Back to School, Back to the Store
Economists Predict Strong Sales, but at Fewer Retailers

By Ylan Q. Mui
Washington Post Staff Writer
Saturday, August 5, 2006

Gas prices are expected to have little effect on how much families spend on back-to-school gear this year, industry experts say. Though shoppers may visit fewer stores, sales of electronics and tax holidays, such as the one that starts today in the District, are likely to provide significant boosts.

The back-to-school season begins with store promotions in July, probably before many students have even started their required summer reading, and runs into September. It is the second-biggest shopping season of the year and serves as an important indicator of the holiday season to come.

Computers and printers have already become back-to-school staples, but this year iPods and video game systems are being counted as "necessities."

"Electronics have become the new fashion accessory," said Scott Krugman, a spokesman for the National Retail Federation, a trade group.

The NRF predicts that sales of consumer electronics will jump by $1.5 billion, to $3.82 billion, after dropping last season. Total spending is expected to reach $17.6 billion, with families spending an average of $527.08 on back-to-school gear, up from $443.77 last year.

More than half of shoppers surveyed by Accenture Ltd. planned to spend more than they did last year, though many cited higher prices as the cause. Thirty-eight percent of shoppers, the largest group of those surveyed, said they expected to spend $101 to $200 on new clothes.

There will be some change in habits: Higher gasoline prices may mean more one-stop shopping as families stock up on notebooks, electronics and clothes all in one place, said Janet Hoffman, director of North American retail for Accenture. Nearly one-third of those surveyed by the consulting firm said they plan to shop at fewer stores because of rising gas prices.

That means Wal-Mart Stores Inc., Target Corp. and other discounters should benefit, while department stores and office suppliers with narrower assortments may have a harder time, Hoffman said.

The International Council of Shopping Centers estimated back-to-school sales will increase 3 percent to 4 percent this year, compared with 4.8 percent last year. It predicted apparel would be weak, with less than half of shoppers planning to buy new clothes.

"Back-to-school items tend to be viewed as more essential, and not discretionary, for the consumer," said Michael P. Niemira, chief economist and director of research for ICSC. "The good news in that is that these consumers will spend for those items -- but they are looking for more bargains."

Though shoppers appear willing to spend, Niemira said, he cautioned that a slowdown could still hit before Christmas.

To help spark consumer spending locally, Virginia, Maryland and the District are offering sales tax holidays on a mix of school supplies and apparel. Virginia's began yesterday and runs through tomorrow. The District's is the longest, beginning today and lasting until Aug. 13. Maryland's is Aug. 23 to 27.

"I always called it a Mom's bill," said Del. Jean B. Cryor (R-Montgomery), who sponsored Maryland's legislation. The tax break "is like a coupon except you didn't have to cut it out of the newspaper."

Several analysts said the expected rise in back-to-school spending would likely translate into a decent Christmas, but consumer analyst C. Britt Beemer was less optimistic.

He said surveys by his firm, America's Research Group, showed families doing more with less, such as making do with last year's fashions. And with nothing in stores to win over shoppers this fall, he doesn't expect much to change before winter.

"There's nothing new for Christmas, in either toys, apparel or in electronics," he said. "I mean, that's kind of sad."