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Industry watcher says retail 'off to a slow start' in pivotal back-to-school season

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As New Jersey retailers prepare to report their back-to-school sales, the head of the state’s retail association said he is not expecting to see any jumps in revenues, as consumer spending and sentiment remains flat leading up to the holiday season.

“I feel like a broken record saying everybody’s been cautiously optimistic, but every retailer has been going into the back-to-school season thinking that way for the last few years, and it hasn’t changed,” said John Holub, president of the New Jersey Retail Merchants Association. “Back-to-school time is the second-most important period of time for retailers in the calendar year, and it’s somewhat of an indicator of where consumers are at going into the holidays, so the last thing we want is a season below expectations. I think we really got off to a slow start, and all we can do is hope for the best.”

A recent Fairleigh Dickinson University PublicMind quarterly poll on consumer confidence found two in five New Jersey residents involved in their household’s financial decisions say they’re worse off financially than they were last year, and 26 percent of those polled expect to be worse off in the months ahead — an increase of 7 percentage points from a previous poll on the subject.

“For every bad indicator, there’s always some good indicators out there,” Holub said, “but then for every step we’ve taken forward, we’ve taken two steps back.”

Industry research firm Retail Metrics today projected modest national retail sales growth of 1.8 percent in August — compared to more significant gains in past years — as a number of teen apparel retailers, like Abercrombie & Fitch Co. and Aeropostale Inc., already are reporting softer sales.

Al Ferrara, national director of retail and consumer product practice for BDO USA LLP, said by mid-September, he’s hoping to see back-to-school sales increases for New Jersey retailers between 2 percent and 3 percent, though he noted the data would fall far below historic sales growth for the season.

“Pretty good used to mean a 10 percent increase, but now we’re saying the same about a 3 percent increase. The bar really has not been raised for retailers in recent years,” Ferrara said. “I don’t think we’ll see a lot of retail development come out of back-to-school time. It’s not anything like the rollout in the 90s and 2000s, when retailers were opening up 50 new stores across the country from the growth.”

Despite flat expectations, Holub said retailers’ revenues are still “heading in the right direction” as they prepare for the holiday season, though he noted a break in the supply chain from a looming longshoremen’s strike — and a resulting shutdown at the Port of New York and New Jersey — “couldn’t come at a worse time,” as stores have begun enacting contingency plans to ensure their shelves are stocked in time for the Christmas season.

“Any disruption in shipping going into the holidays could be devastating,” Holub said. “If you have a distribution or storage center in New Jersey and you can’t go through the Newark port or anywhere else on the East Coast, you have to assume you’ll absorb significantly more costs moving your inventory.”

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