Lackluster Back To School Shopping Sales Expected - iPhone 5 To Blame?

Yet another economic indicator is expected to spawn a disappointing result: back to school shopping.  It’s the largest shopping time of the year, after the epic holiday shopping season.  And sales are expected to remain very similar to last year’s, according to a new report from the National Retail Federation (NRF) by BIGresearch.  And with unemployment still high and the debt crisis looming, we were hoping for a positive back to school shopping season – not a flat one!

Back to school spending (including college students) is expected to reach $68.8 billion, compared to last year’s total $55.12 billion – small caveat: there are more students this year than in 2010.  Per family with students in grade levels K-12, the average spending will be $603.64, down from the 2010 average of $606.04.

College Spending

Back to school spending on college students is expected to decrease to $808.71, compared to $835.73 last year, based on the NRF’s study.  Also, almost 84% of college shoppers said economic conditions are impacting their spending habits and about 45% say they’ll spend less than last year.

And since the teen unemployment rate is 24.5%, many teens were without jobs this summer.  No job means no money to spend on back to school items – yet another likely cause for the lack luster sales that are expected.

Clothing prices are more expensive this year – due to an increase in the prices for raw materials.  Despite this, families with college students expect to spend about $127 on clothing, according to the NRF.

Could the iPhone 5 Pose a Threat to Retailers?

The new iPhone 5 is rumoured to be released in the fall (September or October).  According to a PriceGrabber survey, 35% of consumers plan to buy the iPhone 5 upon its release date. 

As a student, I’ve noticed many other students plan to spend less money on back to school items, in order to be able to purchase the new iPhone 5 later on in the fall (myself included!), thus posing a threat to other back to school retailers.  Also, the iPhone 5 has been among the most searched terms on Google.

Think about it: the new iPhone 5 will probably cost a few hundred dollars, which in many cases is either one half or almost all of student’s back to school budgets, thus causing students to reconsider their purchases in August in anticipation of a large expense once the phone is on the market.

Retailers: Desperate and Early

Stores are offering huge sales to lure customers.  Apple is offering a $100 app store gift card to students who purchase laptops and students will receive a free X-Box 360 after buying a Windows 7 PC.  Also, Target, Wal-Mart and Staples started back to school sale campaigns in mid-July, trying to attract consumers early!

Where Are Consumers Shopping?

The NRF cites the following percentages of consumers who plan to shop at each type of store.

  • Department Store: 57%
  • Discount Store: 68.4%
  • Clothing Store: 48.7%
  • Office Supply Store: 38%
  • Electronics Store: 21.7%
  • Online: 31.7%

(As originally posted on

Scott Gamm is a student at NYU’s Stern School of Business and founder of the personal finance website  He has appeared on NBC’s TODAY, MSNBC, Fox Business Network, Fox News, ABC News and CBS. Follow Scott on Facebook.

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