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This article was originally published in the Richmond Times Dispatch on August 6, 2022.
With fears over COVID on the decline, recessionary fears are likely weighing heavily on retailers. On top of that, inflation is a concern with the consumer price index rising 9.0% over the 12 months ending with June—the highest in 40 years.
Although 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.
Despite the sharp rise in inflation, the National Retail Federation, the nation's largest retail trade group, predicts back-to-school shopping per household will be up 1.8% over last year based on its annual consumer survey that was conducted from June 30 through July 7. Considering high inflation, this indicates consumers are very cautious with spending on school-related supplies. The survey indicated that 38% of consumers said they are cutting spending in other areas to make needed purchases for the school year.
The NRF survey found families with children in elementary to high school will spend $15 more this year for an average $864 on school items. That would put total back-to-school spending in the nation at $36.9 billion or slightly below last year’s record $37.1 billion.
Add on top of that college students and their families who plan to spend an average $1,199, which includes electronics and dorm furnishings.
Global financial services firm Deloitte is even more optimistic, putting the increase at 8% based on its survey that was conducted between May 20 and June 2.
Supply chain issues, such as shortages of computer chips, may 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 seem to be in good financial position and more people continue to find jobs. The savings rate was at 5.1% in June, according to the U.S. Bureau of Economic Analysis. Also, the unemployment rate dropped to 3.6% in June 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 10.6% in May compared with a year earlier. Sales in the Richmond metro area were 11.8% higher over the same period while they rose 13.8% in Northern Virginia and increased a smaller 5.3% in Hampton Roads.