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Even with Texas' sales tax holiday, back-to-school shoppers may button down spending

08:47 AM CDT on Friday, August 20, 2010

By MARIA HALKIAS / The Dallas Morning News
mhalkias@dallasnews.com

Last weekend, Chastity Bennett of Frisco and her two school-age daughters cleaned out their closets. They found hand-me-downs, items they took to a resale shop and others to give away.

This week, they hit the stores to begin back-to-school shopping in search of "reasonable prices," Bennett said Tuesday at Stonebriar Centre in Frisco with her 9- and 12-year-old daughters. "We'll do a little shopping today and the rest on tax-free weekend."

Texas' 12th annual back-to-school sales tax holiday starts at 12:01 a.m. Friday and goes until 11:59 p.m. Sunday. Apparel, shoes, backpacks and school supplies costing less than $100 per item can be bought tax-free.

This year, shoppers are expected to save $59.3 million in state and local sales taxes over the three-day weekend, according to the Texas comptroller's office. That compares with $63.4 million last year and reflects a lower spending forecast this year.

"We expect consumers will be more economical," said R.J. DeSilva, a spokesman for the Texas comptroller. "For example, they'll buy more of the less expensive store brands."

Since the recession hit in 2007, the number of Google searches in Texas for "tax-free shopping" have been steadily rising as families look for ways to save. The peak number of searches in 2009 was double the total in 2006 before the economic crisis.

Families will spend an average of $606.40 on back-to-school clothes, shoes, supplies and electronics this year for the nation's more than 56 million school-age children, compared with $548.72 last year and $594.24 in 2008, according to a survey conducted by BIGresearch for the National Retail Federation.

Texas is one of 15 states nationally to hold a sales tax holiday for the back-to-school shopping season, which is second only to Christmas in importance for retailers.

For her first-grade twin girls, Kari Korth of Frisco said she plans to spend less than the $300 it cost to get them ready for kindergarten last year.

"We won't be getting things like new lunch boxes and backpacks," Korth said. "I'm not starting that every year."

The new consumer is someone who thinks ahead and takes home economics seriously.

"It's the un-super-size me era," said John Long, partner at the retail consulting firm Kurt Salmon Associates.

The early 2000s were marked by super-sized everything, including retail spending funded with big credit card limits and rising home values, he said.

"Today the consumer is de-leveraging, and it's going to take years to work that out of the system," Long said. "This is the way the consumer is going to behave going forward."

Last year, shoppers limited their back-to-school purchases and stayed focused on necessities in August, resulting in the 12th straight month of declining sales for retailers.

But consumers started to exit the bunkers in the final months of last year. That continued in the early spring and summer.

Now retailers are stepping up promotions for this weekend, trying to get a bigger share of a pie that's not growing enough to make every store's numbers look good, Long said.

"After September, we'll have a better understanding of which retailers fared the best. Market share is much more of a focus" this year, he said.

Stores are striking exclusive deals and creating new brands with celebrities to lure shoppers. Macy's has piqued shopper attention with its partnership with Madonna and her Material Girl line.

This week, Plano-based J.C. Penney began opening MNG by Mango shops inside 77 stores. Locally, the first shops are at Penney stores in Stonebriar Centre and the Village at Fairview. Penney plans to have the fast-fashion European retailer's clothes, shoes and accessories in 600 stores by this time next year.

Penney is trying to attract younger shoppers for good reason. Its chief executive, Myron "Mike" Ullman, said the five dominant fast-fashion retailers – Zara, Uniqloe, Forever 21, H&M and Mango – have taken $20 billion to $30 billion in sales away from department stores.

"We think it's a real coup to have one of those residing at the entrance of our biggest stores," Ullman said.

The challenge for retailers is persuading consumers to act like the recession is over.

Korth said her 6-year-olds can wear their summer clothes when school starts next week and well into September.

"It's so hot. They'll still be wearing shorts for two months," she said. "I'll buy some things now and some things later."

SCHOOL TIME NUMBERS

$55 billion What Americans are forecast to spend this year on back-to-school merchandise

$606.40: Expected tab for the average household to buy clothes, shoes, supplies and electronics. That compares with $548.72 last year and $594.24 in 2008.

4.7 million: Number of kindergarten-12th grade students in public schools in Texas

300,000: Number of students in grades K-12 in private schools in Texas

1.36 million: Number of students in Texas colleges and universities

SOURCES: U.S. Census Bureau; Texas Education Agency; Texas Association of Non-Public Schools; National Retail Federation; BigResearch; Texas Higher Education Coordinating Board

STUDY UP, THEN STOCK UP

Tax-free shopping starts at 12:01 a.m. Friday and ends at 11:59 p.m. Sunday.

Ways to save time, money

USE EXTENDED mall hours to shop when crowds aren't so big.

CHECK MALL and store websites.

SHOP KIDS'

closets first. Find out what still fits before you go.

KNOW WHAT

you plan to spend and stick to it.

RESEARCH DISCOUNTS

in advance to map out your shopping. Stores are dishing out discounts this weekend, knowing you're ready to spend.

YOU DON'T NEED

a school-age child to save. You can stock up, too.

What qualifies

•Apparel, shoes, backpacks and school supplies can be purchased tax-free on items costing less than $100.

•Calculators are included, but no other electronics.

•Tax-free items not necessarily considered back-to-school gear: Baby clothes and diapers (including adult sizes), pajamas, robes and swimwear.

•See the complete list on the Texas Comptroller's website, www.window.state.tx.us

SOURCES: Texas Comptroller; Dallas Morning News research

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