Employment Gain Won't Dissuade Bargain Hungry, Wal-Mart Loving Consumers

The just-released unemployment numbers may be comforting but are unlikely to mean much for retail through year’s end and the crucial holiday season when considered against a sobering back-to-school study and the particularly dismal tidbit it contains.

The study, released by America’s Research Group and UBS, demonstrated that 51 percent of parents are so concerned about spending in the current economy they are willing to battle their kids into going back to school wearing the same clothes they did last year. Parents not only are battling but winning in many cases as indicated by the decline of children’s influence on buying decisions, which the study rated as down 20 percent year over year. In fact, only a third of parents have plans to spend over $400 this year on back to school as opposed to almost half – 47 percent — in last year’s already skidding economy.

In total, 34 percent of parents plan to spend less this year on back to school versus last year. The reasons: less money, cited by 42 percent, higher debt, cited by 41 percent, and fear of losing their jobs eight percent. While it’s a bit relieving that fewer consumers are worried about losing their jobs, and a further comfort that unemployment actually decreased for the first time in a year-and-a-third, an expectation has been set by all the economy has done since last autumn and how retailers have reacted to it, particularly around that past holiday season.

Just under two percent of respondents say they will spend full price on their purchases in the back to school season.

And that’s on their kids. If parents aren’t willing to pay full price for their kids’ back to school supplies, how willing will they be to shell out full fare for toys and video games, and how willing will they be to spend on themselves? Unless something drastic happens to change parental attitudes, the answer has got to be: not very.

Britt Beemer, CEO and founder of ARG, said retailers will have to “scream 60 percent to 70 percent off” to get the attention of shoppers this back to school season. The current situation is only going to reinforce the promotional precedent retailers have set in Christmas past, when they have trained consumer to play their cards close to the vest as the stakes mount around Black Friday and the week prior to Christmas.

Further, consumers are keenly focused on where they want to shop with only 13 percent of consumers expressing uncertainty about where they would do their back to school purchasing this year versus 36 percent last year.

And the big winner? It almost doesn’t need to be spelled out: Wal-Mart. Even more consumers, 22 percent, plan on making Wal-Mart their back to school headquarters this year than last, 15 percent. A significant step down is necessary to arrive at Target and J.C. Penney, favored by  11 percent, Sears, 10 percent, American Eagle, eight percent, and Old Navy, six percent.