Back-to-school deals already? You bet
School may be the last thing on the minds of American kids during summer vacation, but retailers are busy gearing up for the back-to-school season, traditionally the second-busiest time of the year for the industry after the December holidays. They have no choice, given changes in shopping habits in recent years.
According to a recent Rubicon Project (RUBI) survey of 1,500 of parents of both school-aged children and college-bound students, more than one-third of these consumers have already started to make purchases ahead of the new school year. A survey released last year by the National Retail Federation (NRF) found that 20 percent of respondents planned to shop at least two months before school starts. And a 2016 NRF report found more people were increasingly "strategically delaying" back-to-school shopping to get the best deals.
Walmart (WMT), the world's largest retailer, is trying to counter that trend by giving consumers its best deals throughout the season, according to spokeswoman Molly Blakeman. The chain began offering back-to-school deals this week, including 300 "classroom items" for under a buck, 600 for under $2 and more than 1,000 for less than $3.
Staples (SPLS) is advertising back-to-school deals on its website, backed with what it calls its "110 percent price match guarantee," and Macy's (M) is touting its fashions aimed at school-aged consumers, vowing that "shopping becomes elementary with a little help from Macy's!"
According to retail expert Howard Davidowitz, these merchants are offering deals to consumers now so they can better manage inventory during what he expects to be a "very promotional" season.
"If they have less of inventory, they will be in less of a panic to liquidate that inventory," said Davidowitz, the chairman of Davidowitz & Associates, a New York-based retail consulting and investment banking firm. He added that he thought it was "the right thing to do."
Walmart, Macy's and Staples, are each counting on a strong back-to-school seasons to prove to Wall Street that they can overcome the stagnant growth that has sent shares of many retail chains tumbling in recent months.
Though Walmart's decision to raise workers' wages is hurting its quarterly profits, Wall Street was heartened that the retailer posted an unexpected 1 percent revenue gain in its latest quarter and forecast that sales at existing stores, also called same-store sales, would rise in the current period.
Macy's, which recently announced that CEO Terry Lundgren would retire in 2017, isn't as fortunate. It recently reported its steepest decline in same-store sales since 2009. And Staples is regrouping in the wake of the federal government's decision to block its $6.3 billion merger with Office Depot (ODP) on antitrust grounds.
Each of these chains has a foe in Amazon (AMZN), which was the preferred vendor for both tech purchases and school supplies in the Rubicon Project Survey. The e-commerce giant has gained more financial flexibility in recent months, thanks to the ongoing success of its cloud-computing business.
The Rubicon Project poll conducted last month found that parents of college freshman plan to spend more than $1,000 on back-to-school merchandise, more than double what their counterparts with younger children plan to spend. The survey found 55 percent of parents of school-age children plan to spend more on seasonal merchandise this year, and 28 percent said they planned to spend less.
Parents of college freshman were more in a spending mode, with 74 percent saying they planned on shelling out more money than they did last year.
If current trends are any indication, parents won't have to wait for summer vacation to near its end to land some good deals.