Back-to-school bargain hunting

In tough times, retailers deal out the discounts while shoppers find inventive ways to save.

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By Jessica Dickler, CNNMoney.com staff writer

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NEW YORK (CNNMoney.com) -- While summer is a great time to be a kid, it is a tough time to be a retailer, or a parent.

Most merchants typically gear up for the back-to-school shopping crowd to hit their stores around mid-July, lasting through early September. But this year, retailers are bracing for a particularly slow season. With a sluggish economy and soaring expenses, families are cutting back on spending during one of the most important shopping periods of the year for stores.

Even though total back-to-school spending for Kindergarten through 12th grade this year is estimated to reach $20.1 billion, according to the National Retail Federation's 2008 Back to School Consumer Intentions and Actions Survey, spending in most categories will be flat.

The survey found that families with school-aged children will spend 5% more this year on back-to-school purchases, or $594.24 per family, compared to $563.49 last year, largely driven by sales of electronics like computers and cell phones, spurred by economic stimulus payments.

But back-to-college spending, which has helped buoy retail sales for the past five years, will drop 7% this year, from an average of $641.56 per person last year to $599.38 this year, the survey said.

Retailers reach out

Because consumers are downscaling in the face of rising gas and food prices, retailers must be aggressive to drive sales, according to Ken Perkins, president of sales tracking firm Retail Metrics. That means more markdowns and promotions to bring customers into stores.

"Retailers are going to have to be very competitive on price," Perkins said.

Department stores and mall-based retailers, like Abercrombie & Fitch (ANF) and American Eagle Outfitters (AEO) are going to have the greatest difficulty drawing in consumers, according to Perkins. While discount retailers like T.J. Maxx (TJX, Fortune 500) and Ross (ROST, Fortune 500), may fare better in the current climate.

A whopping 73% of consumers will be heading to discount stores for their back-to-school gear this year, up from 67.6% last year, according to the NRF survey.

Retail giants Wal-Mart (WMT, Fortune 500) and Target (TGT, Fortune 500) have already started their back-to-school promotions in an attempt to reach out to cash-strapped consumers.

"We know our customers are facing tough economic times," said Shannon Frederick a spokeswoman for Wal-Mart, "and our customers are depending on us for low prices."

The world's largest retailer is promoting 5 to 15 cent pocket folders, pens and glue for under a dollar and back packs for less than $10.

Shoppers get smart

"This back-to-school season is going to be one of intense bargain hunting," Perkins confirmed.

And with more sales and promotions around, shoppers are getting savvy about the scoring the best possible deals.

That means comparison shopping online will be even more popular among those looking for low prices on back-to-school gear while struggling with rising gas prices.

Brad Wilson, founder of bradsdeals.com a site that shares shopping steals, says that this year there are tons of great online deals for consumers willing to shop around. On top of those deals, an abundance of promotional coupons can make back-to-school necessities even less expensive, for those willing to put in the time.

"If I was going to buy a laptop, I would buy it at dell.com or hp.com with a coupon," Wilson recommends. For books, Wilson suggests using a 30% off coupon for Borders or 15% off at Barnes & Noble, current promotions easily found online.

Wilson's top picks this season? A $100 graphing calculator from Texas Instruments for $24.99 after two mail-in rebates from Office Depot coupled with Office Depot's $25-off coupon code listed on Wilson's Web site.

And a free iPod touch or iPod nano with the purchase of a Mac computer before September 15 from Apple's online education store. College students, teachers, administrators and staff also qualify for discounted prices on Apple computers, making that deal a "total no-brainer," Wilson said. To top of page

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