Slow Start for Back-to-School Sales

Consumers are still saying 'show me the discount' but in the end, they'll stock up.

After two years of declining back-to-school sales for retailers, a 3% increase is likely this year. That’s hardly top marks, but after the failing grades of 2008 and 2009, it can be considered at least a C. Persistent high unemployment is likely to keep consumers from splurging, and bargain hunting will continue during retailers’ second-busiest selling season of the year.

Though there has been some letup in shoppers’ penny-pinching since the recession ended, it’s not clear how quickly consumers will revert to previous shopping habits -- if they ever do. For now, penny-wise shoppers will seek out the deepest discounts and best values on everything from pens and pencils to notebook computers and dorm furnishings. Retailers will ante up with eye-popping discounts “just to drive traffic to the stores” in the hope that customers will buy more when they get inside, says Michael Souers, an equity analyst for Standard & Poor’s. Office Depot and Staples, for example, both have plans to sell basic school supplies for loose change.

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Associate Editor, The Kiplinger Letter