The back to school shopping season has been going strong since at least the beginning of July, per a survey from the National Retail Federation. However, with more school-related purchases still coming their way, retailers are only offering hints of how this crucial pre-holiday shopping season is going so far.
Walmart US president and CEO John Furner told shareholders on August 15 that back to school “started off strong this last couple weeks,” but that “about 50% of our customers still say they have a lot of shopping left to do.”
“We have to continue to execute really well, clean up, come out of the season strong so that then we can move to the next holiday, which will be Labor Day,” he said. “So good start, but a lot of trading left to do.”
Target’s Chief Commercial Officer Rick Gomez said back-to-school sales reached their peak in the front half of Q3, and highlighted that the home category, which grew more than 7 percentage points in Q2, is on track to perform well again. In addition, he stressed the importance of affordability, noting that Target is offering 20 of the most popular school supply items such as crayons, notebooks, and backpacks for a combined price of less than $20.
Both retail giant’s Q2 results included the month of July, but the bulk of back-to-school shopping was expected in August, which means many retailers won’t have to reveal their sales numbers for the period until the middle of fall. But how experts are interpreting these early signals appears to vary widely.
On the list: Nikki Baird, retail analyst and VP of strategy and product at Aptos, told Retail Brew that while retailers are increasingly struggling to compete for discretionary dollars, “back-to-school shopping, to some degree, is an exception.”
“Kids outgrow clothes and shoes,” she said. “School supply lists are a mile long. Without question, the retail industry in July benefited from back-to-school shopping and retailers’ heavy emphasis on deals and promotional events.”
- In July, retail sales were up 1% from the month before and 2.7% from the previous year, according to the latest federal data.
- NRF is also optimistic. The trade group expects back-to-school spending to reach $41.5 billion, up from $36.9 billion last year, and household spending to reach $890, up from $864 last year.
One company already touting its back-to-school success is Abercrombie & Fitch. “I’m very happy with how back to school is going for us so far,” CEO Fran Horowitz said. She added that the company has invested in marketing to students, including its Feel Good Fest concert series organized in partnership with local high schools.
Morgan Stanley, on the other hand, is predicting more of a “mixed bag.” In softlines and brands, the bank said in a research note that it thinks “trends will diverge by player—with winners and losers emerging,” though the category overall could prove better than expected. In hardlines and food retail, it’s leaning more cautious due to consumers remaining “value-focused and is spending closer to need.”
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Urban Outfitters President Richard Hayne acknowledged last week in an earnings call that customer demand decelerated in mid-July, and the company sees that trend continuing into August.
“The lower demand rate feels like it’s a return to pre-Covid levels and away from what I would consider a supercharged demand over the last few years,” he said.
Still shopping: But as Walmart noted, there’s more shopping ahead: Shoppers had only completed about half of their back-to-school shopping as of early August, and only about 10% had finished shopping, according to an updated NRF survey. “Many were expecting they’d still be picking up last-minute items the week classes start,” Katherine Cullen, VP of industry and consumer insights at NRF, wrote in a blog post.