Overall back-to-school sales for 2010 were up compared to sales from last year. Oppressive heat drove people inside to air conditioned stores that not only had severely discounted merchandise (as much as 50%), but were discounting as early as July. In addition, some states had tax free shopping weeks. Although sales are up for back-to school this year, they are still below those of 2008. With consumer confidence up for now (barely), retailers hope the positive back-to-school sales will be a good sign for the holidays.
A Few More Predictions
- 2010 Consumer Intentions and Actions Back to School survey found the average American family will spend $606.40 on clothes, shoes, supplies and electronics, compared to $548.72 last year, and close to the $594.24 in 2008.
- Total spending on school-aged children in grades K-12 is expected to reach $21.35 billion.
- Combined K-12 and college spending will reach $55.12 billion.
What Really Happened
Reuters tracks same-store sales for a group of 27 national retail chains, the following results are based on the information they gathered
- Retailers posted a 3.3% gain in same-store sales for August, ahead of the 2.5% rise that analysts projected
- This follows a 2.9% drop a year ago and a 2.7% rise in July
- Among the clear sales winners in August were clothing and stores catering to teen and young adult shoppers
- Electronics sales rose a modest 2.3% from the year before but were down 9.9% from two years ago
- 67% of the retailers that reported same-store sales beat expectations, with mass merchants and apparel retailers doing so by the widest margins
- The last week of August was particularly strong
- Spending on many non-essentials like fashions are still below 2008
- With high unemployment and weak consumer sentiment*, shoppers were still focused on low prices when choosing what to buy
- *An index of consumer confidence released the last week of August by the Conference Board, a private research group, rose just 2.5 points in August, to 53.5
- The International Council of Shopping Centers said forecast September sales would rise 3%
Clothing
- Limited Brands posted a 10% surge in sales last month, beating analysts' estimates for a 7.3% increase
- 40% discounts at Abercrombie & Fitch jumped 6% in the month, passing estimates for a gain of 5.7%
- Note: In August last year, when Abercrombie was holding on to its "no discounts" strategy, sales sank 29%
- Wet Seal reported a 1.1% sales gain vs. estimates for a 3.5% decline
- Macy's 4.3% gain in same-store sales was ahead of projections for a 4% rise
- Possible reasons: 1) Macy's shift to tailoring merchandise to local tastes and more centralized operations that allow quicker decisions. 2) A strong reception to merchandise such as the new Madonna-inspired Material Girl line
- Kohl's Corp. also had a solid showing, with a 4.5% increase in same-store sales, when 2.6% was projected
- TJX Companies posted a 2% increase in same-store sales, just missing the 2.4% expectation
- JC Penney Co. had 2.3% rise that beat analysts' expectations for a 1.6% gain
- American Eagle Outfitters Inc., reported a 1% comparable-store sales gain when analysts' projected a 1.1% rise
- Only Aeropostale Inc.'s same-store sales fell 1% for the month, compared with expectations for a 1.2% rise and a 9% gain a year ago
Discount Stores
- Overall, discounters saw a 4.3% increase, compared with expectations for a 3.1% gain
Walmart Stores Inc., among other retailers reported rising inventory levels as part of their quarterly earnings in August, a sign that they may be forced to mark down merchandise more than anticipated in order to clear stocks.
- Walmart Stores Inc. has posted five straight quarters of declines in U.S. comparable-store sales
- Target Corp. reported a 1.8% gain in same-store sales for the month, falling just short of expectations for a 2% increase
Why?
- Pent up demand
- Mike Gatti from National Retail Federation says that "People may not have bought new shoes last year, so this year there's a bit more of a need."
- Coupons, sales, promotions
- More families this year say their school purchases were influenced by coupons, sales and/or promotions. 17% of families with children in grades K-12 say 100% of their purchases were influenced by bargains and coupons, up from 14.7% of families last year
- The level of back-to-school discounts, as much as 50% off, was the highest seen in a number of years
- Sales also came much earlier than usual as retailers were cutting prices in early July
- Weather
- Consumers sought shelter in the air conditioned stores
- August 2010 was the warmest since 1983 and second warmest in 50 years
- Off-price retailer TJX Companies Inc even said its sales were hurt slightly because it did not have enough summer clothes in stock
- Economics
- Tax-free shopping weeks in several states, designed to boost school-related shopping in the month, likely boosted traffic and purchases in stores
Winners of TV
NRF's latest Back-to-School/College Consumer Intentions and Actions survey showed that...
- The top ten back-to-school commercials came from Walmart, Target, Staples, JC Penney, Kmart, Kohl's Old Navy, Office Depot, Office Max and Sears.
- 27% of families say the commercials from those retailers influenced them to shop at that particular store
Data from Ace Metrix revealed...
- A Kohl's ad promoting a "Vote for Your School" contest tie-in with Facebook is the early winner (614 out of 950)
- Target has been the most active back-to-school advertiser with 13 national breaking ads, they are also running the worst scoring ad, "The Roommate and her Gathering" (355) also featuring a Facebok tie-in
- Target had just one ad in the Top 10 retail back-to-school ads
- Walmart ran three back-to-school ads with one, "Last Night of Lightning Bugs" making the top ten, yet the overall number of ads was down from last year
- Interesting to note that both the highest scoring and the lowest scoring ad feature a tie-in with Facebook
September Predictions
Although the monthly figures are on par with those posted in the beginning of the year, when people were starting to feel good about the economy, retailers will endure an uphill climb in September as they will be facing comparisons against positive same-store sales results for the first time in a year.
Sources:
Discounts, heat fuel August retail sales beat, reuters.com, 9/2/10
Limited Brands, Abercrombie report solid sales gains for August, dispatch.com, 9/2/10
Retailers Show Surprising Strength in August Sales, wsj.com, 9/2/10
Back to school sales get an A, cnn.com, 9/2/10
Retail Sales Prep: Back-to-School Edition, cnbc.com, 9/1/10
Back-to-School Shopping Bust Heralds Holiday Woes, wsj.com, 8/31/10
Who's Winning the Back-to-School Television Advertising Battle? Businesswire.com, 8/19/10
Modest Rise in Back-To-School Spending, brandweek.com, 8/10/10
