Are you waiting for Labor Day sales to finish your back to school shopping? Good luck. If stores have their way, pickings in the clearance racks will be slimmer this year than in the past.
Knowing this back-to-school season would be weak, retailers cut back inventories and shopped more carefully for merchandise, hoping to have fewer leftovers that need to be marked down as the first day of school draws near. But parents are pinching pennies, which leaves the two sides playing a game of retail chicken -- probably until after Labor Day.
But there will be markdowns this season because sales have not materialized, even given retailers' lowered expectations in this recessionary year, says Anne Brouwer, senior partner at Chicago-based retail consultant McMillan/Doolittle LLP. "But I do think that retailers are trying not to push the panic button," she says.
Merchandisers may hold off on marking down too much, especially since their sales for the next quarter will look good compared with last year's disastrous third quarter. The panic following the stock market crash in late September wrecked sales, blew apart projections, and left retailers drowning in overstock during the crucial holiday season.
This year, retailers are determined not to get caught again. "Inventory control" has been the name of the game everywhere from Saks Fifth Avenue (SKS) to JCPenney (JCP). Even a low-price leader like Wal-Mart Stores (WMT), the world's largest retailer, reduced its inventory by 6 percent in the last quarter.
Target Corp. (TGT) has been working on reducing its assortment of products by 5 percent, executive VP of merchandising Kathryn A. Tesija told analysts this month. Target is editing its assortment to get items out of the back room and hold off on markdowns, she said.
Gregg Steinhafel, Target Corp.'s CEO, said Target's back to school pricing has been "slightly more rational, or less deeply negative than it's been." But he acknowledged the tug-of-war between retailers and shoppers during the back-to-school period. "Inventories have been exceptionally well-managed this season," he said. "On the other hand, consumers have been exceptionally price sensitive."
A survey by consulting group Retail Forward found 24 percent of shoppers plan to spend less this year on back-to-school shopping than last year, compared to 19 percent this time last year; another 49 percent plan to spend the same amount, up from 44 percent last year. Only 24 percent of shoppers plan to spend more this year, and that's down from 33 percent last year.
The main strategy for saving money? You guessed it: Look for sales. Fifty-nine percent of shoppers said that's how they will save on school supplies, and 45 percent said they will do that to save on clothes and shoes. It was the leading strategy for saving money on supplies and second only to "buying only essential items" to save on apparel (49 percent).
Andrea Deckard, a stay-at-home mother of three and blogger in Cincinnati, says she heard other parents at football practice say they were not buying new shoes for their kids for back-to-school. The old ones still fit and they planned to buy new ones around the holidays, she says: "I think more parents are seeing what current items will work to get them through the next sale period."
Deckard, who writes about money-saving tips on mommysnacks.net, says her own strategy is to reuse old clothes and supplies and wait for sales after the schoolyear starts. That way, she has the money set aside to take advantage of the clearance prices, she said. "I'm willing to wait -- actually, I'm looking forward to it," she says. "If the stores do get desperate and discount items, that will be a win for us."
But in the end, the game of chicken may not be between shoppers and stores, as much as retailer against retailer, Brouwer says. The landscape is over-retailed, with too many stores selling too much similar merchandise to shoppers who are going back-to-basics, turning away from conspicuous consumption, she says. With the ability to compare prices online, shoppers have a lot more control over their choices and they have become more conditioned to buying on sale than they used to be.
"Retailers have to do their jobs better," Brouwer says. "There's so much out there, so much duplication. What will break the cycle of sale and cleareance is offering consumers much more of what they're really looking for. People will spend on what's good value for the money."
In back-to-school shopping, big retailers play tug-of-war with parents