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Back-to-school so soon?
Retailers are making a risky bet putting tweeds in stores just a few weeks into the summer holiday.
July 8, 2005: 10:16 AM EDT
By Parija Bhatnagar, CNN/Money staff writer

NEW YORK (CNN/Money) - Retailers seem ready for school to start earlier every year, even before kids are done packing for summer camp.

This year, some clothing chains and department stores started to slip fall coats, tweed pants and sweater sets into their stores as early as mid-June. That's almost a month before the start of the three-week back-to-school shopping period, which typically runs from mid-July to mid-August.

For instance, specialty apparel chains New York & Co. (Research) and Bebe Stores (Research), and teen clothier Abercrombie & Fitch (Research) last month debuted a sampling of their fall and back-to-school items such as sweater sets, fur coats and fleece jackets.

It's not just the clothing stores that are rolling out next season's assortment earlier than usual. Industry experts said home furnishing sellers Pier 1 Imports (Research) and Bed, Bath & Beyond (Research) are also jumping on the trend.

Pier 1 Imports spokeswoman Kelley Keenum told CNN/Money that the retailer's school-themed merchandise was put into stores in mid-June. "But that's not earlier than we've usually had it before," she said.

The rush to put out fall merchandise could be a double-edged sword for retailers, according to Marshal Cohen, chief retail analyst with market research firm NPD Group.

On the one hand, if retailers wait too long to bring out back-to-school merchandise, some consumers will say that their needs are being ignored.

But if retailers jump the gun too soon, industry watchers said stores run the risk of not having anything fresh and new when other consumers are ready to shop for school.

"Most back-to-school shoppers wait until late July and August to buy school products. They're only buying maybe 1 or 2 items as early as June," said Cohen. "So does it make sense for retailers to shorten the summer buying cycle in favor of fall merchandise? Not really."

So why are some stores already debuting some of their fall clothes?

"Retailers ideally want to extend the longevity of the full-price selling season. So they sneak in next season's merchandise a little early," Cohen said.

Besides worrying about profit margins, retail analysts say merchants are also likely paying close attentions to record-high oil prices and whether or not that could eventually lead to a marked pullback in discretionary spending sooner than later.

"Oil does factor in at some level," said Michael Niemira, chief economist and director of research with the International Council of Shopping Centers (ICSC), although he added that retailers can take some comfort from the fact that consumer spending has thus far held steady despite the broader economic concerns.

Banking on back to school

School-related purchases can provide a sizeable sales windfall for retailers. The National Retail Federation (NRF) estimates that the total school-related sales in 2004 hit $15 billion and provided a healthy boost to third-quarter sales. The NRF is expected to release its 2005 back-to-school sales forecast later this month.

Said Cohen, "For some retailers, this is the second or third most important selling period of the year. More importantly, back-to-school also provides a transition into fall shopping."

Eric Beder, retail analyst with Brean Murray & Co., agreed with Cohen that retailers are taking a risk by rushing school products into stores just a few weeks into the summer holiday.

"It's a very delicate balance for retailers to decide when to transition into the next season," Beder said. "Some retailers hope launching back-to-school lines early will result in better margins. But if a clothing chain picks out a trend and puts it into stores too early and that trend flops with consumers, it leads to lost dollars. Retailers don't want to be stuck with extra inventory so they'll start putting out the sales signs fast."

Ultimately, NPD's Cohen thinks that those retailers who have a successful back-to-school season won't necessarily be the ones who were first out with the merchandise. "Who wins is who had the right thing, at the right place at the right price," Cohen said.

New York & Co. and Bed, Bath & Beyond could not be reached for comment. Abercrombie & Fitch did not return calls for comment.  Top of page

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