It's the time of year that students and their parents might both dread, but for different reasons: back-to-school shopping season. For the kids, it's a reminder that summer vacation won't last forever; for Mom and Dad, it can mean that big annual layout of money for clothing, electronics, backpacks and other gear.
The National Retail Federation estimates that the average family with school-age children this year will spend just under $670 to equip their kids for when classes resume. That's up 5 percent from last year. So, parents could use a few quick lessons in money-saving math.
In this week's podcast, Mark Hamrick, Bankrate's Washington bureau chief, interviews:
- Kathy Grannis, a spokeswoman for the National Retail Federation, who offers advice on where and when to find back-to-school bargains and how to use technology to get some of the best deals.
- Britt Beemer, chairman of the consumer research firm America's Research Group, who preaches patience as a good strategy for families with school and college shopping lists.
Also, Bankrate's Amanda Rowe has the 411 on whether you ought to be making purchases using your smartphone and social media.
Smart shopping for back-to-school
Will you find big bargains for back-to-school? Is it better to shop early or wait? Here's our crash course.
From Bankrate.com, This is "Your Money This Week."
I'm Mark Hamrick in Washington.
It's enough to damage the mood of young people but raise the hopes of retailers.
We're talking about back-to-school season.
Specifically, what it means for students, parents, retailers and the broader economy.
Two different viewpoints for you, both helping to school you on the subject of saving money when possible.
We begin with Kathy Grannis with the National Retail Federation, on both back-to-school and back-to-college.
Then we follow up with retail expert Britt Beemer, chairman of America's Research Group. Both provide useful tips and insight.
Fortunatel there's no pop quiz, just plenty of useful information.
All of that and more coming up on "Your Money This Week."
Although we're in the fifth year of the economic recovery, signs of economic stress remain.
And to that point, Kathy Grannis, a spokeswoman for the National Retail Federation, tells us the group's own survey finds the economy remains a key issue for most consumers.
Kathy Grannis: Absolutely, and this is the sixth year that NRF has asked that question about the impact the U.S. economy has had on back-to-school plans, and, you know, a lot of the discussion around back-to-school revolves around the fact that these purchases are very necessity-driven. They're a lot less discretionary than, say, spending on gifts for Christmas. You know, as children outgrow their jeans or their shoes, Mom and Dad have to buy them new apparel or find ways to get them the new items that they need to succeed in school. But regardless of that, there are still signs that the economy is driving how parents spend their money and how they create their budgets for their school purchases, and though the impact has lessened over the past few years --and, hopefully, you know, obviously, we all were hoping for that if we were still seeing the high numbers, we'd be in a very different situation right now -- but the impact has lessened, but there are still plenty of people who are finding key ways to cut back on their spending or save money or look for different types of promotions, look online. They even go as far as seeing whether or not they want their children to play sports after school, because it might cost them too much money. So it is something that we keep our eye on, especially for back to school and the holiday season.
Mark Hamrick: So we pinpointed that the economy has made it necessary for retailers to act in a competitive way to attract consumer dollars. What about the other way around: Is the amount of information that's out there, whether it's in, let's say traditionally printed newspaper ads that seem to find their ways to many homes still on Sundays, or online ads and applications. Is the availability of all that information making it easier for consumers to do their back-to-school, back-to-college shopping?
Kathy Grannis: That's a great question. I think you know in the digital age, especially, there's more ways than not to find out what's happening at any retailer, and I think the really cool thing that we've seen in recent years is this cross-convergence where retailers are using their websites and their mobile apps to drive people to their stores, and at the same time in the store they're encouraging digital participation, whether it's through kiosks that they can purchase an item that's not on the shelf or they can scan a QR code to order something online, you know, from their phone if it's not on the shelf. So at the end of the day, if you are a serious shopper, or I should say whether you are a serious shopper or not, there are a lot of ways to keep up with retailers and what they're offering for the school season.
Mark Hamrick: I know you occupy a position that really is ultimately sort of representing the broad cross-section of retail, so it's not as if you can really appropriately advocate for a particular piece there. But having said that, what can we tell people about how to save for back-to-school, and I guess part of the answer there, obviously, has to do with what we just talked about, try to gather as much information as possible and think about that there are so many different kinds of stores or companies operating in the space?
Kathy Grannis: Right, absolutely and you know that actually is a buyer's benefit. You know I hate to say where in a buyer's market, but we might be during certain times of the year, especially back-to-school, where there's so much at stake that retailers are literally throwing themselves at their customers, and a lot of the promotions for back-to-school come directly via social media and emails. Retailers will use special emails to their lists, to alert shoppers to the deals that the rest of the public may not be getting just yet. At the same time, a lot of companies have taken to their own Twitter and their own Instagram feeds to alert their followers of what's happening that weekend in their stores or on their website. And believe it or not, the traditional ways to save money -- coupons and newspaper clippings -- are still very popular with Americans. Survey after survey, we still find that these types of media still very much resonate with the average American shopper. And for a family on a budget, it's important to remember that retailers are still using those vehicles, and even if you're not on Twitter, you can still bet that you're going to get something in the mail or see it in your local newspaper.
Mark Hamrick: Well the other part of all this is, and I've experienced this as the father of a college student who just graduated, fortunately, that you know a lot of us find ways to try to defer our -- let's say our back-to-school or back-to-college purchases to later in the year and maybe even the holiday season, because that computer that Junior wants so urgently but may not exactly need at the moment might be able to wait a few months, and that doesn't work out so badly for the retailers, either.
Kathy Grannis: Well, and you bring up an interesting point. This year we're actually seeing that there's a little bit more of this cat-and-mouse game. You know, retailers have in recent years conditioned shoppers to recognize that the prices at the end of the season are going to be significantly lower, and you know that even goes for Valentine's Day and Halloween. As you get closer to any of them, the prices of course are going to drop as they need to move that merchandise to make room for new merchandise. But at the same time, for those who want the hottest product or must have a certain type of tablet or desktop computer or even a certain pair of jeans, it's not the time to play that game. Inventory these days is lean, leaner than it ever has been, and you know a lot of companies are practicing this just-in-time inventory where they can actually ship it as they need it or ship it around the country from other stores instead of loading up their store before the end and hoping for the best in terms of shopping volume. So, I think if you're not looking for a specific product and you want to find the great places, it's great to wait for the end of the season and prices will be almost -- will certainly be on clearance level. But if there are items that they you want or your child wants, it's likely best to go out there early.
Mark Hamrick: Yeah it could be a mixed blessing, Kathy. I know from personal experience my wife does not want to get a Valentine on February 15. Actually not from personal experience but -- you know what I'm saying. Well Kathy it's always great to catch up with you. Thanks so much for your time.
Kathy Grannis: Thank you, Mark.
Mark Hamrick: Kathy Grannis, a spokeswoman with the National Retail Federation. She spoke with us from her office in Washington.
No recess here.
We're continuing on the subject of "back to school" for consumers.
Our next expert is also a treasure trove of information.
Britt Beemer is chairman of America's Research Group. To begin, I asked Britt about the evidence that many consumers are still restrained.
Britt Beemer: Well, I would say consumers are impacted by three things. No. 1: There virtually is no increase in wages occurring in the marketplace. When you talk to consumers, less than 10 percent of them saw any kind of wage increase this year. Secondly, I think that the other issue is in February, another 23 percent of consumers found out that those who that were working that their health insurance costs were going to impact them because their employers were not going to pay quite as much, and they were going to end up losing between $50 and $100 a month in their take home pay. The third thing that I think is even the bigger issue is that consumers just do not feel good about how the country is going. Because of that, they do not see anything happening that is positive for them. I think that is the biggest thing that has impacted the consumers in the last three months has been the fact that there is just no optimism out there.
Mark Hamrick: Yeah, and even some measures of consumer confidence have been steadily on the rise, but they are nowhere back to anything that we would call normal. Then there is the question that Britt, of course, that there is confidence and then there is spending. The wealthier, obviously are able to luxury items, but is the stress at retail really involving the middle and the lower income levels?
Britt Beemer: What is really bad is at the middle income levels, more than any other area. I will give you an illustration of what happened. If you look at this year, at the spending levels from month to month, we saw that one spike in March. It was unexpected how high it was, according to the economists, but they certainly weren't talking to consumers, because what happened is that consumers got the majority of their income refund checks. About 55 percent of the consumers that got them used them to pay bills, debts credit cards et cetera. The other 45 percent of consumers that got them spent them, and that pushed a lot of capital in the marketplaces. A lot of spending, extra projects, Home Depot, Lowe's, saw increases because consumers were doing things on their back decks or patios, et cetera. But when that money was gone, if you notice back in -- immediately the next month or two, sales went back to the lowest level out there. What happened is that once those dollars evaporated, they were spend very quickly, we were back in this norm. I think that you are going to see this year I believe even lower spending levels by consumers this year than last than year because this whole economic doldrums, that I call, that consumers are in just keeps going on and on and on month after month after month.
Mark Hamrick: So, we have back-to-school and back-to-college season upon us, and I'm told that sort of unofficially begins around July 1, although there is a sense that in many ways it continues all year long. How important is this season, first of all to retailers, Britt?
Britt Beemer: What's vitally important to some retailers -- particularly those retailers chasing the college students, because they know that when consumers -- when these kids go back to college or go to college, there is a lot of dollars being spent. Some estimates are as high as $3,500 for a freshman going to college will be spending in back-to-school-related products, whether it's computer, clothes, et cetera. The issue that I noticed the most is that if you look at last year, over 40 percent of parents who shop for back-to-school delayed almost all of their purchases until December when they felt that they could get a much lower price. Last year, we saw a new trend where, for many, consumers shoes was the No. 1 item that they purchased for back to school, which signifies that those parents that wanted to buy something for their kids, they may not let them have new clothes, but they certainly aren't going to make them hurt their feet. So, what happened is that last year, we saw shoes skyrocket to high levels because parents bought their kids shoes. Right now, I think that number of consumers is going in December to finish to their back to school shopping will be over 50-55 percent, which means that at least half of dollars will be spend in December and not during the back-to-school season. So, I think that you are going to see retailers post some very weak back-to-school number except those shoe retailers who are attacking the young person, they will do well because no parent is going to make their kids wear shoes that hurt their feet.
Mark Hamrick: Well, sure, and the other thing is that if you are talking about $3,500, you look at that at even at a monthly basis that is a lot. You and I have both been in the boat where we are parents of college students, and we know that this is not the college class of our generation, Britt. I mean, in other words, there are a lot of things that these young people are interested in having these days. That is not me just being an old geezer. It's is just a reality.
Britt Beemer: You have all these extra expenses, and I think that is why the college kids have become a much bigger target. Of course, people like Ikea, I mean they really live and die off back-to-school because sometimes there is traffic levels in their stores go up 50-60 percent in August and September, appealing to those college kids who are going back to their dorms et cetera and making all of those purchases for either their apartment or dorms during this time of year.
Mark Hamrick: So, other than the provisional shopping-around Britt, here at Bankrate we like to try to help people with some actual information. Do you have any tips that people might be able to employ that can help them save them save a dollar here and there, particularly in this back-to-school, back-to-college season?
Britt Beemer: If a consumer is shopping in an independent retail store versus a chain, three-fourths of independents will negotiate a price. So, if I am going to be shopping and let us say at a little shoe store that was selling athletic shoes, versus a chain, if I had my children and they are buying shoes, I would say: Can I get a discount if all of my kids buy athletic shoes or if they buy shoes? I think that you are seeing more and more of those people negotiate, No. 1. I think, No. 2 is that if you can either wait until Labor Day, you're going to see better prices because the one thing that retailers know is what they have not sold in August has got to be sold in September. Because all the other new apparel for the year and for the Christmas season is right beyond the day after Labor Day. So, I mean, there are going to be bigger and bigger deals on Labor Day weekend if consumers can wait that long.
Mark Hamrick: You are a treasure trove of information. We have talked for many years, and it is always a pleasure, Britt. Thanks so much.
Britt Beemer: Thank you.
Mark Hamrick: Britt Beemer, Chairman of America's Research Group. He spoke with us from his home in Orlando.
Whether they're younger school-age students or college-age types, youth seem to have the big advantage when it comes to using new technology. And that's certainly the case involving smartphones.
On that subject, Bankrate's Amanda Rowe tells us about the latest ways to pay using social media, often via the smartphone.
Amanda Rowe: Social media is a fun way to share your life with the world. You Instagram a picture of your morning latte or check in at the cafe on Facebook and tweet about how delicious it is -- and new payment options are quickly emerging, making it increasingly possible to pay for that latte using social media.
To make social media payments, you must connect your account to a credit card or debit card. According to a July 2013 survey, 26 percent of all consumers have already made a purchase on social media.
Twitter has already teamed up with both American Express and Amazon, allowing users to use hashtags to purchase products.
These payment options are still in the early stages as research is being done to check on the security of social media transactions. As always with social media, be aware of what information you're putting out there.
For more financially smart ways to use social media, visit Bankrate.com. I'm Amanda Rowe.
Mark Hamrick: This week in business history:
Speaking of back-to-school, we go back to the fictional British school of magic, otherwise known as Hogwarts.
On July 21, 2007, "Harry Potter and the Deathly Hallows" was released. It became the fastest-selling novel ever, selling 15 million copies in its first 24 hours of release. It was the seventh and last edition of the iconic Harry Potter book franchise.
You've been listening to "Your Money This Week."
For more on this and other personal finance issues, visit Bankrate.com. Thanks to producer Lucas Wysocki for his work in the studio.
I'm Mark Hamrick. From all of us here at Bankrate, here's hoping you have a great week.