Retail’s 2020 ‘Back to School’ Disaster

The Associated Press
The Associated Press

Remote learning appears to have choked off some back-to-school spending—although the effects have been uneven.

Data released from the Department of Labor on prices paid by consumers and received by businesses suggest that this years back-to-school spending was anemic in several categories. Consumers are still spending—prices rose by more than expected in September, a sign of healthy demand—but not on many categories that traditionally benefit from back to school shopping.

This is very obvious in the Bureau of Labor Statistics’ measure of clothes for boys. Boys apparel prices are down 11.4 percent compared with a year ago. They dropped on a seasonally adjusted basis by 4.7 percent in September after falling 1.2 percent in August and being flat earlier in the summer

Girls clothing prices were nearly flat in September and are up 2.4 percent compared with a year ago. This suggests that parents may be spending a bit more on girls for remote learning than for boys.

Footwear for boys and girls is decidedly not in demand. Prices dropped by 2.1 percent in September after falling in both July and August. Compared with a year ago, children’s footwear prices are down 8.7 percent.

Educational and communications goods saw a seasonally adjusted 2.5 percent decline for the month of September. Compared with a year ago, prices are down six percent. College textbook prices fell three-tenths of a percentage point in a month when college students are typically stocking up for classes.

Computer prices fell 4.7 percent in September, and are down 5.7 percent for the year.

College tuition and fees fell in September compared with the month earlier. Compared with a year ago, tuitions are up just seven-tenths of a percent.

Yet parents are spending more on elementary school tuition and fees, suggesting an increase in the demand for private schools. Compared with a year ago, these are up 2.8 percent, double the rate of inflation.

This is squeezing retailers. Margins for a broad category that includes footwear and apparel with jewelry and accessories are down 10.7 percent compared with a year ago, according to the BLS’s Producer Price Index. These did improve slightly in September, by two-tenths of a percent.

Margins for computer retailers fell 1.7 percent in September but remain 3.2 percent compared with a year ago, largely thanks to a surge in purchases for people working from home.

Retailers traditionally cut prices for back to school sales but those discounts are reflected in the seasonal adjustments in the monthly numbers and would not impact year-over-year comparisons. The prices drops seen across these categories indicates deeper discounting than usual, suggesting that retailers struggled to move inventory due to lack of demand.

 

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