The Power of Retail

High back-to-school sales are likely to lead to a relatively tame holiday season for teens. According to the National Retail Federation, sales have been forecast to rise just 4% in November and December 2007, coming to $474.5 billion which is below the 10 year average of 4.8% growth. Scott Krugman, NRF’s vice president states that “The economy is in a different state than it was in last year. With the credit crunch on the horizon, the housing market in bad shape and the decrease in the job market, the economy is weak right now.”

TNS Retail has also predicted a slower growth rate of 3.3% compared to 4.6% last year. RBC Capital Markets survey suggests a “plunge in consumer confidence” which will lead to lesser spending on holiday shopping.

While back-to-school shopping has been later this year, due to several states starting school in August this year, September sales are also likely to be rising which will lead to lower holiday spending. Shoppers who have waited to buy back-to-school merchandise will also be able to buy all the latest winter wear, cutting down on these items from the holiday shopping list as well.

The last-minute nature of back-to-school shopping also suggests that consumers have caught onto the now-accepted holiday rule that the later in the season they shop, the more discounts they can take home. “People started to play back-to-school like they’ve been playing the holiday season for the past few years,” explained Eric Beder, retail analyst with Brean Murray, Carret & Co. “They’ve waited for the last minute when the sales are deeper.”