Back-to-school Supply Sales up 1.7%: Nielsen

With consumer confidence seemingly stuck in neutral, The Nielsen Company forecasts a modest increase in dollar sales on back-to-school items, up 1.7 percent to $2.6 billion, although unit sales are projected to drop.

“Unlike the holiday season, many consumers view back-to-school shopping as required vs. discretionary purchases,” said James Russo, VP of global consumer insights at Schaumburg, Ill.-based Nielsen. “That said, we see an extremely modest sales increase for this year’s back-to-school season. While more U.S. consumers feel the country is coming out of the recession, they still feel the weight of a stubbornly weak labor market. Look for consumers to spend their money carefully and focus on purchasing the essentials.”

Nielsen forecasts back-to-school unit sales for the office/school supply category to drop 5.25 percent to 1.04 billion.

The July-September back-to-school season is important for the office/school supply category, generating nearly 40 percent of annual dollar sales and more than 50 percent of annual unit sales for the $7 billion office/school supply category.

Many prices for back-to-school items are up in 2010 compared with 2009. Nielsen’s research shows that the lowest prices are available in July (down 55 percent) and August (down 50 percent). Gains are expected for supercenters, dollar stores, drug stores, and, to a lesser extent, club and grocery stores.

Nielsen forecasts bottled water, a related back-to-school category, to grow 3.57 percent on a dollar basis, outpacing juice sales. Once considered a discretionary item, bottled water is increasingly consumed as a staple, driving its growth.

“Back-to-school prices are up this year,” said Russo. “With consumers applying more pressure for lower prices and promotions on basic consumable items, retailers are looking to make up margins in seasonal categories. Those retailers offering strong discounts and appealing to consumers’ desire for savings and value will be this year’s back-to-school winners.”

Nielsen’s forecast is based on office and school supplies, including office, school, artist/hobby supplies, scissors, tape and glue purchases in U.S. food, drug, mass merchandiser (including Walmart), dollar and club stores, and online sales for July through September 2010. Nielsen’s research is based on more than 110,000 UPCs in the school supply category, and more than 400 million school supply transactions.