Brisk back-to-school sales forecast

Retailers can expect robust back-to-school sales this year with growth topping even pre-pandemic rates, according to a new industry report. But some retail experts say the picture may not be quite so rosy.

U.S. retail sales excluding cars and gas are expected to grow 5.5% over the 2020 shopping season, which researcher Mastercard SpendingPulse identifies as being between July 15 and Sept. 6.

And compared with 2019, before the coronavirus pandemic disrupted the lives of millions of schoolchildren -- and their parents -- sales are expected to increase 6.7%.

Mastercard SpendingPulse tracks both in-store and online sales across all payment types in select markets.

A Walmart Inc. spokeswoman said the company doesn't speculate on sales, but is prepared to serve customers whether they prefer to do their back-to-school shopping in stores or use one of Walmart's pickup and delivery services.

"Walmart continues to be nimble and respond to the changing landscape to help teachers, students and families prepare for the school year ahead," the spokeswoman said.

Last year, for instance, the Bentonville-based retailer included items not usually found on back-to-school lists, such as laptop computer desks, dry-erase boards and headphones.

The spokeswman said that to prepare for this year, Walmart researched the year's trends, applied customer feedback, and "maintained a pulse on the needs of teachers and students across the country."

"With more classrooms returning to in-person learning," the spokeswoman said, "we'll be ready with the more traditional back-to-school essentials but will continue to have a wide variety of products to meet our customers' needs."

Dillard's Inc., the Little Rock department store chain, and Target Corp., Walmart's Minneapolis rival, were unable to immediately respond to requests for comment.

Back-to-school has always been a prime selling season for retailers, but this year "brings an exciting wave of optimism," said Steve Sadove, a senior adviser for Mastercard and former chief executive officer and chairman of Saks Inc.

"This back-to-school season will be defined by choice," Sadove said, "as online sales remain robust, brick-and-mortar browsing regains momentum and strong projections help retailers compete for shoppers' wallets."

But Keith Anderson, senior vice president of strategy and insight for e-commerce analytics firm Profitero, said Mastercard's forecast of 5.5% year over year "is barely keeping pace with inflation."

"As consumer purchasing power continues to flatline or decline," Anderson said, "we think price- and value-conscious shoppers will gravitate toward e-commerce."

The return to summer of Amazon Prime Day and other retailers' competing promotions also may drive back-to-school sales online, Anderson said.

That's not surprising given that many schools are reopening this fall, Anderson said. He said Profitero expects a shift in sales mix this year compared with 2020.

"Last year's back-to-school spending was skewed toward home learning environments," he said, "while this year is about a return to the classroom."

A recent Profitero survey of U.S. consumers showed that apparel will be a strong category this year, behind only electronics and home goods. Anderson added that Profitero's data also suggests apparel prices are rising quickly as demand increases.

Sucharita Kodali, vice president and principal analyst at Forrester Research, said back-to-school sales this year "should be way up."

"Everyone is back in school, including college students, who are a large part of that spend," Kodali said. She expects the hot categories will be bed, office and storage.

Online shopping will grow, "but not disproportionately so," Kodali said. She thinks there is likely to be more in-store shopping this year as people resume their normal, pre-pandemic behavior.

That's especially true for young people going off to college, Kodali said. "I think a lot of parents like to get their kids settled and that drives much in-store shopping," Kodali said.

But not everyone thinks it's possible to make a meaningful comparison between 2021 sales and those of the past two years.

"Anyone's ability to predict against last year is specious," said Mark Cohen, director of retail studies at Columbia University's Graduate School of Business.

Cohen said the entire retail industry was hit hard last year with a few exceptions -- namely retailers that sold essential goods.

"So I think the projections against last year are likely to be a tremendous underestimate," he said.

This summer will see an "enormous explosion" in sales as people snap up clothes and other items they haven't bought in a year and a half, Cohen said.

"I think we're going to witness this giddy third quarter," he said. "We'll see it again this Christmas."

That's why comparing this year's sales with those of 2019 doesn't paint a realistic picture. Last year was "a lost year," Cohen said, while in contrast, "2021 looks like a year in which recovery becomes vivid." He said 2022 "is when we'll start to see some leveling out."

And barring another crisis, "real recovery won't be evident until 2023," Cohen said.

That's assuming there isn't a resurgence in coronavirus cases, he said. Given dangerous variants of the virus emerging and the numbers of people choosing not to be vaccinated, Cohen said it wouldn't surprise him to see new outbreaks in different parts of the country.

Cohen noted that the retail industry has actually weathered this cycle before, albeit on a smaller scale. He gave as an example a blizzard that shuts down stores and supply lines for several days. Afterward, everyone rushes in to replenish supplies.

"It's simply recovery from a crisis," Cohen said. "I have to laugh because we're all such short-term puppies."

Upcoming Events