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Back-to-School Season Could Signal Holiday Retail Strength

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While summer break may be too short for many students, the end of summer is a welcome change for retailers eager to learn whether students “hitting the books” will result in more parents hitting the store aisles.

In line with a general slowdown that occurs during the restful summer months, economic activity also feels a “summer pause,” a “quiet” that can be as loud and jarring as fingers on a chalkboard for many retailers. Fortunately for them, the early back-to-school predictions could mean good marks in their future sales logs.

Retail numbers we’ve studied show an upturn in July for general merchandise and clothing after a string of monthly declines. This supports the belief that retail sales will rebound, at least in the near-term, as we get closer to the holidays.

The National Retail Federation notes that the slow-growth pace of the economy will certainly factor into what shoppers buy during the back-to-school shopping season. However, the organization also predicts back-to-school spending to jump 14 percent this year (the fastest rate since 2003) reaching a record $83.8 billion total if you combine K-12 and college spending.

That’s partly because parents, many of whom have cut back on spending in recent years, must now fully replenish school supplies and clothing. In addition, the NRF says more children will enter elementary and middle school this fall, and that the average person with children in grades K-12 is expected to spend $688.62, up from $603.63 last year.  That’s math retailers like to see!

Even though the majority of that shopping will take place in brick-and-mortar stores, the NRF says a larger chunk of sales will be online—39.6 percent compared to 21.4 percent in 2007, and 10.9 percent in 2003. That growth of e-commerce continues to benefit FedEx which earns money for shipping, whether items are purchased or returned.

Just like parents scouring the aisles and the Internet for back-to-school deals, educators are also shelling out more money from their own pockets. That’s why FedEx Office supports success in the classroom through the Academic Edge program. The program is available all year, but is particularly helpful during the back-to-school season with discounts on everything from copies and prints for the classroom, to banners, posters and outdoor signs for clubs and back-to-school events. More information can be found at http://www.fedex.com/us/office/academic-edge/index.html.

Finally, the back-to-school shopping season goes beyond pencils and school uniforms—serving as an important indicator for both FedEx and the overall economy as a precursor to the biggest shopping season—Christmas.  Higher retail sales during back-to-school often signal a stronger holiday shopping season. Retailers count on that as the global economy continues to recover and rebalance from The Great Recession. It’s also when FedEx ships more packages than any other time of the year.

The question now… will the ads and circulars properly “school” parents on good deals and entice them to open their wallets?  We hope so-- ultimately leaving back-to-school sales logs with a passing grade and renewed hope for stronger holiday shopping.

Comment (1) 

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OUTSTANDING article, Gene!!!

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About This Blogger

Gene provides insight and commentary on the global economy.