Bad News For Back-To-School: It's Not Getting Better

After poor sales in July, teens jumping ship for high-end retailers and reports that as much as a third of shoppers won't be doing back-to-school shopping this year, the hits just keep on coming for retailers. Both MasterCard Advisor's SpendingPulse report and a new Mintel study of parents' spending habits indicate that what's left of the back-to-school season isn't likely to bail them out.

"We expect a moderate back-to-school season and are not predicting major increases over 2012," Sarah Quinlan, SVP Market Insights for MasterCard Advisors, told PYMNTS.com. "Specifically, the effects of a higher payroll tax, increased assessments for healthcare costs and gasoline prices up 5.2 percent over last year means that there is less disposable income to spend on back to school items."

That increase in the price of gas means it outpaced overall retail spending for the first time since October of last year, but it was offset by weakness in those retail categories.

That weakness is no surprise judging by Mintel's findings. According to their study, 48 percent of customers went to sales or clearance racks to save money, 32 percent bought clothes throughout the year to save for back-to-school, and 53 percent of parents said they were worried about being able to afford back-to-school supplies and clothes.

That could spell poor revenue numbers if retailers can't entice parents with sales and promotions. Walmart might well be the winner for the season with its appeal to discount shoppers, but even they're likely to come in at the low end of the company's forecast range.

"Clearly the U.S. consumer is feeling better and has more confidence," Quinlan said. "This is evidenced by the growth rate in U.S. retail sales over the last four months. But there still remains a level of caution. People are continuing to focus on needs versus wants."

For more:

- See this PYMNTS.com story
- See this Drug Store News story

Related articles:

Almost One Third Of Shopper Not Doing Back-To-School
Teens Abandoning Malls For High End Shopping
Back-To-School Is A Bust In July

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