FINANCE

Survey: Parents to increase back-to-school spend, use physical stores

BY Dan Berthiaume

New York – A majority of parents plan to spend more on their children’s back-to-school shopping this year, driven by rising costs or necessity rather than greater spending power. According the Accenture Back-to-School Shopping Survey, which polled 500 U.S. parents of children entering kindergarten through college, nearly all (89%) plan to do most of their back-to-school shopping in a physical store, though many will still use online to browse and search, or "webrooming."

According to the survey, two-thirds of parents (67%) plan to spend between $100 and $500 and 41% plan to spend $500 or more for back-to-school shopping this year. Compared to last year, just more than half (52%) of the parents said they will spend more on back-to-school shopping than last year, 37% plan to spend the same and only 11% expect to spend less. One-third (33%) of parents spending more plan to increase their spending by $250 or more. Among the reasons given for the spending increase, 71% cited higher prices and 56% cited increased school requirements. Nearly one-in-five parents (19%) said they will spend more in order to help their children "keep up with their friends."

The survey results demonstrate the growing importance of the seamless shopping experience. For example, nearly eight-out-of-10 (79%) plan to participate in "webrooming" – browsing online and then going to a store to make their purchase. The top reasons respondents cited for webrooming were: to check if an item is in stock before going to a store to make a purchase (47%); to touch and feel the product before buying (43%); to avoid shipping costs (43%); and to ask the store to match a better price found online (33%).

Other notable findings include:

• The parents of college children expect their spending increases to be higher than the parents of younger children: 28% of parents of college students believe they will spend $500 or more than last year compared to only 6% of parents of K-5 students.

• Among parents expecting to spend less this year, 58% plan to decrease spending by $100 or less than last year. More than half (55%) of these parents said they will reduce their spending because they have less discretionary income and 28% say they will reduce spending because of higher living costs.

• Discount / mass retailers are the number-one shopping destination by far for back-to-school shopping (90%), followed by office supply stores (63%) and department stores (49%).

• Pricing, quality of items and a broad selection to get all or most items at one store are the most important factors for parents when choosing a retailer for back-to-school. Offerings such as loyalty programs, flexible returns and price-matching ranked much lower on the back-to-school shopping priority list.

• Nearly one-quarter (23%) of parents had already done most of their back-to-school shopping by the end of June and 58% of parents plan to do most of their back-to-school shopping between July 16 and Aug. 15. A large majority (81%) of parents will be finished with the bulk of their back-to-school shopping by mid-August.

• Four-out-of-10 parents said that retailers’ advertisements and commercials influence their decision-making on when to do their back-to-school shopping. However, they had mixed opinions about the best time to shop for the best deals: 40% spread out their shopping throughout the summer and school-year; 35% shop early in the season; and 23% shop late in the season to get the best discounts.

• The top items on back-to-school shopping lists this year are: general school supplies (88%), clothing and shoes (87%), accessories such as backpacks (71%) and computers, tablets, phones, gadgets and electronics (60%). Food and grocery spending also rang in at 41% and big-ticket furniture, mainly for college students, at 13%.

• For those parents planning to shop online, most will use their home computer (89%), but nearly one-third (30%) will use a smartphone or tablet (31%).

• When asked why they choose to shop online, searching for deals and the best price are the top reasons, above convenience: 65% expect to save money or find better discounts by shopping online; 59% want to spend more time researching the best prices; 44% prefer the convenience of having everything they need shipped to their doorstep; and 22% hope to avoid a boring shopping trip for the children.

• Half of respondents (51%) said they are likely to use a subscription service from a retailer for school-related purchases.

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Fourth quarter looms largest for RadioShack

BY CSA STAFF

The stakes will be high for every retailer during the upcoming holiday season, but none more so than RadioShack where a stellar fourth quarter could help the company avert a gloomy scenario outlined by Moody’s Investors Service.

The rating agency suggested in a report released July 29 that RadioShack has adequate liquidity to see it through this year, but noted that 2015 could be a different matter.

“We think it is increasingly likely that RadioShack Corp. will run out of cash by the third fiscal quarter of 2015, before it can complete its turnaround plan,” according to the Moody’s report. To arrive at that conclusion, analysts constructed two scenarios, both of which assumed sales declines during the back half of the year. In the base case, Moody’s envisions RadioShack’s full year sales declining 7.4% with the company burning through $401 million of cash by February 1, 2015.

“Barring a cash infusion, RadioShack will not have much of a cash cushion to draw upon as it scrambles to remain relevant in the increasingly competitive mobile phone and consumer electronics business,” according to Moody’s. “Our optimistic scenario envisions the company having enough liquidity to get through 2015, although we see this as a less likely outcome.”

The optimistic scenario envisions a less severe sales decline of 4.6%.

On a positive note, Moody’s indicated RadioShack has no debt maturities until 2018 so that enhances the company’s liquidity runway to implement a turnaround strategy. However, Moody’s was quick to dismiss this positive aspect by noting that, “with each passing quarter and no credible evidence of a turnaround, the liquidity runway continues to shrink.”

While retailers are oftentimes forced into bankruptcy when suppliers stop shipping products, Moody’s doesn’t envision that scenario.

“From a working capital perspective, we have assumed some vendor tightening, but do not anticipate a loss of any major vendor support in the near-term given that RadioShack also has accounts receivable from a number of these large vendors,” Moody’s said. “We expect the company’s vendor relationships to shift from just transactional to more strategic going forward, as the company streamlines its inventory and partners with vendors that provide products and services, which would be aimed at jump-starting RadioShack’s revenue growth.”

The disparaging report from Moody’s caused shares of RadioShack to hit a new 52-week low of 68 cents on Tuesday and followed a warning last Friday that shares of RadioShack are in danger of being delisted from the New York Stock Exchange. Companies receive delisting notices when their shares trade below $1 for 30 consecutive days. A company can regain compliance with listing requirements if its stock trades above $1 for 30 days during the next six months.

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FINANCE

Brand Keys: Back-to-school spending to rise 9%

BY Dan Berthiaume

New York – Households with school-aged children (pre-school through 12th grade) plan to spend more this year on back-to-school necessities with a predicted increase of 9 % for an average spend of $655, according to the 15th annual survey conducted by Brand Keys.

Average anticipated spending in all major back-to-school categories reflect higher levels from 2013:

Clothing: $348 (+16%)
Shoes (athletic & dress) $127 (+15%)
Supplies $ 89 (+13%)
Computers/Electronics/
Tablets/Smartphones: $213 (+12%)
Books/Study Aids $ 18 (+80%)

Preferred retail categories for back-to-school shopping were:

Discount Stores: 99% (+2%)
Online 93% (+30%)
Department Stores: 35% (+25%)
Office Supply: 30% (+20%)
Specialty Retailers 34% (+13%)
Catalogs 30% (-5%)

This year, the top-10 list of most popular retail and e-tail brands consumers mentioned as places they intended to shop included:

Retail E-tail

1. Wal-Mart Amazon.com
2. Target Walmart.com
3. Macy’s eBay.com
4. CVS Kohls.com
5. Best Buy Macys.com
6. TJ Maxx Zappos.com
7. Staples Overstock.com
8. Footlocker Gap.com
9. Payless Nike.com
10. Apple stores Target.com

Nearly 35% of consumers indicated they had already bought and stockpiled supplies for the first day of school. Another 25% indicated they would wait for the ‘Summer Sales.’ The remaining 40% are waiting until the last minute.

Brand Keys surveyed 8,300 U.S. households with school-aged children.

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