According to research, average American families with children returning to school after the summer holidays are expected to spend about $58 more for back to school products this year. This is compared to what they spent last year. A total of $606.40, which is up 11% from the previous figure, will be the new average, according to the National Retail Federation. On the other hand, average American households with college students returning to class are forecast to spend about $2 less than before, making the figure $616.13 for this year.

This year marked a strong start for dealers in school supplies, with shoppers willing to spend more, and retailers moving products at full price. However, recent months have shown a new trend in the industry, with shoppers exhibiting a much more cautious approach to their spending patterns.

Surveys indicate that more shoppers are planning to buy generic products this year than they did last year, as revealed by a consumer intentions survey taken by the National Retail Federation last month. There is also expected to be an increase in comparison shopping online, which will have a great impact on retail sales overall.

The stores that anticipate these changes in consumer spending are preparing for price wars and attractive discounts, to pull shoppers in during this back to school season, as consumers are showing signs of being far more frugal than before.

Average spending on clothes during the school days rush is forecast at $225.47, for a household with children returning to school. This figure is up 10% from the dismally low 2009 reports, but remains down 3.9% from the reports of two years ago. By an interesting contrast, consumer electronics spending is projected to reach $181.61, which is up 20% from 2008.

Following this interesting trend towards consumer electronics is the knowledge that some of the dollars previously spent on back to school wardrobes and accessories have been reallocated by cautious parents to other sales categories, with particular preference showing favor for electronics. Expected to emerge the winners in this area are the big-box chains like Target Corp. and Wal-Mart Stores Inc., which are in a good position to offer these goods at attractive prices, experts say.

Every year, there is a sudden spending spree on school supplies and fall clothes that typically runs from now until Labor Day. This is the second most important event for US retailers, after factoring in the traditionally significant Christmas season. Later this week, a better understanding of consumer spending will be available, when the nation’s chain stores report their July sales on Thursday.

The numbers are hard to ignore, with total back-to-school spending this year expected to reach $55.1 billion, which is up roughly 16% over last year’s figures, according to the National Retail Federation. This also represents a sharp rebound from the painful season of last year. However, the increase is not intended to cover up the new season’s very cautious shoppers, and the subsequent changes in choices and in what they are actually buying.

Parents have been stretching their dollars over the last two years, and face the task of supplying basic needs for their children. In addition, tighter education budgets across the entire country are creating more of a burden on them, as increased responsibility for school supplies is finding its way to families with strained budgets.

Some actionable items for dealers in the wholesale business to pay particular attention to:

• Many parents will only buy what is absolutely necessary for the time, with spending on categories like fall season fashion being put off until the weather changes, and temperatures drop.
• Consumers are showing signs of disbelief in the recovery efforts, and a seeing is believing ethic will likely dominate spending. Retailers are expected to answer the call with more discounts and special promotions, in order to create incentives.
• Some parents are requesting school supply lists early, in order to take advantage of the extra time to hunt down the best deals.
• Consumers are becoming more sophisticated in their cost-cutting efforts, as they focus more on rebates, coupons, and other promotions that drive the actual spending downward.

In an interesting side note, many retailers such as Abercrombie & Fitch Co., and American Eagle Outfitters Inc., have made costly errors in judgment from allowing themselves to fall prey to overconfidence in the market. Sales were less than they had hoped for, and they are now stuck with a glut of inventory, say experts.

Wholesalers may find this excess inventory to be worth investigating, as the discount and liquidation market may find a new source to channel goods for the upcoming holiday season of 2010.