Michigan Retailers Cautious About Back-to-School Season

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The most recent Michigan Retail Index suggests that the state’s retailers may be feeling a bit uncertain about what they should expect from this year’s back-to-school shoppers.

When asked about sales for July–September, 58 percent of retailers said they expect to see an increase over the same period last year, while 18 percent project a decrease and 24 percent foresee no change. That puts the seasonally adjusted outlook index at 69.5, down nearly 10 points from the same time a year ago.

“Because it’s a quick survey, we don’t ask (the retailers) to give their reasoning, so we don’t know for sure what triggered that small decline,” says Tom Scott, spokesman for the Michigan Retailers Association, which publishes the index with the Federal Reserve Bank of Chicago. “But the obvious suggestion is that they’re a little more cautious about this year’s back-to-school, early fall shopping period.”

Scott says this may have to do with the fact that back-to-school spending dropped slightly in 2013, when compared to the year before, or that the traditional shopping approach has evolved over the years.

“It used to be that (back-to-school shopping) was more concentrated immediately before school,” Scott says. “You would do all of your shopping in a few days or a week, and you would get everything from school supplies to winter coats. But those days are long gone, now it’s much more spread out, not only throughout the summer, but also into the fall after school has started.”

Those sentiments are echoed from a recent survey from Deloitte, which operates a large practice in Detroit. Their back-to-school report found that more than a quarter of parents expect to delay some of their purchases until after school begins.

Even so, the National Retailers Federation has high hopes for the season, with its annual surveying reporting that a total spending on back-to-school items is expected to reach $74.9 billion — up about 3 percent from $72.5 billion in 2013.

“And we don’t want to lose sight of the fact that the actual performance in spring was fantastic and shows that consumers are more open to spending after that very tough winter,” Scott says. In fact, Michigan’s retail industry rang up its best sales performance in more than three years this past June, with retailers’ year-over-year sales jumping 19 points to 66.7 on the 100-point scale.

“We get a better picture of what’s going on by looking at this past spring as a whole, and that picture is strongly positive,” adds James P. Hallan, MRA president and CEO.  “Coming out of the extremely tough winter, we finally saw an increase in sales in April, an unexpected drop in May, and then a larger than anticipated increase in June. It makes more sense to view the entire second quarter as a rebound from the harsh winter.”

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