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Recession Holds Back School Shopping

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Some analysts are expecting a 5 to 8 percent drop in back-to-school and back-to-college sales, the year's second-biggest retail season. NY1's Money Matters reporter Tara Lynn Wagner filed the following report.

Before the school bell rings, retailers hope to ring up some sales as parents prep their children to return to the classroom. From simple supplies to designer duds, the national retail federation expects families to shell out an average of $550 on back to school items.

Yet Simon Smith, a father of three, only wants to spend $150.

"We started already and we're about $160, $170, so we're already over the budget," says Smith. "So, I'm sure it will go a little bit further."

Smith says hand-me-downs give him more room in his budget for the must-buys, and experts say that strategy is especially popular this year.

"A lot of the products that are purchased for back to school are not so discretionary. They are more need-based," says Standard and Poor's equity analyst Marie Driscoll. "And it's not surprising, given that unemployment has peaked up, consumers spending is weak. The consumer is concerned and they are spending on what they need."

For many kids, necessary items do not mean new backpacks, but what goes in them.

"I got some pencils, pens, erasers, sharpeners," says one child.

"Folders, binders, two black Sharpies markets, pencils, pens," says another.

In a poll conducted by consulting firm Deliotte earlier this summer, two out of three respondents said they plan to spend less this year compared to last. Nine out of 10 said they'll achieve that goal by shopping at discount department stores.

"Wal-Mart is always a frequented location. This year a lot of people expect to go to convenience locations, drug stores, JCPenney, Kohl's," says Driscoll. "We think they'll benefit from back-to-school shopping.

In addition to discounts, parents say they are looking for deals, scanning circulars for special promotions in an attempt to stretch their dollars.

"I'm looking more for sale items, two-for-ones," says one parent.

Analysts at Standard and Poor's expect to see a drop of 5 to 8 percent in back-to-school and back-to-college sales this year, but say there will be a second wave of buying once the school year starts and kids see what's popular. Retailers and analysts are already using these early figures to plan for the next big shopping season.

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