Will Back-to-School Season Put a Bullet in Sears?

Back-to-school season is a big deal for brick-and-mortar retailers, according to the Deloitte research on the subject for the 2016 shopping season. Other than the final 10 weeks of the year, it is the one chance troubled retailers have to get ahead. No retailer is more troubled than the Sears unit of Sears Holdings Corp. (NASDAQ: SHLD). The retailer already has started aggressive promotions to bring in customers. If Sears sales for the period are slow, it puts another bullet in a dying company.

The Deloitte 2016 Back-to-School Survey shows:

The average spend for those who start shopping by the end of July is $537, compared with $424 for those starting in August or later. While 81 percent of respondents say their financial situation is better or the same than last year, over half of them say their spending will likely remain the same as last year (55 percent), 32 percent will likely spend more, and 13 percent will likely spend less.

While clothing and school supplies still dominate back-to-school lists, electronics are at the top of the class for those families who plan to spend in this category. Survey respondents shopping for technology-related items (29 percent) said they would spend an average of $456 on computers (including software, hardware, and accessories), and $286 on gadgets like tablets, smartphones and wearables. Additionally, 31 percent say they are buying fewer traditional school supplies because their child is using more technology for school.

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It is one of the rare cases in which traditional retailers have an edge over e-commerce, during a period when Amazon.com Inc. (NASDAQ: AMZN) continues to ruin the prospects of brick-and-mortar retail:

Roughly two-thirds of the budget for traditional categories like school supplies (66 percent) clothing and accessories (63 percent) will be spent in-store. The majority of shoppers (61 percent) say they’ll research online before making a purchase in a physical store. One-quarter (25 percent) of parents surveyed said they plan to use social media to assist with their shopping, but the number one reason to use social media is to find out about promotions (74 percent), followed by coupons (64 percent).

Sears already has begun to employ tactics to pick up market share for the season. Its current back-to-school sales include 50% off on clothing and backpacks. Additionally, Sears offers as much as 25% off on cosmetics and jewelry.

In its most recent reported quarter:

Sears Domestic comparable store sales decreased 7.1% primarily driven by decreases in home appliances, apparel, consumer electronics, footwear and Sears Auto Centers.

For the same quarter, Sears lost $471 million.

Sears shares are off 78% in the past five years. Back to school is one of the company’s last chances.

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