Retailers preparing for a difficult back-to-school season are getting creative in their attempts to entice shoppers into the stores – aggressively introducing new products, slashing prices and ramping up marketing in the battle for parents' bucks.
But analysts say their efforts will likely make little difference to consumers pressured by rising costs, who will likely stick to shopping at discounters – particularly as tax-rebate checks dry up and they aren't finding “must-have” fashion items in the stores.
“It will probably be one of the two or three most disappointing back-to-school seasons this decade,” said retail consultant Burt Flickinger III, managing director of Strategic Research Group. “It will be very promotional. Consumers are more cash- and credit-constrained than any other time in U.S. history.”
Just how skittish shoppers are feeling will be seen Thursday when many retailers report their July sales for stores open at least a year. A weak back-to-school season may signal trouble for the all-important holiday season, which begins not long afterward.
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But while consumers may not see a new backpack or pair of jeans as essential this year, retailers are trying whatever they can – slashing prices of selected items, offering cash back or discounts on additional items, running some promotions at certain times of day.
“We assume it's going to be a very difficult customer environment so from a sales and promotions standpoint we'll be extremely competitive,” said Mike Boylson, chief marketing officer at J.C. Penney Co.
The department store chain is also introducing six new lines aimed at teens and young adults during the season, compared with last year, when it introduced only one.
Patricia Edwards, an investment manager at Wentworth Hauser and Violich in Seattle, said the atmosphere was the most promotional she has seen in five or six years.
“Frankly, it smacks a little bit of desperation to me,” she said. In terms of department stores such as J.C. Penney or Kohl's Corp., “the problem right now is traffic,” Edwards said. “Wal-Mart has a captive audience because of the food they sell. People are already there, so it's a little easier for them.”
That's the case for Michelle Portillo, a public relations manager at National CineMedia in Centennial, Colo., and the mother of an 8-year-old and 4-year-old, who says she is “dreading” the back-to-school season. “I just don't have the disposable income I had last year” because of rising costs, she said. For her daughter who is entering third grade, Portillo bought a dress for the first day of school but plans to hold off on buying any more clothes.
“I will purchase a new backpack from Wal-Mart with all her school supplies, but nothing else will be new at the beginning of the school year,” she said.
Another problem experts cite is a lack of “must-have” fashion trends. Jeans and T-shirts are likely to be among the biggest sellers.
“There's an absence of anything new in fashion,” said Marshal Cohen, chief retail analyst at NPD Group.
To get people past that thinking, retailers are going beyond usual price cuts. American Eagle Outfitters Inc. is offering a free T-shirt to anyone who even tries on a pair of jeans.
Retailers are also changing marketing to focus more squarely on prices.