This article was originally published in the Richmond Times Dispatch on August 8th, 2021.
Similar to many other businesses, the COVID-19 pandemic had a devastating impact on many retailers.
Even though the holiday selling season is months away, retailers are likely looking for clues about how much consumers will spend to make sure that their inventories are sufficient. The holiday selling season represents about 20% of the retail industry’s total annual sales.
Back-to-school shopping has historically been a predictor of how the holiday selling season will fare.
The National Retail Federation, the nation's largest retail trade group, predicts back-to-school shopping should be up 6% over last year based on its annual consumer survey that was conducted from July 1 through July 8.
Assuming the return of in-person learning this fall, the NRF survey found families with children in secondary school will spend $59 more this year for an average $848.90 on school items. That would put total back-to-school spending in the nation at a record $37.1 billion in 2021 compared with $33.9 billion last year — up 9.4%.
Add on top of that college students and their families who plan to spend an average $1,200.32, which includes electronics and dorm furnishings. That’s an increase of $141 from last year to put total back-to-school spending at a record $71 billion compared with $67.7 billion in 2020.
Global financial services firm Deloitte is even more optimistic, putting the increase at 10.9% based on its survey that was conducted between May 27 and June 17. Deloitte said total back-to-school spending is estimated at $59.2 billion.
Both surveys were conducted before the Delta variant spread accelerated. In fact, in early July the University of Washington COVID-19 model projected national infections to rise to about 150,000 per day at the beginning of October. As of Tuesday August 3 last week, the University of Washington raised its projection to almost 320,000 for the same timeframe with peak rates of infection occurring mid-August.
As has been the case all year, COVID-19 infections are driving economic forecasts and can put a dent in back-to-school sales if education institutions decide not to hold in-person classes.
In addition, supply chain issues, such as shortages of computer chips, can impact the availability and sales of computers and other electronic goods. Inflation, such as the higher cost to fill up a gas tank, may also put a dent in some potential back-to-school sales.
On the positive side, consumers still seem to have plenty in savings from federal stimulus funds and more people continue to find jobs. The savings rate was at 9.4% in June, according to the U.S. Bureau of Economic Analysis. Also, the unemployment rate dropped to 5.4% in July 2021 from a peak of 14.8% in April 2020.
The latest retail sales figures in the state for May suggest Virginians are going into the back-to-school selling season with strong momentum.
Sales in Virginia were up 16.2% in May compared with a year earlier. Sales in the Richmond metro area were 15.7% higher over the same period while they soared 21.6% in Hampton Roads and rose a smaller 13.7% in Northern Virginia.