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Retailers Fear Weak Back to School Sales

Retailers are bracing for a weak back-to-school shopping season in Florida and around the country, with the recession-battered economy expected to dampen sales and no sales tax holiday in Florida this year to entice customers.

“We have concerns this year without the back-to-school sales tax holiday,” Florida Retail Federation President Rick McAllister said Wednesday.

The back-to-school shopping period, usually starting this week and continuing through the first couple weeks of August, is typically the second biggest shopping period for retailers after the Christmas season.

The National Retail Federation ordered up a survey of consumers' plans for back-to-school buying nationally earlier this month and found that the average family with kids in school plans to spend $548.72 on school items this year – down 7.7 percent from the roughly $600 they spent last year.

Total spending on school items and clothes is expected to be more than $17 billion nationwide, according to the National Retail Federation. Add in spending by students headed to college and the number more than doubles.

The state retail organization doesn't do a Florida-only projection, but parts of Florida have been among the worst-hit areas in the national economic slump and that is likely to be reflected some in local back-to-school shopping.

“The economy has clearly changed the spending habits of American families, which will likely create a difficult back-to-school season for retailers,” Tracy Mullin, President and CEO of the National Retail Federation, said earlier this month. “As people focus primarily on price, strong promotions and deep discounts will ultimately win over back-to-school shoppers this year.”

McAllister said Florida retailers are having to continue discounting – something they already have to do in summer, typically the slowest season for shopping here.

For several years, Florida lawmakers passed a sales tax holiday to coincide with the back-to-school shopping period, but facing revenue shortfalls budget writers have rejected the tax break the last couple years. Retailers have often said that was a mistake – Department of Revenue figures in the past have shown that sales tax collections have actually gone up during sales tax holidays, because the tax break is limited to certain items and has an upper limit – meaning people lured in by the prospect of savings often end up actually spending more on exempt items – and paying more in taxes.

Still, there's debate whether that would be the case in a recession, and at any rate the tax break won't happen this summer.

National retailers and analysts say there may be one bright spot in the coming weeks: electronics. Dropping prices for personal computers is spurring laptop and desktop sales, and projections are that families will actually spend more on technology this year than in past years, even with the lower prices.

The International Council of Shopping Centers also put out a lackluster back-to-school forecast for the year, estimating same-store sales during this year's back-to-school season will be up about 1 percent, well below the annual average of 4.7 percent seen between 1993 and 2008.

Some analysts have said over the last couple weeks that even that may be too optimistic.

Retailers are hoping for an unexpected jump, partly as a confidence booster heading into the winter.

Back to school shopping “is somewhat of a predicter of Christmas,” said McAllister, meaning a bad season could be even worse psychologically for retailers for what it portends for the rest of the year.

Meanwhile, in other economic news on Wednesday, economists were surprised a bit by an unexpected increase in durable goods orders nationwide. The government reported that orders for items meant to last more than three years, but excluding cars, climbed 1.1 percent in June, the most in four months, and more than was expected by economy watchers.

The report is a good indicator that companies are beginning to boost investment, adding to confidence that the recession, the worst in a half century, may be starting to ease.

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