Mastercard expects spending to rise 5.5%
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Back to school is usually a time of fresh beginnings, but consumers are more impatient than usual for a fresh start after the pandemic. This emotion will fuel spending, according to a new forecast.
Back-to-school sales in the United States are expected to increase 6.7% from 2019 and 5.5% from last year’s Covid days, according to a forecast from Mastercard SpendingPulse. The company uses non-auto spending models online and in stores to make retail sales projections for the period from mid-July to early September.
Sale season is usually a major driver for retailers as families shop for school supplies, clothing, and college dorm room decorations. This year, however, it will also serve as a barometer of consumer confidence as cases of Covid decline in the United States and many people return to routines like full days in a classroom, office meetings and more. a more busy list of activities.
“The importance is increased in large part because we are in a very rapidly changing consumer environment and in a reopening economy,” said Steve Sadove, senior advisor to Mastercard and former CEO of Saks.
For retailers, the start of the 2021 school year comes at a critical time. Some, like Amazon, Walmart, and Target, face tough year-over-year comparisons due to unusually high sales of groceries and other home time essentials during the pandemic. . Other hard-hit retailers, such as Macy’s and Kohl’s, are trying to make up for lost time as merchandise like shoes, dresses and jeans once again grab shoppers’ attention.
Clothing in particular is likely to see a big year-over-year increase as consumers fill their closets. Clothing sales are expected to increase by around 78% from the start of the school year in 2020 and 11% from the 2019 season, according to Mastercard forecasts.
Sadove said people want to look fresh and fashionable as they prepare to reunite with colleagues or classmates, attend weddings and go out more. “There is a pent-up demand for novelty, for change,” he said.
One of the beneficiaries of this will be department stores with a 25% year-over-year increase, according to Mastercard, as consumers return to malls and browse stores again.
For many consumers, online shopping will remain a habit. E-commerce sales are expected to decline nearly 7% year-over-year, but will be 53% higher than back-to-school sales in 2019.
Retailers have yet to run popping TV commercials and flyers from kids wearing new outfits and shiny backpacks. Still, Amazon, Walmart, and Target’s summer sales could jumpstart back-to-school shopping early. Amazon Prime Day is June 21 and 22. Walmart and Target have previously announced competing sales events that will overlap this period.
Retail sales rebounded, despite the pandemic-induced recession. They jumped 10.7% in March, according to the Commerce Department, but remained stable in April. Strong sales in the first quarter prompted companies such as Walmart, Macy’s, Levi’s and Gap to raise their forecasts for the coming quarters.
Target Director of Growth Christina Hennington said during the first quarter earnings call in mid-May that the retailer “is forecasting one of our biggest back-to-school and college seasons ever. “. She said consumers seemed upbeat and eager to celebrate the holidays and the events of life.
Casey Hanson, a stay-at-home mom of two from Placerville, Calif., Said she looks forward to greater normalcy in the coming school year.
Last fall, her 6-year-old daughter, Matilda, started kindergarten at home. Hanson bought new clothes for Matilda and her 3-year-old sister Margaret, who is in preschool. Still, the list of school supplies contained different items than usual, as they had an easel board, dry-erase markers, and an iPad to turn the house into a classroom.
Hanson said many parents have struggled as the pandemic stole milestones, like the first day of school and opportunities to volunteer in the classroom.
“I felt like I was missing a bit – like a moment that you can never get back,” she said.
She said these emotions can influence families’ back-to-school purchases, as some parents “feel like they just have to go big.”
When Matilda returned to school in person in January, she used her old glow-in-the-dark backpack and mermaid-themed lunchbox. This fall, Hanson said she would take her future first-grader to the store to pick out a brand new backpack, lunchbox and water bottle, most likely themed unicorn or Rainbow.
“We missed last year, but that’s okay,” she said. “We are looking to the future.”