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    Nielsen Predicts U.S. Back-to-school Sales of Over $1.5 Billion

    Cell phones and lunch items promise to be big sellers.

    New research from The Nielsen Company shows that consumers will still be stocking up on back-to-school supplies, despite widespread concerns about the tanking economy. Nielsen forecasts 2.6 percent growth, or over $1.57 billion, in school and office supply sales in U.S. grocery, drug, and mass merchandiser stores during the core back-to-school season of mid-July through early September. Back-to-school sales account for over a quarter (28 percent) of the school and office supply category's yearly sales of $5.5 billion.

    "Consumers may be cutting back in terms of discretionary spending, but they are not about to send their kids to school without the necessities," noted James Russo, Nielsen v.p., food and beverage sector. "While we don't expect to see a drop in back-to-school sales in this economic downturn, we do foresee changes in where consumers shop for back-to-school items, along with the prices they are willing to pay."

    With almost 100 percent household penetration, grocery stores may come out on top this back-to-school season, as consumers move to combine shopping trips. Nielsen In-Store research indicates that in August and September 2007, almost 850 million consumers visited measured grocery stores, vs. an average two-month period of a little more than 500 million consumers. Grocery stores had over 105 million consumers visit the home, school, and office supply departments during the back-to-school period, with a rise in traffic in mid-August and a traffic spike in the first week of September.

    Over 1.3 billion consumers visited measured mass merchandisers in August and September of last year, with 162 million consumers shopping the home, school, and office supply departments, and the highest level of traffic occurring in the first week of August.

    "Consumers are clearly shifting to value and one-stop-shop channels as they seek to optimize shopping trips," said Russo. "Retailers at risk this back-to-school season are the specialty retailers such as office supply stores where distinct trips are needed, and apparel retailers, which are heavily skewed to discretionary spending."

    Back-to-school sales usually begin the second week of July and last through early September, peaking the second and third week of August, and the first week of September. For 2008, Nielsen forecasts a shorter but more intense back-to-school selling season, with consumers likely choosing to hold out for increasingly aggressive sales and promotional activity by retailers.

    "Consumers recognize that retail prices tend to fall the closer we get to the first day of school," explained Russo. "Stung by high gas and food prices, many consumers will likely hold out as long as possible, waiting for retailers to drop prices on items kids need for the new school year."

    As well as backpacks and binders, many parents will end up buying mobile phones for their school-age children heading back to class. According to Nielsen Mobile, 46 percent of U.S. kids between the ages of 8 and 12 and 80 percent of U.S. teens (ages 13 to 17) use a cell phone phone.

    With a number of major mobile phone companies rolling out youth-oriented devices featuring cameras, integrated music players, and expanded memory to coincide with the start of school, Nielsen predicts this year will be the biggest back-to-school season yet for cell phones.

    In fact, Nielsen Mobile research shows that cell phone ownership doubles between the ages of 10 and 11, as students reach an age at which many parents view a cell phone as both acceptable and necessary.

    On the food front, such staples as peanut butter and jelly are still selling. U.S. consumers are expected to spend over $87 million on peanut butter and almost $13 million on jelly during the four-week period surrounding the first day of school.

    For the sake of convenience, and maybe because of a growing number of school bans on peanuts and peanut butter due to student allergies, more and more parents are turning to combination lunch products, which are expected to bring in over $68 million in sales.

    Additional lunch-related items anticipated to spike during the back-to-school shopping season include food storage containers, sandwich bags, and paper bags, with combined sales of more than $95 million expected.

    "Lunch-related products, especially lunches that can be sent from home, are likely to continue selling strong this season, in spite of the current economic difficulties," said Russo.

    Despite the sales growth predicted by Nielsen for this back-to-school season, Russo warns retailers not to view sales during this period as a harbinger of 2008 holiday sales.

    "Unlike holiday items, core Back to School items are viewed as necessities," he observed. "When it comes to holiday sales, the dynamics and opportunities are very different from Back to School."

    Headquartered in New York, Nielsen, a global information and media conglomerate active in more than 100 countries, is the parent company of Progressive Grocer.

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