by Toni Rumley
July retail sales rose .6% across the country with June coming in flat. Without automobile, gasoline, restaurants and building materials, July sales performance was .3% ahead of last year. For those retailers who report on a quarterly basis, the 2nd quarter results were all over the board. American Eagle announced a significant 11% comp store increase, however that was after experiencing a -7% decrease for the same period last year. All indications (unemployment rate, consumer confidence, gasoline prices) point to a positive Back to School outlook, however, there are mixed predictions from the National Retail Federation (NRF) over what will happen.
According to the NRF’s Back to School spending survey, the average family will be spending -5.8% less than last year for their Back to School needs with electronics (-7.1%) and clothing (-5.8%) taking the biggest hits.
Expectations are that shoppers will wait until the last minute to make their purchases, which coincides with the significant negative July comp sales results from trendy retailers such as The Buckle (-8.1%), Gap (-7%), Banana Republic (-10%) and Zumiez (-7.6%). These savvy shoppers will use their smart phones to locate stores and compare prices/products. Shoppers are also expected to spend more time online. In turn, fashion at a value price will be the overall winner for Back to School so expect challenging profit performances for August.
One last thought, in the past retailers would gauge their holiday performance based upon their Back to School results. No longer is that the case. More and more shoppers feel Back to School shopping is less important and they tend to complete their shopping well after the first day of school. This doesn’t mean the time period isn’t useful. Retailers will continue to test trends in order to take action and focus their inventory for the Holiday Season.
RIS offers Retail Planning and Business Solutions. If you need help increasing sales, improving cash flow and achieving higher profits, contact our specialist, Toni Rumley, for a free, no obligation consultation. Her email address is ToniR@RIS.com.