Summer may still be in full swing, but families are already looking ahead to the start of the school year. However, they are not too thrilled with what they’re seeing in the market. According to the National Retail Federation, two-thirds of shoppers have noticed a significant rise in prices on student supplies compared to last year.
For retailers, the back-to-school season is not only important for driving sales but also for setting the stage for the upcoming holiday season. This year, companies are facing a crucial question: Will parents reduce their shopping lists due to the higher prices and tighter budgets?
Industry forecasts offer varying perspectives on the matter. The NRF estimates that back-to-school shopping will reach a whopping $41.5 billion, surpassing last year’s $36.9 billion. On the other hand, Deloitte’s annual survey suggests a more moderate spending trend. The survey reveals that households plan to spend $597 per child, which is 10% less than the previous year. Interestingly, this is the first time since 2014 that the survey indicates a pullback in spending.
In an era of uncertain predictions and unexpected outcomes for consumer health and the overall economy, there is one thing that both the NRF and Deloitte agree on: Shoppers are becoming price-sensitive. When it comes to back-to-school shopping, this means actively searching for deals, utilizing coupons, and opting for more private-label products. This shift in behavior bodes well for discounters and mass merchants like Walmart, Costco, and Target, who are known for their competitive pricing and convenient shopping experience.
Last Week Overview
Markets
Major stock indexes witnessed a positive start to the week on Monday, with the Dow Jones Industrial Average leading the charge with a 400-point rally. However, stocks faced a setback on Tuesday following Moody’s downgrade of 10 regional banks. Wednesday brought uncertainty as China’s falling consumer prices and a sharp decline in exports had a ripple effect on global markets. By Thursday, U.S. consumer prices had cooled down in July, leading to a slight decline in stocks followed by a recovery. Overall, the Dow managed a modest 0.6% gain for the week, while the S&P 500 experienced a slight decline of 0.3%, and the Nasdaq Composite was down 1.9%.
Companies
Eli Lilly Beats Estimates with Strong Sales of Mounjaro
UPS Cuts Financial Outlook Following New Labor Agreement
White House to Restrict U.S. Investment in High-Tech Chinese Industries
Deals
ESPN Inks $2 Billion Deal with Penn Entertainment for Sports-Media Brand Licensing
KKR Acquires Simon & Schuster for $1.62 Billion in Cash
Tapestry Acquires Capri Holdings for $8.5 Billion in Cash
Next Week
Tuesday 8/15
Retailers’ Earnings Announcements Shed Light on American Consumers
- Home Depot releases earnings before the market opens
- Target and TJX Cos. announce results on Wednesday
- Ross Stores and Walmart close out the week on Thursday
Census Bureau Releases July Retail Sales Data
Consensus Estimate: 0.4% Month-over-Month Increase
Wednesday 8/16
Federal Open Market Committee (FOMC) Releases Minutes of Late-July Meeting
Majority Expect Last Interest-Rate Hike for This Cycle
Conference Board’s Leading Economic Index (LEI) for July to be Released
Economists Forecast 0.3% Month-over-Month Decline
