Hope Yet for Retail: Big Spending Expected for Back-to-School

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Back to school spending expected to increase.
Back to school spending expected to increase. Credit: istock

Finally, some sun appears to be shining on the retail sector. With the holidays just around the corner—165 days until Christmas—back-to-school season is already underway and might just be a blockbuster, according to data released Thursday by the National Retail Federation. During the July through September period, which is the second-most important sales season for retailers, consumers are expected to spend $83.6 billion, 10% more than last year, a survey from the NRF and Prosper Insights and Analytics found. Shopping lists will be topped by electronics like laptops and tablets and shoes, according to the survey.

"Consumers are in a much better position compared to the last several years," said Ellen Davis, senior VP- research and strategic initiatives at the NRF. She noted that workforce and wage numbers have improved and led consumers to open up their wallets. "They're splurging on some items—they didn't feel comfortable doing [that] a few years ago," she said.

Some retailers are already reaping the rewards. Amazon's Prime Day on Tuesday was the retailer's most successful yet—sales grew 60% over last year. On Thursday, Target raised its sales outlook for the second quarter, citing improved store traffic and sales in recent weeks. The Minneapolis-based retailer is focusing on new in-house brands, like the recently launched Cloud Island baby offering, and testing new delivery methods like a curbside delivery test.

Though shoppers have the ability to spend, "the big issue is willingness and what factors might be keeping them from spending as much as we might hope," said Jack Kleinhenz, chief economist at the NRF.

Unlike previous years, when back-to-school marketing began in mid-to-late July, brands are more eager to promote themselves now, after a disappointing first quarter and lackluster holiday. Lands' End and Office Depot started campaigns in June, and Walmart rolled out a spot set to Whitesnake's "Here I Go Again" last week.

Early ads are focusing on promotional messaging thus far, according to a spokeswoman from Ace Metrix, the ad tracking firm, though she cautioned the marketing cadence could change to more emotional mix. Kohl's and Gap should debut campaigns in the coming weeks on both TV and social media.

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