California Apparel News

The Back-to-School season is just getting underway, andprominent retail trade groups and analysts have forecast widerangingprojections for this crucial retail season, which is consideredthe second most important moneymaking season forretailers, right behind the winter holidays.

The National Retail Federation, America's biggest retailtrade group, forecast a 14 percent increase in Back-to-School spending over last year, when the average family spent$603.63 on apparel, school supplies and electronics.

This year, NRF is predicting families will spend $688.62on school supplies for students in grades K–12. The trade associationcites an increase in the number of children enteringelementary and middle school this year and a need for parentsto "replace and replenish what their children might have had to 'make do' with last school season." NRF's 2012 Back-to-School spending survey was conducted by BIGinsight.

Shopping-center trade group International Council ofShopping Center's forecast is significantly less.

According to the ICSC-Goldman Sachs ConsumerTracking Survey, the average household spending for Backto-School will be $300. Forty-four percent of those surveyedplan to spend the same amount as last year, while only 14percent stated they will spend less. Of the 42 percent of consumerswho plan to increase spending, almost half indicatedthat it was due to a need to replace wardrobes and schoolsupplies, said Michael P. Niemira, ICSC vice president ofresearch and chief economist.

"Despite the relatively soft economic conditions over thelast quarter, consumers view Back-to-School merchandise asessential, which is likely a key reason that so many consumersplan to increase spending this year," Niemira said.

But market-research company ShopperTrak forecast nationalretail sales to increase this year. The Chicago-basedgroup predicted retail sales will increase 4 percent in August,when much of Back-to-School shopping takes place. However,the group did not confirm by deadline a dollar amountof what the average household will spend.

"The tide will turn for retailers this year as we forecast a 4percent increase in Back-to-School sales," said ShopperTrakFounder Bill Martin. "This increase will follow year-overyearU.S. retail-sales growth in 28 of the last 29 months. Augustwill present retailers with a tremendous opportunity totake all steps possible to maximize their shopper opportunityand increase conversion rates."

One reason for the increase in business is a decrease ingas prices, Martin said. A recent decline in gas prices acrossthe nation might translate into more disposable income thatparents can spend on kids.

To serve a bargain-hungry public, retailers will offerBack-to-School promotions to get bodies through theirdoors, just like they do during every major shopping season.Walmart has offered free shipping for uniforms andsupplies on its e-commerce site (www.walmart.com). Butno one knows how deep discounts will be for the 2012Back-to-School season, said Jeff Van Sinderen, a retail analystwith B. Riley & Co., a Los Angeles–based financial-servicesfirm.

"There are a lot of mixed reads out there," Van Sinderensaid of the Back-to-School season. "It will not be super-strongout of the gate, and retailers could pull promotionaltriggers early."

That falls in line with NRF's survey, which found thatparents will be shopping for sales. According to BIGinsight'ssurvey for NRF, 84.8 percent of parents said the economywill "impact their spending plans in some way," and 51.1percent said they plan to shop sales more often. Additionally,17.9 percent said they will be shopping online more often,and 32.1 percent said they will be comparing prices online.

"The budget-conscious consumer has not forgotten aboutprice, quality or value; we're merely seeing a more savvyshopper," said BIGinsight Consumer Insights Director PamGoodfellow. "There's no question consumers have becomemore practical in their shopping, and with school purchasesoftentimes considered a necessity, parents have likely beensaving and scrimping to be able to fully afford all of theirchildren's needs for the upcoming school year."

The good news for apparel makers and retailers is thatclothing and accessories top the Back-to-School shoppinglist, followed by electronics. According to the NRF, parentswill spend about $246.10 on clothes and $217.88 on electronics.

Independent Los Angeles County–headquartered specialtyretailer M.Fredric will avoid most promotions and planon charging full price. It will mean a healthier balance sheetin the long run, said Fred Levine, M.Fredric's co-owner."Sharper buying and bringing in fresh new product weeklyseems to be a better strategy to maintaining a healthy bottomline than price busting," he said.

Longer season

The Back-to-School season is stretching beyond its traditionalJuly-to-September parameters. Teenage peer pressureoften pushes the buying season out. Teenagers oftendelay their Back-to-School shopping until October so theycan see what other kids are wearing, said Deke Jamieson,executive vice president for juniors lifestyle collectionYMI Jeans, which is headquartered in Los Angeles.

As they do for Christmas, retailers are increasingly startingpromotions earlier to get more consumers in the store,but they are keeping their inventories very lean. "They'renot buying like they used to buy," Jamieson said. "They'rebuying less and buying later across every product category.Retailers are looking for 'just-in-time' inventory. Theywant merchandise just in time. They want to get it in andblow it out."

Manufacturers can still make profits if they concentrateon making clothes with a competitive price and at a goodquality, Jamieson said.

Retailers serving adults can make Back-to-School profitsby selling outfits for teachers or school staff, said MercedesGonzalez, a retail consultant with New York–basedGlobal Purchasing Companies.

"We have been trained for 18 years, depending on yourschooling, to buy something new for Back-to-School,"Gonzalez said. "There is no reason to shop unless you givethem one. This gives them an excuse to shop for themselves."

On trend

Back-to-School trends for juniors include clothes withmetallic colors, chambray shirts, lace- and animal-skinprints, motorcycle jacket silhouettes, and fur for when theweather gets cooler, said Barbara Fields, founder of theBarbara Fields Buying Office in Los Angeles. "But it'sgoing to be challenging," she said of the retail environment."It's more challenging than I've ever seen it."