Back-to-school shopping will test retailers
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"I will purchase a new backpack from Wal-Mart with all her school supplies, but nothing else will be new at the beginning of the school year," she said.
Another problem experts cite is a lack of "must-have" fashion trends. Old favorites such as jeans and T-shirts are likely to be among the biggest sellers.
"There's an absence of anything new in fashion," said Marshal Cohen, chief retail analyst at NPD Group.
To get people past that thinking, retailers are going beyond any usual price cuts. Gap Inc. is expanding its "friends and family" discount program. American Eagle Outfitters Inc. is offering a free T-shirt to anyone who even tries on a pair of their jeans.
Some stores are also offering to cover the taxes on people's purchases. American Eagle is offering a discount to Florida shoppers, since their "tax-free" shopping week was canceled this year. Circuit City Stores Inc. plans to absorb the cost of state and local sales taxes for purchases at its California stores during two days in August.
Retailers are also changing their marketing to focus more squarely on prices. Last year, Staples Inc. emphasized its wide variety of products in its back-to-school marketing. Now it's offering free or nearly free items like pencil holders for a penny. In one ad, a woman attempts to use Staples' "Easy" button at a gas pump in an attempt to lower the $92.50 price for filling her tank, but the button doesn't work. A voiceover informs her the "Easy" button only works to lower prices at Staples.
"We recognized pretty early on the economic environment had taken a bit of a shift," said Teresa Herd, Staples' vice president and creative director. "We looked at what people are experiencing: pain at the pump, pain when we go to the grocery store."
Office Depot Inc.'s promotions — free products and items like pencil sharpeners and rulers for a penny — are similar to previous years, but this year the difference is the scope and assortment. New items are offered each week until Sept. 1.
Despite the glut of promotions, analysts says shoppers are likely to flock to discounters known year-round for low prices such as Wal-Mart Stores Inc., Target Corp., warehouse clubs like Sam's Club and Costo Wholesale Corp.
Those stores have benefited as consumers trade down amid rising living costs and consolidate shopping trips to save money on gas. The retail sales reports due out tomorrow are expected to show even a bigger disparity between them and mall-based clothing stores.
But the discounters are joining the fray as well. Sam's Club is offering a $15 gift certificate to college students who sign up. Walmart.com is chasing the same market, offering free shipping on many items and a special online gift card promotion.
In the end, Edwards said, while some retailers may be disappointed with back-to-school results, "one way or another, children will be clothed and have crayons and notebooks for back-to-school, because they have to."
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