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Retail’s Watching Back to School With an Eye to Holiday Sales

Much uncertainty remains in the air surrounding the coronavirus, and between continued rising infection rates and a possible second wave of the virus later in the fall, the expectations for decent retail sales for back-to-school (BTS) or holiday aren’t all that optimistic.

Traditionally, BTS is the second-largest selling season after holiday and can be a reliable harbinger of November-December sales.

The double whammy of 2020 as an election year and the year of an historic pandemic means retail their buyers have landed in uncharted waters for the current BTS and holiday seasons. This year, apparel isn’t expected to be top of mind of consumers concerned about whether classrooms will welcome students and how to make ends meet amid sky-high unemployment rates.

What BTS might mean for apparel sales for holiday

“Back-to-school and holiday usually are directionally correlated. But if holiday this year follows the normal course of events, and if it looks anything like what we’re seeing now for back-to-school, we have a big problem,” said Simeon Siegel, retail and e-commerce analyst at BMO Capital Markets.

He believes it would be overly optimistic to think consumers will quickly return to stores in droves. “Given the potential later ramifications of COVID-19, that’s already suggesting [the idea] that the pandemic has not eased up at all,” Siegel said.

Retail consultant Walter Loeb believes “most kids attending K-12 will be in a virtual situation this year,” which likely means parents won’t need, or want, to purchase piles of new school-ready outfits. But Loeb doesn’t necessarily believe a lower sales outlook will hurt retailers. “I think most retailers have bought only a little bit of apparel merchandise for back-to-school, essentially just a minimum amount,” he said.

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Retail buyers bought just enough to bring in some newness into the stores and online, but not so much to leave the stores with excess inventory that it will then have to markdown later on, Loeb added.

“Because BTS is just ahead of holiday, it is often a precursor of what to expect for holiday. BTS is having a slow start, and there’s no mad rush into the stores,” he said. “People will be cautious about holiday, and there won’t be any mad rush for holiday goods either.” Even Amazon’s two-day Prime Day sales event has been put off to a still to-be-announced date from its usual July time frame.

Loeb said electronics orders are firmed up, and likely were placed on order in February for holiday as retailers planned out their special promotions. Toys are another category that will likely be okay since parents and grandparents will buy for their kids and grandchildren. Apparel is a different story.

Retailers began canceling fall orders at the start of the U.S. outbreak in April, and most likely canceled some holiday orders and put others on hold until they get a better read on the consumer willingness to spend. Currently, retailers are still in the process of clearing out leftover spring and summer inventory that can’t be packed up to sell for next year.

“Apparel is the one category that’s being talked about right now because there’s so little being bought at the moment. Basically, everyone’s given up on apparel,” Loeb said. The one category within fashion that could fare better between now and holiday is footwear, but only shoes that are suitable for casual wear or athleisure and active fashion, he said.

Western markets including the U.K. and Europe have shown some semblance of a semi-recovery in apparel as stores reopen, said Katie Thomas, Global Consumer Institute leader at Kearney. “However, we are still seeing a lag in the U.S. as consumers debate the need for new apparel right now, with funds in the back-to-school budget likely to be reallocated to hygiene or electronics supporting home learning; apparel purchases that do happen will still be over-represented in casual-leisure wear for at-home flexibility,” she said.

According to Thomas, even when apparel purchases are completed online, that’s not necessarily a plus for retailers. “With consumers still nervous to shop in-store, a lift in e-commerce has been frequently noted; it’s worth calling out that returns in apparel tend to be three times to five times higher for products purchased online versus in-store, so there could be downstream implications of this channel shift that are not yet realized,” she noted.

Fashion searches for BTS and holiday

While parents are conducting online searches for some apparel items, ShopStyle has seen an increase in consumers searching for items to create comfortable and productive at-home workspaces as opposed to shopping school supplies for classroom settings. Search terms such as “kids desks” rose 44 percent in July, with clear storage containers up 29 percent in search and “storage bench” up 10 percent.

While the pivot in searches has leaned more toward home, Alison Stiefel, ShopStyle’s general manager, said there’s been an uptick in apparel searches, but what people are looking for has centered on athleisure for kids and anything that’s more comfortable and casual in style. In short, parental searches have mimicked what moms and dads have been looking for themselves as they transitioned from the office to working from home.

“As we looked specifically at what people are searching for on our site, [what we’re] seeing is that kids’ shoes are up 6 percent. It’s a combination of sneakers and sandals. We’re also seeing women’s fashion trends tickle into kids fashion. The percentage of search for Teva was up 455 percent year-over-year, and that has trickled into kids’ shoe searches too,” Stiefel said.

Parents are looking for comfortable, casual footwear for their kids at a “good price point,” she said.

In general, the casual style matches up with the search for athleisure apparel for kids, such as joggers. Among the top-searched brands are Disney, up 558 percent within the past month, H&M at up 364 percent and Kappa at up 345 percent. The top-performing brands searched at ShopStyle for kids shoes were Puma, up 357 percent, Nike Air Force 1 at up 250 percent, Native at up 250 percent and Jordans, at up 193 percent. Sandals, at up 106 percent year-over-year, dominated the search for kids’ shoes. There wasn’t any increase in sneaker searches, suggesting that parents may be preparing for virtual instruction versus time spent at the school yard or playground for play and sports activities. Also top-of-mind were Stride Rite and Vans.

As for BTS fashion trends, anything tie-dye was a top search term. Tie-dye sweatpants searches were up 1,440 percent year-over-year, with tie-dye sweatshirts up 262 percent. The fashion trend also matched the collection’s theme in the new denim line launched by Gap called Gap Teen this year.

For kids attending K-12, top -earched apparel brands in addition to H&M were Mini Melissa, at up 288 percent, Ralph Lauren at 162 percent, Andy & Evan at 145 percent, Cat & Jack at 125 percent and Billieblush at 51 percent.

For teens, the top searches were Ugg at up 53 percent year-over-year, girls’ bras at 333 percent and backpacks at 28 percent.