associated with holiday sales growth."
What's more, consumers are saving less, which means they're poised to spend more. "Savings rates are normalizing," he says. "They peaked out at 8.2% during the depths of the recession exactly two years ago, and they're getting back in shouting distance of the normal 4%, and are at 5% now."
While consumers are still grappling with high gas prices, those increases peaked about a month ago and began falling, which should also help release pent up spending demand, Johnson says. Shoppers won't be splurging, but "we believe we'll see people buying again."
iPads for Fifth-Graders
Retailers are largely in summer clearance mode now, and will be setting their floors up for back-to-school over the next few weeks. When the selling season gets into full swing by mid-July, expect tablet computers, e-readers and smart phones to be the hot items.
What will be notable about this year is that tablets and smartphones "will be purchased for middle and upper-elementary school kids, such as fifth-, sixth- and seventh-graders," Johnson says. "The advanced technology is penetrating the younger grades."
Last year the Apple (AAPL) iPad was the only tablet game in town, but other tablet computers, such as Samsung's (SSNLF) Galaxy Tab and Toshiba's (TOSBF) new Thrive tablet are now on the market, as well as the iPad 2, Johnson says.
And some retailers are even offering shoppers incentives to upgrade to a new tablet. Target (TGT) is touting its electronics trade-in program, where shoppers can hand in a used iPad, iPod or video game in exchange for credit towards the purchase of an iPad 2.
Faux Fur, Red Jeans
The fall could mark a rebound in apparel sales, which have been tepid. Johnson believes pent up clothing demand will be unleashed in the back-to-school season for women's clothing.
Still, high cotton prices will put a damper on apparel purchases, and shoppers could end up paying 5% to 10% more for their new fall wardrobes, he says.
But shoppers will, for the most part, acquiesce, as cost increases "will likely be accepted by consumers," the ICSC report says.
Expect to see bold looks -- from fur to tribal prints -- as well as minimalist cuts and simple fabrics -- on retailers' shelves, fashion forecasters say.
"Summer days of running wild will turn into wearing wild things for the fall, whether the fur is faux or real," says Susan Scafidi, professor of the Fashion Law Institute of Fordham Law School. "The most on-trend pieces will involve mixed materials, like a faux fur jacket with leather or wool sleeves."
What's more, "lace looked like a popular fall trend even before Kate and William tied the knot, and now it's inevitable for both brides and the rest of us."
In footwear, which CPG predicts will be a strong back-to-school seller, cutout booties will continue to make a splash, which "means that we'll be breaking the old rule about open-toed shoes and tights," Scafidi says. And "wedges and chunky heels abound."
In addition, "denim no longer has the blues," Scafidi says. "Jeans are available in every color of the rainbow and then some. Traditionalists can ease the transition with cobalt, which complements any wardrobe, while the adventuresome reach for brighter hues."
H&M's head of design Ann-Sofie Johansson offered her take on the looks that will be hot for fall on the fast-fashion chain's web site.
These include "frontier fashions," such as ponchos, blanket wraps and tribal prints; "minimalism," in the form of simple coats and straight, wide trousers in smooth, flat fabrics with a thin belt; shrunken cardigans and wide skirts in silhouettes reminiscent of the 1940s and 1950s; and 1960s-inspired "fun and spirited" short, straight shift dresses, polo shirts and cropped skinny trousers in bold colors.
E-Commerce Hot, Teen Retailers Not
E-commerce will continue to be the fastest-growing retail channel this back-to-school season, Johnson says. While the sector includes brick-and-mortar retailers' online stores, it also includes "pure play" merchants like Amazon.com and the fast-growing, private sale sites, such as Gilt Groupe and Rue La La, Johnson says.
Department stores ranging from Macy's (M) and Kohl's (KSS) to Nordstrom (JWN) and Saks Fifth Avenue (SKS) are expected to have "their best back to school season in years [due in part to] better execution by their leaders."
At the same time, warehouse clubs Costco (COST) and Sam's Club (WMT) are also poised to enjoy a healthy back to school selling season if recent performance at those chains is any indication, he says.
By contrast, teen retailers' back to school performance "will be a mixed bag" as merchants such as, American Eagle (AEO) and Aeropostale (ARO) will continue to "lose business to the fast-fashion players, particularly Forever 21," Johnson predicts.
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