Back to school a retail bonanza

"It's the most wonderful time… of the year," the old song says.

Andy Williams was referring to the holiday season, of course. But office supply seller Staples Inc. borrowed the ditty for its back-to-school sales several years ago in a marketing campaign.

Once only for the niche market of pencil and paper sellers, back to school has grown and grown to become a major revenue maker for retailers not generally synonymous with educational products.

"It's certainly one of the most important times," retail consultant Wendy Evans says. "If you're not active in it, your competitors probably are."

The numbers are impressive: Statistics Canada data shows Canadians spent $946 million on office supplies and stationery alone during the three months up to the start of school last year, and roughly 23 per cent of Canadian households made some sort of back-to-school purchase last year.

In total, Canadians spent $34.5 billion at stores in August last year, and a sector-by-sector breakdown of the spending suggests school-related purchases made up a large chunk of that.

But it isn't just pencils and binders anymore. Best Buy is an active marketer during July and August, hoping to cash in on the market for school-related computers, printers and personal organizers — but it also capitalize on the latest in fun gadgets.

'It's certainly one of the most important times.' —Wendy Evans, retail consultant

"Based on the nature of our business, this time of year is actually our first major shopping opportunity," company vice-president Angela Scardillo says. "It's a crucial period for us."

Privately held Best Buy declines to disclose sales figures, but Scardillo confirms it's the second-busiest time for sales. Indeed, it's significant in part because of its proximity to the No. 1 time — the key Christmas shopping season.

Back-to-school purchases are often "needs," Scardillo says — a laptop for taking notes, a printer to print essays, or new wardrobe for class, for example. But the holiday season is often about "wants." What's selling well in August can sometimes be an excellent clue for what's going to sell in December, she says.

"It's always important from a marketing perspective, but it's a little trickier from an inventory perspective," Scardillo says.

Not just books

That's because the inventory process at large chains can be lumbering, with shelf decisions made weeks and months in advance. In retailing, selling out of the must-have item at the wrong time can be even worse than having stocked shelves of products nobody wants to buy.

"We worry more about selling out of something that's popular than we do about anything else this time of year," she says.

Direct educational purchases are retail's bread and butter this time of year, but sellers like Best Buy have aimed at some of the other opportunities. Of the $10,262 it costs to educate the average Canadian student in 2009, only $4,724 of that typically went for tuition. That's a lot of dollars earmarked for the accoutrements of going back to school.

It's not exactly known when back to school became such a retail bonanza but the first stores to start the trend were likely department stores. That's because department stores invented the concept of the "sale" in general — selling goods at reduced prices at certain times of the year to gain market share, Evans says.

She recalls a time earlier in her career working at iconic retailer Eaton's, when the back-to-school bonanza was one of the busiest shopping times of the year.

"It was always a major sale," she says, "and it's only gotten more competitive."

The competition has moved beyond bricks and mortar. Online selling is the new normal for retailers, Evans says, and back to school is no exception.

"More of our overall efforts are devoted to our online presence as consumers get more and more comfortable with it, and back to school is no exception," Scardillo confirms.

It's early days yet, but the chain is reporting strong sales so far with netbooks and smartphones proving popular.

"We're cautiously optimistic and hopeful" Scardillo says. "But so far we're seeing an uptick."

Other retailers report similar optimism.

"Consumers are very value oriented these days," Evans says. "The customer's been waiting, making sure they don't spend money before they have to."

That manifests itself in back-to-school shopping beyond extended a few weeks into the school year. School supplies might be needed on Day 1, "but kids want to wait a few weeks for sneakers, etc., to see their friends and make sure they're getting the right kind."

Add it all up, and it's clear that by the middle of August, you won't be able to set foot in a mall without being inundated with school-related sales offers. And when people are in a buying mood, you've got to be prepared, Evans says.

"You've really got to do your homework," she puns.