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August 6th, 2008

Shift in Back-to-School Shopping Season



As far as spending seasons go, back-to-school time is only second to the weeks leading up to Christmas. Since times are tough, consumers are guaranteed to spend less:

America’s Research Group sees back-to-school spending falling as much as 2%. A mere 1.5% of consumers said they will buy products at full price. Last year, 11% said they would.

The Chain Store Sales report for June saw a 0.7% decline from May. Yet, sales at chain stores continue escalate, as sales rose 4.3% in June. Despite a lag in overall retail sales, drug stores’, wholesale clubs’, and discount stores’ sales have remained consistently positive throughout the year. As inflation continues to batter spending, discount stores can bet their sales will see a boost during the next few months:

The International Council of Shopping Centers found that 90% of households said they will pick up everything from T-shirts to T-squares at discount stores. That’s up 16 percentage points over last year and 34 percentage points over 2006.

Deloitte found that 90% of households say they will change their back-to-school shopping habits to include more sale items, to purchase only what’s needed, to shop for more lower-priced goods and to use more coupons, among other things. Nearly nine in 10 people said they will shop at discount and bargain stores.

When the Retail Sales report for July is released next week, the numbers will most likely remain positive because of the billions issued in stimulus checks. But what will happen when the back-to-school spending season is over, and the buzz from stimulus checks has worn off?

“Back-to-school happens every year and parents are budgeted for it,” said Jharonne Martis, an analyst at Thomson Reuters. “After August there is no back-to-school or rebate checks to boost consumer spending. We will see then how robust the U.S. consumer can be.”

As an extra incentive through the end of the year, 15 states plus Washington D.C. are offering a sales tax holiday can amount Consumers’ savings to discounts of up to 10%. The sales tax holiday is set to coincide with the back-to-school season, offering consumers a savings on products such as clothing, electronics, and school supplies.

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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