Back-To-School Spending To Decline For Second Consecutive Year According To IBISWorld

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Back-to-school spending is expected to drop 0.2 percent to $19.56 billion in 2010

LOS ANGELES

– Aug. 17, 2010 – Back-to-school spending is expected to drop 0.2 percent to $19.56 billion in 2010 due to continued high levels of unemployment and economic uncertainty, according to industry research firm IBISWorld. This is the second consecutive year of decline, having dropped 5.4 percent in 2009, after three years of very strong growth from 2005-2008.

School supplies are expected to perform well in 2010, growing 1.18 percent to $3.45 billion, yet one of the strongest emerging back to school categories, electronic school supplies, is only forecasted to grow 0.84 percent to $4.97 billion. While expected to become the biggest spending category by 2017, the past two years of growth for electric school supplies sector has actually fallen behind that of traditional school supplies. This slower growth was due to tighter budget constraints, however IBISWorld expects that into the coming years a strong rebound in this category will occur.

“Although growth in electronic school supplies is below traditional school supplies, demand for these essential schooling materials generally remains on a steady and positive path from year to year,” explained Toon van Beeck, senior analyst with IBISWorld On the other hand, clothing categories are expected perform poorly in 2010. The footwear segment is forecasted to decline 1.45 percent to $3.61 billion, while clothing and other goods are expected to fall 0.87 percent to $7.53 billion.

“Clothing will see a decline in spending in 2010 as parents continue to hold out on purchasing unnecessary or expensive clothing items, opting for the basics and essentials,” said van Beeck. “Furthermore, apparel companies are expected to aggressively push for market share, meaning sales will be abundant across back to school clothing areas. This will be particularly true for the denim category.”

Discount stores have been an improving shopping avenue for parents throughout 2008 and 2009. However, for 2010 back-to-school shopping at discount stores is not expected to perform as well. These stores will see a slight decline in demand, given the strong resurgence during the two years prior, and with clothing stores expected to push for increased market share, some sales are expected to flow back to those retailing avenues.

However the greatest winner this back to school year is expected to be the online category. This avenue is expected to “steal” sales from many shopping areas in 2010, with growth potentially nearing 50 percent. The ease of online shopping, combined with increasing reliance and trust of using it as a shopping channel, is expected to greatly help back-to-school sales this year.

“Consumers can easily shop around for the cheapest electronics and traditional school supplies, making the online segment a very attractive method of shopping,” added van Beeck. “Catalogue shopping is also expected to observe a rather positive year compared to 2009, as it is also a relatively easy method to shop for key back to school items in search for a bargain.”

Office supply stores are forecasted to remain the biggest shopping avenue because consumers can pick up a large majority of their back-to-school goods there. Companies like Staples, Office Depot, Wal-Mart and Costco are all expected to benefit greatly firm the multibillion dollar back-to-school spending market.

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