Friday, Aug. 15, 2008

Retailers glum over slow sales for school

‘People are very careful about what they're spending'

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For Ed Jurgrau, owner of Shoe Train children's shoe store in Potomac, the back-to-school season is his best of the year. But this year, the best hasn't been so good.

Jurgrau, who enjoys a large base of repeat customers spanning several generations since 1979, prepared for the slower spending plaguing all niches of the retail industry when he bought his fall stock.

"We were very careful in our fall buying," Jurgrau said. "We didn't buy things that were expensive."

During a typical back-to-school season, customers often buy several pairs of shoes in one trip, Jurgrau said. He sees that trend quickly fading, as more customers make do with fewer footwear options.

"People are very careful about what they're spending," Jurgrau said. "We'll weather it out, but I've never been more aware that people are concerned about price."

Nationally, retail sales dropped 0.1 percent in July from June, the first drop since February, when sales fell 0.5 percent, according to a report released Wednesday by the U.S. Commerce Department. At department stores, retail sales rose by 0.3 percent in July, half the 0.6 percent rise in June. Clothing sales nationwide rose to $19.13 billion in July from $19.08 billion in June.

Overall back-to-school spending is expected to fall as much as 24 percent from last year, according to a survey by consulting firm Retail Forward of Columbus, Ohio.

David P. Brennan, a marketing professor and co-director of the Institute for Retailing Excellence at the University of St. Thomas in St. Paul, Minn., said shoppers are focusing more on what they truly need and reusing anything they can, especially clothes. He called the predicted 24 percent plunge significant.

Also, more shoppers are also visiting several stores and comparing prices rather than just buying everything from one merchant, he said.

Thomas S. Saquella, president of the Maryland Retailers Association, said most retailers, particularly clothiers, are "pulling out all the stops" with advertising to attract more back-to-school shoppers.

"I'm seeing a lot more television advertising than I ever recall," Saquella said. "Retailers know they have to go out and be very promotional. This is a very important season for retailers, second only to the holiday season. … If you have a good back-to-school season, that usually means you'll have a good holiday season."

For Maryland retailers, July sales were a continuation of what the industry has noted since the fourth quarter of last year, Saquella said: "very disappointing." While some large retailers such as the Boscov's department store chain, which filed for bankruptcy protection have announced store closures, most retailers will likely try to continue fighting through the sluggish spending trends through the end-of-year holidays.

Roughly 90 percent of households are more conservative in their back-to-school shopping habits, hunting more sales items and using coupons, according to Deloitte & Touche. Those shoppers will flock to discount and bargain stores this year.

Officials at The Mall at Prince George's in Hyattsville said the shopping complex is well positioned to have a strong back-to-school season despite the broader downturn.

"Shoppers are likely to seek out value destinations such as Marshalls, Ross Dress for Less and Target in order to stretch their budgets," said marketing director Victoria Clark of the mall's major tenants.

Marketing director Kris Winternitz said Bowie Town Center has seen a slight slowdown in back-to-school sales, mainly in stores with merchandise for teenagers and in shoe stores. Both retail types attract the most preschool shoppers at the center, she said.

Fashion Bug, a teen clothing chain store in Glen Burnie, has fared all right, with higher-than-normal sales last week, said manager Regina Grant. She said she hopes the specials and fashion show the store has planned for this weekend will further boost sales.

Some retailers were reluctant to discuss their slower sales, but a representative from Annapolis Gymboree, a children's clothing store, said more shoppers are trying to be frugal and are looking more than buying. The store is also seeing less foot traffic than usual.

The pinch is even being felt among companies producing basic school supplies.

Raymond Geddes and Co., a school store supplier in Baltimore, has continued to sell well through the direct-to-school market, although its retail sales have fallen, said Laura Bruck, vice president of marketing.

With the exception of electronics, spending in most retail categories will likely be flat this year, according to the National Retail Federation. While electronics will remain the No. 1 purchase among college students, spending will drop about 22 percent, the industry group estimates.

Some computer and electronics retailers said more people are reusing what they have, rather than shopping for upgrades or replacements. One retailer in Glen Burnie said his store has so far sold 10 notebook computers during the back-to-school season; last year, it sold 40.