By Donna Balancia

August 9, 2008

With a little more than a week to go until students return to school, some retailers are worried about the impact of consumers reducing their spending, higher gas prices and a lack of a back-to-school "sales tax holiday."

The weeks just before and just after the start of school are a key period for retailers, particularly ones that sell clothing.

An estimated $20.1 billion will be spent on back-to-school purchases for students in kindergarten through 12th grade, according to the National Retail Federation.

Reports released this week, however, indicate that spending may be weaker than in some previous years, particularly for clothing purchases.

Retailers ranging from Abercrombie & Fitch to J.C. Penney reported relatively weak July sales, as economic concerns trickled down even to young shoppers, once considered largely recession-proof.

July same-store sales appeared to enjoy less of a boost from tax rebates, as more shoppers used rebates for food and to pay for record-high gas than they did this spring, according to TNS Retail Forward, which analyzes retail trends.

Sean Snaith, director of the Institute for Economic Competitiveness within the College of Business Administration at the University of Central Florida, said it would take a big change to get people to spend.

"If oil and energy prices keep falling, that may have a positive impact on retail sales," Snaith said. "But, otherwise, we've probably seen the big bump from the tax rebate checks, but I suspect, between the economy and the whole situation, that people won't be going crazy. I don't think we're going to see eye-popping retail sales through the rest of the year, including the holiday season."

Consumers ages 18 to 26 report being harder hit by gas prices and more reluctant to buy clothes because of high fuel costs than adults 27 and older, according to data provided to by BIGresearch.

"They may want to spend, but the cash tank is on 'E,' " BIGresearch's Phil Rist said. "When there's no money because it's in their car, they can't spend."

Kayla Walker, sales representative at PacSun in Viera, said her shop's sales "numbers are a little down -- 2 percent." And like many area retailers, it is trying special sales promotions to compensate for Florida not having the sales tax holiday this year, as it has in the past, on clothing and school supplies.

Rod Rice, manager of J.C. Penney at the Melbourne Square mall, said that, like many in the state, his store is running a 6 percent discount on items to make up for the lack of a Florida back-to-school sales tax holiday.

"We took the bull by the horns this year, and we're giving a 6 percent discount," Rice said. "And we're getting results. J.C. Penney is not a discounter and it's not an expensive department store, so we're really well positioned in these economic times. People are more diligent about finding value."

While retailers generally expect an increase in shopping for elementary, middle school and high school students, higher gas prices are affecting college students and their subsequent spending.

"No matter what, Junior still needs a new pair of shoes," said Kathy Grannis, a spokeswoman for the National Retail Federation. "So parents are still spending their rebate checks on their younger children. But we're seeing a decline in spending for
college-aged students. For the first time in these kids' lives, they're seeing gas prices at what their parents have never even seen. Sharp jolt of reality for the 17-, 18-, 19-year-olds."

Retailers are upset about the Florida Legislature's decision not to approve the sales tax holiday this year.

"We continue to be disappointed about not having the back-to-school sales tax holiday," said Rick McAllister, president of the Florida Retail Federation. "We're hearing a lot of complaints."

McAllister said retailers can't legally give the sales tax break. Sellers have to collect the sales tax.

But retailers are telling people they're giving an extra 6 percent off, in many cases.

"Sales are going to be OK, but not great," McAllister said. "There are a lot of families who will not buy as much at one time. They may spread purchases over the next three months."