Pent-Up Demand to Fuel Back-to-School Shopping
Retailers Prepare for Strong Back-to-School Sales
The pandemic-fueled shopping surge is expected to spill over to the back-to-school season, with Amazon (AMZN), Walmart (WMT), Target (TGT) and other retailers poised to benefit. The shopping season usually kicks off in mid-July and lasts through August.
Back-to-school shopping has traditionally been a big sales driver for retailers as families purchase clothes, electronics, college dorm décor, and school supplies. This year is expected to be even stronger given pandemic shutdowns kept many students at home. Now with life returning to normal they are ready to spend again. US spending for back-to-school gear and supplies is projected to increase 5.5% year-over-year and increase 6.7% when compared to 2019.
Amazon, Walmart, Target to Benefit
A better-than-expected back-to-school shopping season will be welcomed by the online and offline retailers. Amazon, Walmart, and Target will face tough baseline comparisons with 2020, when sales of groceries and other pandemic essentials skyrocketed. Meanwhile Macy’s (M) and Kohl’s (KSS) were hit hard during the pandemic and need the boost a stronger back-to-school shopping season may bring.
Apparel sales are expected to be among the big drivers of growth as consumers swap their loungewear for new shoes and attire. Some forecasts have apparel sales growing nearly 80% year-over-year and 11% compared to 2019. Department stores should be a big beneficiary of that trend as consumers hit malls again.
Ecommerce Still Driving Growth
Ecommerce sales will still be part of the picture but are expected to decline around 7% from this time last year. With that said, they’re projected to increase more than 50% compared to 2019. That underscores the comfort level consumers now have shopping online. The back-to-school shopping season doesn’t kick off for a few more weeks, but Amazon’s Prime Day on June 21 and 22 could jumpstart sales. Walmart and Target are also running summer sales that overlap with Prime Day.
Retailers are benefiting from more than a year’s worth of pent-up demand which bodes well for their bottom lines. The big question for investors in the near term is, will it be enough for some of them to overcome tough year-over-year sales comparisons?
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