As retail sales slow down in 2019, so too goes the back-to-school selling season, according to new data from Coresight Research, citing research from the National Retail Federation.
Coresight is projecting slower growth for the BTS season for non-food sales from July to September, at an expected 2.0 percent to 2.5 percent growth rate. That’s lower than the 4.4 increase for the same period in 2018.
The lower growth is in line with the general slowdown in retail sales, with June 2019 showing an increase of just 2.1 percent. According to Coresight, sales last year for June grew at “double that pace.”
Furthermore, non-food retail sales rose just 3.2 percent for the first six months of 2019, representing a significant slowdown from the 5.1 percent growth rate in the same 2018 period.
Coresight said its estimates are based on a June survey from Prosper Insights & Analytics, which found that only 17.1 percent of BTS shoppers said they expect to spend more this year. That compares with a similar study a year ago in which 22.8 percent said they planned to spend more.
While lower gas prices, higher wage growth and lower unemployment are deemed positive economic indicators for BTS, the savings rate this year is also lower, down to 6.1 percent in May versus 6.6 percent a year ago. Added to the slowing growth for non-food retailers and total retail sales, there are also three fewer tax-free shopping days in many states.
The Coresight projection is somewhat decent, given the view of the National Retail Federation. NRF, the retail trade organization, also worked with Prosper Insights for a BTS and back-to-college survey projecting that BTS spending will decline for the second consecutive year to $26.2 billion, while back-to-college is forecasted to be lower than its peak of $54.5 billion.
Combined, NRF is projecting total seasonal spending to reach $80.7 billion, 2.5 percent lower than 2018’s spend of $82.8 billion.
Both NRF and Coresight see apparel, electronics, shoes and school supplies as the biggest BTS spending categories. According to NRF data, which Coresight cites in its report, apparel spending for BTS represents 34 percent of the spending pie, and shoes are at 20 percent.
NRF is expecting the apparel and accessories spend to average $239.82 per household, with shoes at $135.96. For back-to-college, electronics is the largest category, while apparel is second at 15 percent and shoes are at 10 percent. College-bound students also spend on categories that their younger counterparts don’t have to worry about, such as food and dorm room furnishings.
As in 2018, department stores–at 52.5 percent, but lower than the 57.2 percent in 2018–remain the number one channel for BTS sales, but this year discount stores overtook online for second place. Clothing stores ranked in fourth place.
The Prosper survey that NRF commissioned indicated that 50.1 percent said they expect to shop at discounters, and the rate for online shopping is forecasted to be 7 percentage points lower than in 2018 at 48.8 percent. The Prosper survey also indicated that nearly every channel of distribution saw a decrease based on respondents’ answers, with the exception of the local/small business group. The neighborhood retailers as a group are expected to grow sales to 15.9 for BTS this year, or up 2.1 percent from 2018 and up 4 percent from 2017.
And the Amazon effect? In June, when the surveys were conducted, 59.1 percent of respondents said they plan to shop Amazon Prime Day deals for BTS. This year, Amazon Prime Day was held over two full days.
The last two days of July and the first two weeks of August are expected to be the key BTS shopping period, according to a Deloitte study, which is also expecting flat sales growth.