B-T-S in Question

NEW YORK — Will back-to-school mean back to shopping?

High gas prices, inflation, unemployment concerns and general recession fears will likely prompt consumers to spend cautiously this year, according to industry watchers. But even though most shoppers are expected to buy fewer b-t-s items than they did last year, many independent retailers told Footwear News at last week’s WSA Show in Las Vegas they are hopeful that the important selling season will be fairly lucrative, due, in part, to planned promotions.

“We’re optimistic,” David Pearse, owner of family shoe store Redman’s Shoes in Alliance, Neb., told FN at the show. “The second half of our summer is up from last year.”

A spate of recently released b-t-s shopping surveys show varied forecasts, however. Of note, the National Retail Federation released a survey predicting a 5 percent increase in overall b-t-s sales this year versus last year, with most consumers saying they plan to shop at discounters. A recent Deloitte survey said 71 percent of consumers plan to spend less than a year ago.

Regarding the timing of spending, a Citigroup Global Markets’ b-t-s survey, taken online July 18-21 by consumers over 18 who are either in school or have kids in school, found that shopping this year started earlier than in 2007 or 2006. In fact, more shoppers had either started or finished their shopping by late July than in the past two years.

“Consumers are likely shopping earlier for b-t-s this year as a result of: retailers promoting b-t-s aggressively, bargain hunting by consumers and spending pulled forward as a result of the receipt of tax rebate checks in April through July,” Deborah Weinswig, an analyst at Citigroup, wrote in a July 28 research report detailing the survey.

In addition, price is driving shoppers’ purchase decisions this year more so than in years past. Discounters and department stores are likely to be the winners this b-t-s season, Weinswig said. About 75 percent of those surveyed by Citi said they plan to spend $400 or less on b-t-s purchases. As for must-have items among girls, the survey listed graphic tees as the most popular purchase and boots as the fourth most popular.

But Sam Poser, equity analyst at Sterne Agee & Leach, predicted that spending in the back half of this year will be “better than people expect. It comes down to execution at retail. [Success will depend on] key items, big time.” He cited Uggs and women’s high-top sneakers, such as the Reebok Freestyle, as potential bestsellers and predicted it will be another strong boot year.

Poser also agreed that shoppers are on the hunt for value. “The consumer is so smart right now. They are so savvy and looking for value, which retailers tend to confuse with price. [Consumers] want great stuff, but it doesn’t mean it has to be cheap. [The desire for value] has nothing to do with the economy.”

As in the case of Ugg boots, consumers are clearly still willing to spend more than $150 per pair, Poser noted.

The analyst expects that most of the b-t-s business will take place at off-mall stores, a good sign for discounters and independents. “People are shopping local,” he said, meaning they prefer to shop closer to home to save on travel costs such as gasoline. “You used to drive to the destination mall. Now, if there’s something three miles from your house, you’re going to go three miles away,” he said.

At the mall, Poser said, “Department stores are going to struggle, and other mall-based [retailers] are up against easy comparisons, but they need to watch their inventories or it’s going to get really promotional.”

Matthew Serra, chairman and CEO of Foot Locker Inc., recently told FN there are new, exciting products in the skate category that would likely spur b-t-s selling at his stores. In addition, he does not expect to be overly promotional during the season. “We certainly have cleaned up our inventories, and we don’t see the necessity to promote aggressively.”

For Nick Bombersbach, VP at JCPenney’s online division, JCP.com, b-t-s “is a time where we have the opportunity to capture market share.” Particularly in the department store chain’s American Living brand, “we’ve seen a good response from the customer,” Bombersbach said. He expects that trend in American Living to extend into b-t-s sales in the young men’s department, along with footwear.

Several independent retailers said they expect the season to breathe life into the struggling market. Trish Franchetti-Johnston, a buyer at Redman’s Shoes, said ath-leisure styles should do particularly well, including brands such as Keen and Skechers.

“Even Crocs still do pretty well for us,” added Pearse.

“Kids always get what they want, and they want what’s popular and what’s hot now,” said Franchetti-Johnston. “They might not get as many pairs as last year, but the parents will at least [buy] one pair of new shoes.”

Franchetti-Johnston and Pearse added that they will likely offer heavier promotions and b-t-s discounts this year to encourage shoppers with less money in their wallets.

Jill Hathaway, owner of Hathaway Shoes, a fashion comfort shoe store in Kansas City, plans to do the same. “You have to do whatever you can [to drive business] in this environment,” she told FN, citing a promotion she initiated with local schools to send out store flyers to students before the semester begins, with 2 percent of total sales going directly to the schools participating in the campaign.

Going into the season, Hathaway expects New Balance, Keen and Birkenstock to be strong sellers for kids and teens.

Danny Wasserman of Tip Top Shoes in New York is also expecting promotions to excite b-t-s shoppers. He anticipates strong sales for Converse styles at the start of the school season, but thinks Ugg boots will still drive the most traffic. Other brands could perform, as well, he added. “I don’t expect to sell as many Crocs this year, but Skechers will be good. Really, you need to have everything for your customer. Everything they might want,” he said.

His son, Lester Wasserman, of West, also in New York, is counting on one brand in particular to bring in b-t-s shoppers. “Nike is still the killer,” said the younger Wasserman. “We’ll be heading into back-to-school at full price.”

Isack Fadlon, co-owner of Sportie LA, said any increases in fall b-t-s spending at his stores will likely be small. Simple, classic sneaker styles in toned-down colors, such as the Vans classic slip-on and the Reebok Freestyle, are expected to be big sellers this fall, Fadlon said.

“There are some people who are gravitating toward basic colors because they can wear it with anything. You can buy a simple white sneaker and it’ll go with whatever you wear. That’s a direct influence of the economy, and the consumer is tiring of too much color that has been out there for the past several seasons,” Fadlon said.

For Ed Habre, president and CEO of the Shoe Mill in Portland, Ore., open-toe styles should be a hot item for teens this season. He said he may not be selling as many pairs but expects shoppers to dig into their pockets for one, high-quality pair.

“Shoppers are gravitating toward better footwear. They no longer want to buy multiple pairs that can act as throwaways,” said Habre.

— With contributions from Meredith Derby


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