Business Trends

Retailers Having Back To School Blues

In Uncategorized on August 17, 2009 at 4:59 pm
EconomyWith 55.8 million kids enrolled in public and private schools this fall, retailers can anticipate their usual brief stint of shoppers. But given lackluster consumer spending and a 9.4 percent unemployment rate, it is no surprise analysts at industry research firm IBISWorld expect back-to-school spending to decline by 3.4 percent – from the $20.42 billion generated in 2008.

In probing their back-to-school cost breakdown, the Los Angeles-based firm divided the following four categories into what it considered to be typical school-related expenses: electronics, traditional supplies, footwear and clothing.

“Parents will inevitably put more thought and less dollars into their back-to-school shopping strategies,” said George Van Horn, senior analyst at IBISWorld. “In particular, dollar-variety stores can expect to see a greater wave of traffic since parents are doing everything they can to save an extra buck”.  In fact, IBISWorld approximates 21.3 percent of sales from the $47 billion discount-retailer industry to come from school and office supplies alone.

The fastest growing category, electronic school supplies, will see a slight decline of 1.8 percent, down to $5.12 billion. Parents on average will spend $91.69 per child on electronic equipment this year, a fairly significant leap from the $43.36 average observed in 2005. Items such as calculators and personal laptops are must-haves in today’s learning environment, and IBISWorld predicts that by 2016, this sector will become the number one back-to-school spending category – overtaking the core area of clothing, as the learning environment becomes more technologically focused.

The biggest decline this year comes from the clothes category, expected to plunge 5.4 percent. For each child enrolled in school this year, sporting the latest trends in clothes and accessories will cost parents $136.60 on average.

And for the 1.23 million kids that will be home-schooled this year, IBISWorld found that while parents may be saving on certain expenses like clothes and shoes, educating a child at home escalates costs in other areas. In particular, parents incur the hefty price of purchasing the latest teaching tools, textbooks, and learning equipment – typically covered by public and private schools.

“Back-to-school spending is a necessary and justifiable expenditure,’” said Van Horn. “Retailers have driven down overall prices in order to entice consumers, so price-conscious parents won’t need to significantly cutback, because they will get a lot more out of their dollar this year.”

About IBISWorld, Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every U.S. industry.  With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions.  Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide.  For more information visit www.ibisworld.com or call 1-800-330-3772.

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