Office stores’ pain is discounters’ gain

Amid conflicting reports of how much consumers planned to spend during this year’s back-to-school season, one thing that’s clear is that the stars have aligned for Walmart and other discount retailers.

The discount channel is always a prime destination for BTS purchases, owing to its broad assortment and reputation for low prices. However, this year those factors took on new importance as the now familiar economic concerns of high gas and food prices coupled with a weak housing market caused penny-pinching consumers to trade down and consolidate trips.

As a result, 88% of the 5,035 people surveyed in a Deloitte back-to-school shopping survey said they intended to do most of their shopping at discount retailers and value-oriented department stores identified as Walmart, Target and Kohl’s. Running a distant second in terms of preferred shopping venues were dollar stores at 37% (see chart, below).

“That was a response that came as a bit of a surprise to us,” said John Rooney, a principal with Deloitte’s consulting arm.

Deloitte’s survey, conducted July 11 to 14, also indicated 71% of consumers planned to spend less this year. That finding appears to contradict results of a National Retail Federation survey from early July that showed consumers planned to spend more this year.

Consumer intentions matter less than actual numbers, and the early read suggests Walmart is poised to school many of its competitors this year, as it has benefitted from increased customer traffic due to consumers’ desire to save money.

“Walmart’s integrated ‘Do the math and save’ campaign for back-to-school has positioned us clearly as the price leader for all school supplies,” Walmart stores division president and ceo Eduardo Castro-Wright said during an Aug. 14 pre-recorded conference call. “As with other seasons, we do believe that customers are shopping closer to the holiday and we expect momentum to increase in the coming weeks.”

Office superstores are in a more difficult spot as they have reported weak sales of late and expressed concern about future spending.