Laptop Demand Driving Back-to-School Spending, Says NRF

That’s a bit of a surprise, said Cullen, given increased spending last year for virtual learning and work-from-home needs due to COVID-19. She noted that coming out of the previous recession, consumers had renewed interest in spending on electronics they may have held off on replacing, and the same pattern may be playing out following the most recent recession that the National Bureau of Economic Research declared last week ended in April 2020, making it the shortest recession in history. Families that had children sharing devices at home may need to buy separate or a broader variety of electronics for this school year, Cullen said.

NRF Chief Economist Jack Kleinhenz expects “extraordinary” GDP growth for Q2 approaching 9% when the government releases figures Friday, following a solid Q1 with 6.4% growth. Despite the positive numbers, “by no means has the economy fully recovered,” he said, citing 7 million fewer workers on payrolls today than in February 2020 and 5.9% unemployment.

Nearly 50% of respondents say they planned to buy a laptop for school, 57% for college, said the survey. Planned electronics purchases for college average $306 vs. $262 a year ago; for K-12, it's $295 vs. $274. Among other electronics categories, 30.7% of K-12 buyers planned to buy a tablet, 29% accessories and 22.3% speakers. Among back-to-college consumers, 27.3% planned to buy a tablet, 25.1% accessories and 19.7% a printer.

Shoppers want to shop both online and in stores, said Cullen. Some 48% of K-12 and 43% of college consumers planned to shop online for school items, she said. Department stores, clothing and electronic stores, which had “steep declines” during the pandemic, had faster sales over the last few months, said Kleinhenz, and the BTS season will be especially important to those channels. Total BTS spending is projected to be 6% higher than last year.

“Aches and pains” facing the retail industry are lack of labor, product shortages and shipping bottlenecks that created “friction for prices,” said Kleinhenz. He said it’s unusual for inflation concerns to follow so closely after the end of a recession, “but the current situation is far from ordinary.” Consumer prices and expectations of inflation have risen. He predicted the current degree of inflation will last for the next 12 months.

Market supply and demand is driving inflation after the “flattened out” economy last year caused many suppliers to cut back on production, said Kleinhenz. That led to excess demand for goods and services, which “bids up prices.” He referenced a backlog of imports from Asia due to transportation limits and believes it will be several months before logistics issues are ironed out. Cullen said most retailers are now in stock with inventory for BTS season, but the trade association is encouraging consumers to shop early “in case things do take longer.”

Commenting on implications of supply chain constraints on holiday sales, Kleinhenz said many retailers he has spoken to made their holiday orders knowing the logistics constraints. “They’re hoping their inventory will get here shortly and in time,” he said. A “major speed bump” is logistics issues for retailers and package deliveries, said Kleinhenz. “We had a heck of a time getting packages there in time for Christmas last year, and I think logistics companies are trying to adjust for it.” There could be surcharges, he said, noting a major shipper announced it will start surcharges in November, “which means retailers are probably going to encourage spending to get started early,” as they did in October 2020.

The NRF responded Wednesday to the Centers for Disease Control and Prevention’s recommendation that fully vaccinated people again wear masks indoors in COVID-19 hot spots. “Public health and safety is always the number one priority for retailers,” said NRF. Retailers will continue to follow the guidance of the CDC and other public health experts to protect their associates, families and customers, it said. “It is truly unfortunate that mask recommendations have returned when the surest known way to reduce the threat of the virus is widespread vaccination,” NRF said.

Cullen acknowledged the challenges mask recommendations are for retailers whose employees have gotten pushback from customers. The NRF’s foundation offers training to help store employees be equipped to deal with such situations, she said. “It’s not a simple situation.”

Kleinhenz called vaccination “a critical path to further economic recovery.” He noted the U.S. seven-day average for vaccinations as of Monday, 400,000, was “a fraction of what we saw months ago.” Drivers to economic spending growth, including government fiscal policies and rollout of vaccinations, have helped “but are fading,” with vaccinations slowing and stimulus checks either spent or “tucked away." Kleinhenz's colleagues on the forecast panel for the Blue Chip Economic Indicators believe the biggest threat to global economic growth is “the uneven rollout of vaccines and the emergence of additional variants,” he said. The biggest spur to growth would be faster-than-expected global vaccination, he said.

The economist noted the pickup in COVID-19 cases due to the delta variant but said there’s no evidence now it’s affecting consumer behavior. “It’s way too early to say whether the variant will keep people home” as in previous peak COVID-19 periods, he said. Kleinhenz repeated the NRF’s 2021 retail sales projection growth of 10.5%-13.5% to $4.44 trillion-$4.56 trillion.