Although a recent survey by Deloitte & Touche LLP found shoppers mostly upbeat about the economy and willing to spend, local surfwear apparel retailers and manufacturers are being at best cautiously optimistic about sales this back-to-school season.
“The news is that the majority of people will spend at least the same as last year if not a little bit more,” said Tony Cherbak, a retail analyst in the consumer products group at Deloitte & Touche’s Costa Mesa office.
On the other hand, Cherbak said, “I don’t think it’s going to be leaps and bounds above last year. That would not be consistent with anything that we’re seeing in the economy.”
The firm surveyed 400 families with school-aged children in Southern California. In Orange County, 73% expected the economy to stay the same or improve in the coming year, with more than 64% planning to spend $200 or more on back-to-school clothing, which is the same or more than they spent last year, according to the report.
In LA, the report said, 69% expected the economy to stay the same or improve, and about 55% planned to spend $200 or more, which was the same or more than last year. San Diego’s percentages trailed LA’s by about two percentage points.
Cherbak said the good news for retailers, who generally have seen a slowdown in consumer spending, is that most shoppers believe the economy “has gone as low as it will go” and “things are beginning to stabilize.”
That’s the case at least in Southern California, which fared better than the rest of the nation, he said.
“It’s now just a matter of how long does that slowdown last and at what point do we start seeing a real positive upturn,” Cherbak said. “I think a lot of the retailers are hoping it’s going to be back-to-school this year, but they’re approaching it with caution.”
That means retailers will “manage their inventories as best they can, and put a little bit more pressure on the manufacturers,” Cherbak added.
The results of Deloitte & Touche’s survey came as a bit of a surprise to at least one retailer. Steve Hurst, manager of Laguna Surf & Sport’s Aliso Viejo store, said that he anticipates that it “would be really hard to come close to last year’s numbers,” which he described as “above and beyond” expectations, mainly because there was more disposable income in the market.
However, he said, since Orange County seems to be a “little bubble” within California “you can expect something close to last year.”
“Most likely you’re looking at customers seeking out more sale stuff; whereas, last year it didn’t really matter,” Hurst said.
Laguna Surf & Sport will carry the same dollar amounts in inventory this fall vs. last fall, but Hurst said the store was more “conscious of what we’re buying” and “where dollars are being spent.”
That air of caution is also being seen by accounting firm Moss Adams LLP’s Irvine office, according to partner Frank Kaufman. Moss Adams has many clients in the apparel industry. Kaufman said the back-to-school season has gotten more challenging over the years. One reason: the advent of year-round schools, which has spaced out the back-to-school shopping window, according to Kaufman.
The slow economy has also taken a toll on apparel manufacturers, which shipped about 5% less back-to-school inventory to retailers this season vs. last.
“We’d like to see (consumer spending) be the same or a little more but I don’t think that’s going to be the case,” Kaufman said.
Meanwhile, Billabong USA is bracing for a slower back-to-school season than last year, according to Andeaux Borunda, who heads Billabong’s visual merchandise and design.
“We’re hoping that it’s not going to happen, but we’re bracing for not as strong a season as in the past,” Borunda said.
To that end, Billabong is taking precautionary measures, which includes watching inventories closely at the retail level.
With a few accounts, Billabong will take back some product that doesn’t sell through, according to Borunda. That product is then sold in Billabong’s outlet stores, he added.
“We at least have that avenue to go if we take a big hit this back-to-school season,” Borunda said. n
