NEW YORK — To understand the impact of surging inflation on this year's back-to-school spending, look no further than children's rain boots with motifs like frogs and ladybugs made by Washington Shoe Co.
Spending held steady for these evergreen items even after the Kent, Washington-based business was forced to pass along 15% price increases in January to its retail clients because of soaring transportation costs. But by May, as gas and food prices also surged, shoppers abruptly shifted away from the $35 higher-end rain boots to the no-frills versions that run $5 to $10 cheaper, its CEO Karl Moehring said.
“We are seeing consumers shift down," said Moehring, noting dramatic 20% sales swings in opposite directions for both types of products. “Wages are not keeping up with inflation."
This back-to-school shopping season, parents — particularly in the low to middle income bracket — are focusing on the basics while also trading down to cheaper stores amid surging inflation, which hit a new 40-year high in June.
Last week, Walmart noted higher prices on gas and food are forcing shoppers to make fewer purchases of discretionary items, particularly clothing. Best Buy, the nation’s largest consumer electronics chain, cited that inflation has dampened consumer spending on gadgets. Both companies cut their profit forecasts as a result.
Such financial struggles amid the industry's second-most important shopping season behind the winter holidays mark a big difference from a year ago when many low-income shoppers, flush with government stimulus and buoyed by wage increases, spent freely.
Matt Priest, CEO of trade group Footwear Distributors & Retailers of America, noted that last year, the group's retail members saw a noticeable uptick in online sales mid-month when shoppers received their monthly child tax credit checks that amounted to a couple of hundred dollars. This season, without that bump, he expects shoppers will buy fewer shoes for their children and rely on private label brands.
Inflation has squeezed household finances for Jessica Reyes, 34, who took her daughters Jalysa, 7, and Jenesis, 5, to a “Back to School Bash” event last month in the Chicago's northside that offered free backpacks filled with supplies for students.
“I feel like everything is going up these days," she said at the event. ”We’re a one-income household right now … so I think it’s greatly affected us in all areas, in bills and in house necessities and school necessities."
Watch more local news:
Watch the latest local news from the Twin Cities in our YouTube playlist: