August 14 , 2008

Parents, retailers plan cutbacks this back-to-school season

Parents, retailers plan cutbacks this back-to-school season

August 14, 2008-By MARIA HALKIAS / The Dallas Morning News 


CEDAR HILL – Katrina Lynn says she's adjusting to higher gasoline and food prices this back-to-school season by spreading out her purchases over several weeks, maybe even into Christmas.

She used to complete back-to-school shopping for eighth-grader Tytiana and fourth-grader Corey all at once.

But as soon as the school supply lists were posted in July, Ms. Lynn went to Wal-Mart and got that out of the way. Since then she's found school uniform knit shirts on sale for $6 at Kohl's.

This mother's new approach is being repeated over and over nationwide as parents face a new school year under the threat of rising unemployment, a growing credit crunch, depleting home equity and a stock market that's erasing their net worth.

But back-to-school shoppers in Texas will get a break this weekend with the 10th annual tax-free holiday. Purchases of most clothes and shoes priced under $100 will be free from state and local taxes between 12:01 a.m. Friday and midnight Sunday.

The state comptroller's office estimates that shoppers will save $54 million in sales tax, including $42.1 million in state sales tax and $11.9 million in local sales taxes.


Saving time, money


Saturday, while shopping at Uptown Village at Cedar Hill, Ms. Lynn put discounted shoes on layaway at Foot Locker. Her savings are twofold: She avoids fitting feet amid this weekend's expected sales tax holiday crowds, and she can take the shoes out of layaway by Sunday to get Texas' annual tax break.

Shopper mind-set heading into this back-to-school season has turned increasingly frugal.

Less than one-half of shoppers (44 percent) planned to spend about the same on back-to-school as last year, according to a survey by TNS Retail Forward Inc. That's seven percentage points lower than last July. About 19 percent said they will spend less this year. That share rose six percentage points in July from the same month in 2007.

While households will continue to spend on apparel, electronics, and dorm and school supplies needed to send 75 million students into a new academic year, parents will focus on price, promotions and clearance, and forgo discretionary purchases to save money, Citigroup retail analyst Deborah Weinswig, said in a report this week.

She expects Wal-Mart to increase market share with upgraded brands such as L.e.i. girls' and juniors' jeans and OP young men's apparel, a new slick college savings guide and its "Do the Math and Save" campaign. Citigroup and other research firms have a more cautious outlook for the department stores, as a large percentage of their sales come from apparel.

Midlothian residents Tiffany Dennis, 25, and 18-year-old Alisha Short said they're shopping first in their own closets.

Ms. Short is entering the University of Texas at Arlington as a freshman and faces a $300-a-month commuter gasoline bill. And Ms. Dennis said she has a good job in a doctor's office but is saving more just in case there are cutbacks.

"I've got jeans and tank tops that I can layer and just buy a few things," Ms. Short said. Ms. Dennis said she's sharing more clothes with her sister, who's married with a family and can't afford extras.

Teen specialty chains are putting items they sold at full price during last year's back-to-school season on sale, Ms. Short said. Standard $39.50 jeans are now $24.50 at American Eagle, and all tops were 50 percent off at Aéropostale, she said.


Soft sales expected


American Research Group chairman Britt Beemer predicts that back-to-school sales will be extremely soft as the firm's survey found that nearly one-third (29.1 percent) of parents will spend less on back-to-school. The biggest reason (44.5 percent) was that they have less money. Also, only 1.5 percent said they will pay full price for back-to-school shoes and apparel, compared with 9.9 percent last year, he said.

The retail industry's official forecast from the National Retail Federation estimates that households will spend an average of $594 on back-to-school purchases, up 5 percent from last year's estimate of $563.

The Commerce Department reported Wednesday that retail sales fell 0.1 percent in July, the first decline since February.


Less on racks


At the same time, retailers and shopping centers are doing more than offering lower prices to weather the slowdown.

They're flat-out putting less on the racks. June shipments to major U.S. retail container ports declined 10.3 percent from a year ago, and container volumes at U.S. ports have fallen in each of the first six months, according to the National Retail Federation's Port Tracker report.

Others have taken more serious action. Regional department store chains Mervyns, Boscov's and Goody's Family Clothing filed for bankruptcy. J.C. Penney Co. has scaled back its new store expansion. On Wednesday, Macy's reported profit and sales declines for the second quarter and lowered its forecast for the full year.

Tween Brands Inc. said Wednesday that it's closing its Limited Too chain, which caters to 7-to-14-year-old girls. After a bigger-than-expected second-quarter loss, Tween Brands said it will convert 560 Limited Too stores to its lower-priced Justice nameplate.

Alan Shor, president of Dallas-based The Retail Connection, said retailers are being very cautious and are worried that the housing situation seems to be worsening. "But we're operating in a good part of the country," Mr. Shor said about North Texas. "We're not concerned that we'll be sitting with as much retail dark space as in other regions such as Florida, California and Arizona."


Delaying purchases


At Cedar Hill's new Uptown Village, stores are still opening, but the center has plenty of vacant space and a spot waiting for a major tenant.

Cedar Hill mom Ms. Lynn is still pricing long uniform pants, but in Texas, they won't be needed for a couple months at least, she explains while standing outside The Buckle.

Daughter Tytiana ducked inside to check out a jacket she really wants.

"Instead of getting it now, that jacket may become a Christmas present," Ms. Lynn said.