Advertisement
Canada markets closed
  • S&P/TSX

    22,167.03
    +59.95 (+0.27%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CAD/USD

    0.7387
    +0.0015 (+0.20%)
     
  • CRUDE OIL

    83.11
    +1.76 (+2.16%)
     
  • Bitcoin CAD

    95,967.36
    +2,377.83 (+2.54%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,254.80
    +42.10 (+1.90%)
     
  • RUSSELL 2000

    2,124.55
    +10.20 (+0.48%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • NASDAQ futures

    18,465.00
    -38.75 (-0.21%)
     
  • VOLATILITY

    13.01
    +0.23 (+1.80%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • CAD/EUR

    0.6844
    +0.0039 (+0.57%)
     

Retailers should expect a 'choppy' back-to-school season amid COVID-19

FILE - Back-to-school supplies await shoppers at a store on Saturday, July 11, 2020, in Marlborough, Mass.  The pandemic has dragged into the new school year and wreaked havoc on reopening plans. That has extended to the back-to-school shopping season, the second most important period for retailers behind the holidays.  (AP Photo/Bill Sikes, File)
FILE - Back-to-school supplies await shoppers at a store on Saturday, July 11, 2020, in Marlborough, Mass. The pandemic has dragged into the new school year and wreaked havoc on reopening plans. That has extended to the back-to-school shopping season, the second most important period for retailers behind the holidays. (AP Photo/Bill Sikes, File)

Analysts expect the back to school shopping season will be choppy and delayed this year, as parents grapple with school re-openings and the economic impact of the coronavirus pandemic, but that the right product mix will help some companies through the uncertainty.

Back to school shopping, which typically kicks off as early as July, is a key event for many retailers, particularly those in the apparel and office supply categories.

Ike Boruchow, a senior retail analyst with Wells Fargo Securities, said in a note to clients this week that a stalled retail recovery and uncertainty around school re-openings has resulted in a delayed shopping period and shifting demand.

ADVERTISEMENT

“For companies that rely heavily on kids apparel sales or kids apparel as a traffic driver to other purchases, a choppy back to school season could be a significant hit to their full-year results,” Boruchow wrote.

“With some families still undecided as to how their children will learn this fall, and many school districts still figuring out if and how to re-open their doors to students safely, the traditional back to school shopping timeline may be delayed and traditional back to school wallet share may shift.”

For Staples Canada, back-to-school is one of the top sales events of the year, chief executive David Boone said in an interview. He said the company had surveyed parents about their needs, shifting their product lineup to meet them. So far, Staples Canada has seen demand grow for personal protective equipment and technology services versus previous years.

“There’s definitely been a shift towards more online shopping and a shift towards products that are part of the new reality of how education is going to operate in Canada,” he said.

“Clearly we’ve had to pivot in terms of the products and services and pace with which we can provide them.”

But some retailers will struggle, said Bruce Winder, a retail analyst who recently wrote a book about the impact of COVID-19 on the industry.

“For many retailers, back to school is an incredibly important event. This year it has a lot of uncertainty because of COVID-19 and the state of the economy,” he said.

Winder expects apparel retailers, particularly those in the higher-end category, will suffer in the back to school season as shoppers shift towards discount retailers instead.

“Anything that’s discretionary like that will not see an uptick in sales,” he said.

“The big uptick you’ll see is in devices and electronics, and personal protective equipment. You’re going to see a downtick in apparel.”

A Deloitte survey conducted earlier this summer found that back to school spending will likely remain flat this year. The survey found that spending on technology products such as personal computers and tablets will increase by 28 per cent when compared to last year, while spending on clothing and traditional school supplies will drop by 17 per cent.

Winder says retailers that offer personal protective equipment and technology products in high-demand should focus on aggressive marketing and getting the products out in front of the customer.

“In the meantime, you’re going to have to ride this out and hope that things are better for the fall,” he said.

Download the Yahoo Finance app, available for Apple and Android and sign up for the Yahoo Finance Canada Weekly Brief.