Kids’ IPhone Hopes Dashed as Americans Pare School Spend

Photographer: Matthew Staver/Bloomberg

Back to school shopping at a Wal-Mart store in Thornton, Colorado. Close

Back to school shopping at a Wal-Mart store in Thornton, Colorado.

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Photographer: Matthew Staver/Bloomberg

Back to school shopping at a Wal-Mart store in Thornton, Colorado.

Tiffany Slaney-Leigh, a 14-year-old in El Cerrito, California, says she’d love to get a laptop, an iPhone, three-inch wedge sneakers, mini dresses and a butterfly tattoo on her hip before starting ninth grade this fall.

That’s not going to happen.

“The economy is uncertain,” Tiffany’s mother, Kim Slaney, said in a separate interview. The office-operations manager plans to spend $500 on her daughter’s clothes this year after dropping $800 in 2012. “You take a few steps forward and a few steps back.”

Plenty of other consumers are feeling the same way. U.S. households are planning to shell out an average of 7.8 percent less for this year’s back-to-school shopping season because of the bumpy economic recovery, the National Retail Federation says. The potentially lackluster spending is one more signal that consumers are conflicted about the strength of the recovery and the stability of their buying power. That means retailers will have to keep prices low and offer exclusive products to fare well during the important back-to-school season, second only in importance to the year-end holiday season.

Total back-to-school spending may total $26.7 billion this year, the Washington-based NRF said July 18. That translates to an average of about $634.78 on apparel, shoes, supplies and electronics for parents with school-age children, down from $688.62 last year, the group said.

Photographer: David Paul Morris/Bloomberg

U.S. households are planning to shell out an average of 7.8 percent less for this year’s back-to-school shopping season because of the bumpy economic recovery, the National Retail Federation says. Close

U.S. households are planning to shell out an average of 7.8 percent less for this... Read More

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Photographer: David Paul Morris/Bloomberg

U.S. households are planning to shell out an average of 7.8 percent less for this year’s back-to-school shopping season because of the bumpy economic recovery, the National Retail Federation says.

“There is no question that the economy still has a tight grip on Americans’ spending decisions,” NRF Chief Executive Officer Matthew Shay said on a conference call. “People are finding ways to get by.”

The Standard & Poor’s 500 Retailing Index rose 0.3 percent at today, bringing the year’s gain to 28 percent.

Discount Shopping

About 90 percent of consumers plan to shop in discount stores, up from 83 percent in 2012, according to a survey from the New York-based International Council of Shopping Centers. They’ll also cut back on gadgets, with only 56 percent of families with children in kindergarten through 12th grade planning to purchase electronics this year, down from 60 percent last year, according to the ICSC.

Almost half of parents consider price to be the most important factor, according to a survey released July 22 by Capital One Financial Corp. (COF)

That should benefit Wal-Mart Stores Inc. (WMT), whose prices were lower than those at Target Corp. (TGT), Sears Holdings Corp. (SHLD)’s K-Mart and Staples Inc. (SPLS) in a Bloomberg Industries pricing survey last week. Bentonville, Arkansas-based Wal-Mart’s prices on a basket of items were 9.8 percent lower than at Target, 33 percent less than K-Mart and 31 percent cheaper than at Staples, according to the study.

Reusing Clothes

The focus on saving is a contrast to last year, when per-household spending soared 14 percent on pent-up demand. Parents haven’t forgotten that splurge and plan to ask their kids to reuse what they can for the coming school year. Indeed, Slaney points out that Tiffany still has skinny jeans that fit.

“Shoppers may need more encouragement and excitement to expand their child’s wardrobe or replenish additional items,” Alison Paul, a Chicago-based retail sector leader at the Deloitte LLP consulting firm, said in a statement. “Retailers will not only have to make offers very attractive this season, but they will have to score an ‘A+’ on unique, exclusive merchandise and services that nobody else can offer.”

Things would be different if teens had their way. Forty-seven percent of teens expect to do their shopping in department stores and 21 percent identified mobile phones, electronic gadgets and computers as must-haves, Capital One said. Among the parents, the figures were 29 percent and 4 percent, respectively, the McLean, Virginia-based bank said.

Teens’ Influence

The younger generation may win in the end. Almost three-quarters of parents say their children influence at least half of their back-to-school purchases, the NRF said. More than two-thirds said they would forgo purchases for themselves to pay for back-to-school merchandise, a Deloitte survey showed.

And the persuasive power of teenagers can’t be ignored. Slaney says Tiffany points to pictures in magazines, says all the girls are wearing the clothes she wants and sometimes even resorts to the silent treatment.

“There is ongoing pressure,” Slaney says. “She tries everything she can.”

To contact the reporter on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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