Article in the NY Times today talks about how back to school shopping is predicted to be 3-4% less than it was last season. In the article it discusses how shoppers are buying at lower price stores and insisting on bargains.
The article paints this as another indication of the poor economy. I would be ecstatic if with almost 10% unemployment rate and the trillions of dollars of wealth lost in this country, if we were only down by 3-4% and consider such a prediction very upbeat.
In fact, the CPI numbers that just came out show CPI on a year to year basis is down 2.1% and while I realize further analysis would be required, if prices are down 2.1% and sales go down 3-4%, we are pretty close to flat.
Yes, high end stores may lose sales to lower price stores, but this type of sales season would clearly indicate a need for significant inventory replenishment.
One teen quoted in the article was quoted as saying that one shirt from Hollister was the same price as three shirts from Aeropostale. In general, while buying one shirt at Hollister is good for Hollister, buying three shirts consumes more raw materials and labor.
Of course some of these predictions are based on a sluggish start to back to school season and the article does point out that many states have delayed the tax free day sales promotion they have been running. Considering many families are likely postponing back to school shopping to make sure they can afford it, the predictions may actually be on the low side.
However, with a 2.1 percent drop in CPI and a 15% contraction in the overall economy and a 10% unemployment rate, a back to school season with a decline of 3-4% would be about a pretty strong indicator that:
a. Teens can really nag parents to spend money (know this from first hand experience)
b. Things are getting better.
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