BACK TO SCHOOL – A Glimpse of the 2014 Winter Holiday Retail Shopping Season?

Posted on 8/18/2014 10:00:02 AM By Rick Krause

Consumer spending remains the leading driver of the US economy, and therefore drives the need for packaged goods and packaging adhesives.

While most of the attention in retail spending focuses on Black Friday, Cyber Monday, and the official Winter Holiday retail shopping season (> $600 Billion in retail sales), back-to-school shopping, represents the second largest consumer spending period of the calendar year.  It also gives us our best glimpse of consumer sentiment and spending habits likely to be observed during the critical Winter Holiday retail shopping season.  This includes what consumers are willing to purchase and how they are making those purchases.

It also guides retailers and consumer product goods companies in their 4th quarter forecasts for production, packaging, and converting demand, all of which are important to those of us manufacturing packaging adhesives.

Parents’ willingness to spend on the educational, fashion, environmental and social needs of their school-age children and college-bound students continues to grow.  According to the National Retail Federation (NRF), the average family with children in grades K-12 will spend $669 on apparel, shoes, supplies and electronics, up 5% from $635 last year.  Similarly, the average college student and their family will spend $916 on dorm furniture, school supplies, electronics and more, up 10% from $837 last year.  Total back-to-school spending by students and families is projected to reach almost $75 billion in 2014.

After adjusting their estimate of total US retail sales growth for the first half of the year down to 2.9%, the NRF is projecting 2014 retail sales to grow a total of 3.6%, down from the 3.7% growth observed in 2013 and the original 2014 forecast of 4.1%.  Strong back-to-school and winter holiday retail shopping seasons could certainly achieve this growth, particularly when compared to the 10-year growth average of 3.5%.

Is there reason for optimism for the remainder of 2014?  Recent data seems to suggest there is:

  • Consumer Confidence, as tracked and monitored by the Conference Board, continued to improve in July to 90.9%.  This represented the third monthly increase and the highest level since October of 2007.
  • Same-store retail sales, according to the ISCS / Goldman Sachs Retail Chain Store Index, while seesawing on a week-to-week basis, have been increasing between 2.8% and 4.6% versus 2013.  The projection for August is currently 4-5%.
  • Real gross domestic purchases, purchases by U.S. residents of goods and services wherever produced, increased 4.5% in Q2 ’14 in contrast to a decrease of 0.4% in Q1 ’14.

In the absence of inflation, cost increases or other consumer anxiety, retail sales (and therefore packaging and adhesives) could indeed accelerate during the critical Back-To-School and Winter Holiday retail seasons.  It would certainly lead to a Happy Winter Holiday season and the beginning of a Happier 2015!

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More Information:

Consumer Confidence Survey

Weekly Retail Sales Tracking

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