By Tonya Garcia, MarketWatch
Rod Sides, the U.S. leader of the retail and distribution practice at Deloitte, notes that sales will not just be for gadgets and devices, but also any supplemental items and services, like videoconferencing, that will enhance the e-learning experience.
There’s also anxiety among parents that kids are falling behind in their studies and would suffer from a lack of interaction with peers and teachers in a distance learning situation. That’s coupled with fears about sending kids back to school during a pandemic. Moreover, he echoed the concerns that shoppers likely have about their financial well-being.
“The most valuable things in most people’s lives is family,” he said.
More direction from those in authority could quell some of these fears, Sides said, with many asking themselves, “How do I make sure I’m prepared in the absence of information?”
With shoppers still deciding how best to spend their back-to-school budgets, experts are making predictions.
Sides thinks big-box retailers like Walmart Inc. /zigman2/quotes/207374728/composite WMT +2.29% and Target Corp. /zigman2/quotes/207799045/composite TGT +1.13% , which heavily focus on the back-to-school season, could see a hiccup if sales of items like dorm room decorations slow.
Brian Yarbrough, consumer discretionary analyst at Edward Jones, thinks any slowdown in back-to-school sales at Walmart and Target will be offset because they’re essential retailers. However, between the two, Target might be more vulnerable because the retailer relies less on food.
“They’re the only game open in town if there are more lockdowns,” he said.
On the other hand, he says apparel retailers could be disappointed by a season where parents and college students are buying far less new clothing. There have already been a number of bankruptcies in the apparel retail space, including Brooks Brothers and J.Crew. And department stores like Macy’s Inc. /zigman2/quotes/201854387/composite M +3.17% and J.C. Penney Co. Inc. /zigman2/quotes/204684963/composite JCPNQ +3.19% , which has also filed for bankruptcy and just announced 152 store closures, are restructuring to weather the pandemic.
Joel Rampoldt, managing director in the retail practice at AlixPartners, thinks impulse purchases of all stripes will suffer as shopping moves online and away from brick-and-mortar stores.
“It’s an impulse-heavy season,” he said. “There’s an awful lot of stuff that people didn’t intend to buy that usually ends up in the basket.”
Rampoldt suggests retailers focus locally, determining what the need is for the area around a store and meeting the demand. That may be more tech products, services or something else entirely.
“Everyone wants to get their kids off on the best foot,” he said. “That’s why people spend money to get kids everything they need. That will collide with families under economic pressure.”
On the bright side, if schools open later than usual, there could be an opportunity for retailers to sell all of the unsold back-to-school items further down the line.
“Unlike apparel inventory, back-to-school products are not really subject to the whims of fashions or trends,” said Howard Meitener, managing director at Carl Marks Advisors, a middle-market investment bank and advisory firm.
“Stores that don’t sell all their product this year can simply hold on to it until next year, or the new year if schools open back up in January. If that happens, it could help January sales which is a traditionally slow month.”
And if computer sales increase, Wedbush’s Pachter thinks there will be some sellers that benefit.
“[T]o the extent that PC demand is up, I would expect to see online retailers capture more share than normal, so Amazon /zigman2/quotes/210331248/composite AMZN +1.52% , Walmart.com and Dell /zigman2/quotes/203822527/composite DELL -1.13% should see more growth than Best Buy /zigman2/quotes/205918291/composite BBY +1.48% ,” he said.
The SPDR S&P Retail ETF /zigman2/quotes/206947004/composite XRT +1.19% has slipped 0.7% for the year to date while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.37% is down 0.5% and the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.73% has fallen 6.3%.