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"The concern is so large": The start of college doesn’t look that means this yr. That is what it means for retail

A Wal-Mart Stores Inc. employee organizes school supplies at a Wal-Mart Stores Inc. location in the Porter Ranch neighborhood of Los Angeles, California.

Patrick T. Fallon | Bloomberg | Getty Images

Nobody really knows what the shopping season will look like this year – neither retailers, parents, students nor teachers.

The fear is great and this could affect sales, the timing of purchases and what people buy.

66 percent of parents are concerned about sending their children back to crowded classrooms due to the Covid 19 pandemic in the fall. This is the result of an annual Deloitte start-up survey in which 1,200 parents were interviewed online from May 29 to June 5.

However, a lot has happened since then. Some schools have started announcing their plans to facilitate reopening in the fall. As an example, Harvard University announced on Monday that it will welcome freshmen and some other students to campus this fall semester, but will teach all classes online and people on campus will need to be tested for coronavirus every three days. Tuition fees are not reduced from $ 49,653, it said.

Needless to say, there is still a lot of uncertainty. All retail traffic is still depressed compared to last year, with declines accelerating in some states as cases of Covid-19 continue to increase.

Fear has its origins in different places. Some parents worry that their children will fall behind academically. Only 43% of the parents surveyed by Deloitte believed that the most recent education at home that their children received during the crisis was preparing them for the next grade. Schools across the country were closed in the spring to thwart personal lessons. Many school districts had to look for support plans, which frustrated teachers because they quickly tried to put everything online.

Public schools in New York City began to curb the spread of the virus in the week of March 15 and have never been reopened. Governor Andrew Cuomo said this week that there are no plans for reopening in the fall and no final decisions regarding personal learning have been made. The NYC school district is the largest school system in the country with over 1.1 million students in more than 1,800 schools.

Fifty-one percent of parents say that, according to Deloitte's survey, they plan to increase their spending on virtual learning tools later this year to try to complement what they are offered at home.

"The fear is so great," said Rod Sides, vice president of Deloitte's retail and sales practice. "There has to be something to relieve fear."

Other causes of fear include health and safety concerns, and finance. 38 percent of people said they had "big financial concerns" about the upcoming school season, said Deloitte. The US unemployment rate is currently 11.1%, with millions of people unemployed.

A few weeks ago, according to Deloitte's survey, 43% of parents said they had not heard from their children's current schools about the security measures planned for the fall. Around a quarter did not yet know when the first day of school would be.

However, the total expenditure for the beginning of the school season should remain almost unchanged compared to the previous year. It's just the categories parents spend money on that shift – with electronics appearing to have a much larger share of the wallet.

According to Deloitte, total spending on going to school in the U.S. is expected to be $ 28.1 billion, or $ 529 per household. That would be relatively flat from 2019.

A buyer wearing a protective mask walks past a sale sign in a clothing store owned by American Eagle Outfitters Inc. at the Westfield San Francisco Center in San Francisco, California on Thursday, June 18, 2020.

Michael Short | Bloomberg | Getty Images

However, clothing expenditures are expected to decrease by 17%, while expenditure on technical items such as computers will increase by 28%. According to the survey, spending on traditional back-to-school items such as notebooks and backpacks is expected to decrease by 18% year-on-year.

When children are stuck at home, everyone tries to work digitally. Parents turn to online tutoring platforms, online educational games, and other tools to keep students busy – even during the summer months when many camps don't take place.

This could be good news for electronics retailer Best Buy and other stores like Walmart and Target, which are known for their wider range of technical equipment.

In the meantime, a decrease in clothing spending would not be a good sign for department stores and other mall-based chains like Gap Inc., which is owned by the Old Navy.

According to Deloitte, parents plan to spend 37% of their total back to school online this year, up from 29% in 2019. Others will try to shop closer to home and use contactless options such as online shopping and store pickup, the survey said.

What about college?

Going back to college in the fall is a similar story. Spending on dormitory equipment and stocking college supplies is expected to be approximately the same as last year at $ 1,345 per household, the survey said.

Low and middle income households in particular are expected to cut their budgets, Deloitte said. It is the houses with higher incomes that keep this number relatively even compared to the previous year.

"I think we have a consumer who is hopeful," said Sides. "They are concerned, but there is a great desire to give their children what they want."

According to the survey, 62 percent of college parents are concerned about sending their students to school and have health and safety concerns.

A handful of colleges and universities have drawn up their fall plans, with many supporting a hybrid model of online and personal learning.

Contrary to Harvard's announcement, several other Ivy League schools, including the University of Pennsylvania and Cornell University, plan to re-open the majority of their dormitories and hold a handful of personal courses.

Rutgers University announced this week that most distance classes and "extremely limited" accommodations will be available on campus in the fall semester.

With many families waiting to learn more about what learning will look like, analysts expect the spending spree at the beginning of school, if any, to take place later in the season.

"I think back to school may be pushed back," said Stacey Widlitz, president of SW Retail Advisors. "Then retailers will panic if shoppers don't show up … but I think parents won't open their wallets until they know it."

This delayed spending behavior could then "snow" its way into the holiday season, she warned, triggering a flood of deep discounts that never end. Back to school is the second most important shopping season each year for most retailers.

"If the start of school is not good, everyone will look at their neighbors to see how they are doing," said Widlitz. "I think parents will spend money in many different ways this year."

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