B-t-s Sales Seen Slowing to 5.5 Percent Gain

·3 min read

Back-to-school retail sales are forecast to grow by 5.5 percent in 2022, to a record $812 billion, up from $769 billion in 2021, according to veteran retail forecasters Customer Growth Partners.

However, that’s a far cry from last year’s “torrid” 13.1 percent increase, Craig Johnson, president of CGP, said in his back-to-school report issued Wednesday.

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“Defying both fears of a recession and raging inflation the solid-but-not stellar growth signals a turning point in the post-COVID[-19] era as shopping behaviors normalize,” said Johnson. “Buffeted by crosswinds from record gasoline prices, rising inflation in food and household essentials, spiking interest rates and COVID[-19] after-effects, households could well have been expected to trim their spending sails this BTS season.  But even though we may be in a shallow recession even now, the American consumer is a plucky sort — and she may well weather this storm at the mall as well as at the beach.”

“Still, the nominal retail growth we’re seeing is buoyed by today’s near 9 percent inflation, which accounts for most of the 5.5 percent BTS sales growth forecast. In fact, unit demand growth may be close to flat if not negative, as price elasticity effects curtail purchasing at the margin, especially for discretionary goods such as apparel and home furnishings,” Johnson said.

Consumers have been reeling from the nation’s high inflation, the highest it’s been in 40 years due to, as Johnson noted, higher raw material costs, supply chain bottlenecks and record Federal spending.  “Inflation has long been a two-edged sword for retailers, boosting comps on the one hand, but reducing shopper spending power—especially on non-essential goods.  For consumers, the 9 percent inflation has been an unvarnished disaster, eroding real incomes since wages and salaries are up barely 5 percent, with the inflation “tax” falling most heavily on lower-income and fixed-income households.

Offering some hope down the road for consumers, Johnson said inflation “is likely to persist not well into 2023,” Johnson said. “Although consumer fundamentals are still strong — job growth, rising incomes and healthy household balance sheets — now they are not quite so strong, so the risk in our 5.5 percent forecast is to the downside. The American consumer is remarkably resilient — but she is not infinitely resilient.”

Johnson also forecast that for back-to-school:

  • Apparel and accessories will outpace all other major merchandise sectors, with year-over-year growth forecast at 5.9 percent, down from a post-COVID-19 rebound of 33 percent in 2021.

  • Department stores will ease from their 41 percent back-to-school growth last year, but will still enjoy a solid 4 percent growth at BTS 2022.

  • Health and personal care stores will rise by 3.5 percent, down from 8.5 percent last year.

  • Discounters and wholesale clubs will rise barely 2 percent, down from 10 percent last year.

  • Lagging sectors will include the consumer electronics and appliance stores, down over 4 percent, which are lapping last year’s work-from-home and remote schooling trends.

The back-to-school season is generally considered kicking off after the Fourth of July and extending through Labor Day.

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