As I was reading the Washington Post, I came across an article evaluating whether or not the back to school sales that retail stores have to prepare children for the return to school were successful. According to this article, the sales were a lot better than last year. According to the International Council of Shopping Centers, sales were down 2% in August 2009. In August 2010, they were up 3.2%, which was .2% better than what they predicted.
While the sales were up, they were not as great as the companies would have liked. The big chain stores are saying that consumers are only buying when the price fits their budget. While they are spending more than last year, the only way theses stores will keep people buying is through discounting their products. Unfortunately with the job market and housing markets unstable, people are afraid to go out and spend lots of money. The fact, however, that certain stores like Costco and Victoria Secret beat the Wall Street forecasts are proof that we are not entering a double dip recession.
I think that it will be interesting to watch the trends of people shopping over the course of the semester, especially around the holidays. I am curious to see where they are shopping: are they buying high end designer clothing such as Dior or clothes from Target and Wal-Mart? And finally, it will be fascinating to watch the market hopefully recover and see how that will affect retail.
To answers the question in my title, I think the back to school sales were not a bust. Not only did the sales beat the prediction, but they alleviated the stress that we may be in a double dip recession. What do you guys think?
Article Used: http://www.washingtonpost.com/wp-dyn/content/article/2010/09/02/AR2010090201460.html
I believe that back to school sales are up this year because the economy is rebounding, although somewhat inconstantly. Instead of fighting expensive wars over seas, the Obama administration has promised to make the economic recovery it’s number one priority. Consumers are gaining more confidents in the market. Furthermore, a store like Costco’s may not have had the same economic woes as others. Unlike Wal-Mart, Costco, like a BJ’s or a Sam’s Club, charges a yearly membership fee and only sells about two fifths of the what a Wal-Mart would sell. Costco’s offers more luxury items as well. As a result, most people who shop at Costco earn about 75,000 dollars a year. Therefore, I conclude that this particular section of consumers were not as affected by “recession” as perhaps lower sectors of the consumer market.
ReplyDeleteSource: Hubbard, O’Brien Macroeconomics, 3rd edition, pg. 250
Mia Rosen
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ReplyDeleteAfter reading a similar article at the WSJ I've come to the conclusion that:
ReplyDeleteThe retail industry’s retaliation to such turbulent times has been a “marketing war” trend. Retailers excelled in their attempts to bring back consumers by offering exceptional back to school promotions, and offering new exciting products and lines. Many retailers realized that despite the loss of profit margin, increasing sales is key for survival - marking an evolving retail industry.
Michael Milner
Source: http://online.wsj.com/article/SB10001424052748704206804575467312613965340.html
I also think it will be very interesting to see how and where this trend lies, come December. I honestly think that the recession has come as a sort of reality check for many people, who therefore have become more conscious of their spending. The recession has taught some people about being careful about their money, and many have seen the benefits of shopping at cost-efficient stores such as Wal-Mart and Target. And, many will not be likely to want to turn away from those benefits any time soon. Back to school sales are a good time for stores like those to "show their stuff" and buyers may be learning to stick to those stores during the holidays, since they sell a great product at an even greater price.
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