Update: Watch James Russo discuss back to school sales on CNBC's "Closing Bell." [ video - requires Windows Media Player]
The middle of summer marks the beginning of the Back to School (BTS) season, as parents and kids across the country start to prepare to return to class rooms in late August and early September. The excitement of school starting isn't just felt by the kids - retailers also look forward to the season, as it's an incredibly important time for the $2.5 billion office/school supplies category. Additionally, with the economy mired in a steep recession this season, the BTS season will be closely watched for signs of a recovery in spending. Half of annual unit sales of some related products occur during the BTS period, accounting for 36-38 percent of annual revenue.
This year, as the US continues to be in the grips of recession, Nielsen is forecasting a dollar sales rise of 0.4 to 1.3 percent, to $2.17 billion, a pace below the growth achieved in 2008. Unit sales will drop to 1.18 billion, down 5.5 percent from 2008.
In 2008, Nielsen predicted that dollar sales of BTS supplies would rise 2.6 percent; the actual result was 2.4 percent.
"Unlike the winter holidays, back to school shopping, to some extent, is not viewed as discretionary by consumers. Kids must have certain items at the start of the new school year. That said, we expect sales to increase at an extremely modest level in dollar terms in 2009. The nation is firmly in the midst of recession, so consumers will spend their money carefully, as they have for the better part of a year, and focus on purchasing the essentials," said James Russo, Vice President, Global Consumer Insights at The Nielsen Company.
One peripheral category which is forecast to gain is bottled waters. Often considered a discretionary item, bottled water is consumed as a staple, and is expected to out-pace juice sales with growth of 3.57%.
"The winners this season will be retailers who offer strong discounts and appeal to the consumer's desire for savings and value. Look for gains from supercenters, dollar stores, drug stores and to a lesser extent, club and grocery stores," said Russo.
Back-to-school categories include office/school supplies, artist/hobby supplies, scissors and tape/glue. Retail outlets covered by Nielsen are food, drug and mass merchandisers, including Walmart. Figures do not include dollar stores, online sales or office supply retail chains.