4 months ago
Spending on children in grade school will drop 8% this back-to-school season as parents react to an economy that – unlike last year – is unquestionably in recession, a study out today predicts.
Back-to-college spending, which includes graduate students, is expected to fall 4%. BIGresearch, which conducted the survey of 8,367 consumers for the National Retail Federation (NRF), says those who are going away will actually spend more than last year. But more young people say they are postponing advanced degrees or are planning to live at home while attending school, contributing to an overall decline in spending.
"The economy is forcing young adults to make hard decisions about which schools to attend, where to live, and what's really a 'necessity' for college," says Tracy Mullin, the federation's CEO.
The American Council on Education says it may not be so bleak: It expects enrollment at schools ranging from community colleges to graduate and medical schools will actually increase, as it has in previous economic downturns.
ACE, a trade association of two- and four-year colleges and universities, is predicting a 4% to 5% increase in enrollment this fall, based on conversations with "hundreds of college and university officials," says Terry Hartle, council senior vice president. "But it's quite possible individuals won't be spending as much ... on non-essentials."
Either way, living with parents may be "a concession students need to make," BIGresearch's Phil Rist says. That would likely lead to lower sales for already beleaguered home furnishings retailers, as fewer people furnish dorm rooms or apartments and stock kitchens.
Spending in most back-to-school categories is expected to decrease. Electronics is expected to be one of the few exceptions, NRF says.
The study also found that while discounters such as Wal-Mart (WMT) or Target (TGT) remain favored shopping destinations, consumers plan to do more shopping for school supplies at drugstores and less at office-supply chains.
That might be a mistake. The August/September issue of Consumer Reports ShopSmart, out this week, compared prices on several products at discount, dollar, grocery and drugstores. The magazine found CVS' prices were almost always the highest. A composition notebook cost the most at CVS (CVS)– 3 cents a page vs. 1 cent at the dollar and discount stores, editor-in-chief Lisa Lee Freeman says.
Staples (SPLS) says it has a better selection and regular promotions. CVS' Erin Pensa says drugstores offer value and "are the most convenient."
By Jayne O'Donnell, USA TODAY
