Dead Back-to-School Society: What’s Different Now

  • Posted by
  • on August 12th, 2013
deadpoets

Courtesy: Huffington Post

It’s that time again. The time of year I have to write these words over and over again: “THERE IS NO MORE BACK TO SCHOOL.” I know. Provocative words. However, Americans have been buying closer to need for years, and the recent correction in the market, and decline in personal income has made it all but impossible for the Middle Class to revert back to old-school spending patterns. With 25 million unemployed & underemployed Americans, it’s worse than you think.

The irony is that in a business like retail, that prides itself on following consumer behavior and buying patterns, it seems most of these big retailers are the last to know. No longer are we lovingly sending our children away with a steamer trunk full of wool stadium blankets, Bass Weejuns and Brooks Brothers blazers, hoping they are outfitted properly until we visit them before Thanksgiving. We are a “buy now, wear now” society and long-term spending and shopping is no longer feasible.

Along with the downturn in the market, budget cuts, and the like, public schools are launching in to the school year earlier and earlier in an effort to maximize the school year. Many schools nationwide have been in session for three weeks or more already, which begs the question why retailers are spending so much of their advertising budgets after the fact in August and September. July same store sales were dismal at best, albeit the month is historically a clearance month.

The equity analyst community, as well as the trade, will desperately begin to craft missives on the INTENT of consumers to buy. However, its not that consumer’s WON’T shop for Back –to-School, it’s WHERE and WHEN. School supplies. Shoes. Health Care. Whatever one needs to get their kid in the door for school, that’s the segment that will get share of wallet. Crocs $CROX, NIKE $NKE, $WAG Walgreens, $TGT Target, Wal-Mart: are all likely recipients of the lions share. Aside from the flight of the middle class from retailers like Sears $SHLD and $JCP to dollar stores $DLTR $DG and discounters like $WMT $TGT $KSS, there is something else going on: Technology has become a must-have for Back-to-School. For the moneyed set, Apple $APPL is a back to school necessity, if not a fashion statement, as is the Nike Fuel Band.

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Courtesy: NIKE

 Victoria’s secret is now advertising  “Tech Toys” in it’s campus bound collection “Pink”:

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Courtesy: Victoria’s Secret

Courtesy: Victoria’s Secret

With that share of dollars flowing into technology, it’s not difficult to see why many teen retailers are feeling the twinge of desperation as disposable income rotates away from apparel. And its not just tablets, phones, and laptops. On-line retailers like Amazon $AMZN, and fast fashion retailers like H & M, Zara $IDTX, American Apparel $APP and the like, are making life extremely difficult for the specialty apparel space: Bebe $BEBE, American Eagle $AEO , Aeropostale $ARO, Abercrombie & Fitch $ANF -once the cool kids of retail, these names are going to be lonely at the lunch table.

Check out my conversation about this very thing on FBN’s The Willis Report:

 


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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