Tax break Shoppers hoping for back-to-school bargains as S.C. gives sales tax a holiday

Kelley Bianchi of West Ashley shops with her 10-year-old daughter, Ella, for back-to-school supplies at Target in Citadel Mall. She doesn’t want to wait until tax-free weekend because she is worried supplies might run out.

Kim Thomas browsed the back-to-school aisles of Target last week to see what’s new and what she’ll need for her three sons.

The West Ashley stay-at-home mom wasn’t buying a whole lot. She’s saving that for this coming weekend when she won’t have to pay taxes on scores of items children need for the classroom.

South Carolina’s 17th annual sales tax holiday runs Friday through Sunday, when everything from clothing and computers to book bags and binders can be purchased without paying the 6 percent state sales tax and any applicable local sales taxes. In all, shoppers will save about $2.25 million, according to estimates from the state’s Board of Economic Advisors.

“I’ll definitely be back for the tax-free weekend,” Thomas said. “With three kids, you need every penny.”

Thomas plans to spend about $100 on each boy — ages 5, 10 and 12 — mainly for uniforms and school supplies.

Jennifer Morgan will hit the stores as well this coming weekend.

“Sometimes, they offer bigger incentives during tax-free weekend so we get things a little cheaper,” said the mother of two boys, one of them entering pre-kindergarten.

She doesn’t plan to spend a whole lot on back-to-school items — maybe $40.

Kelley Bianchi plans to buy school supplies for her 10-year-old daughter early.

“Sometimes, they run out,” she said. “It’s a possibility we’ll be shopping over the weekend if we can’t find what we need ahead of time. It’s a hassle getting all the things she needs if they run out.”

She also isn’t planning to spend a great deal this year — about $25 or $30.

That contrasts with the National Retail Federation’s forecast for back-to-school spending to rise 11.5 percent this year to $75.8 billion.

The nation’s largest retail group found in its annual survey parents plan to stock up rather than make do as they did in past years.

“Families are still looking for bargains, but there are signs that they are less worried about the economy than in the past,” the retail group’s president and CEO, Matthew Shay, said.

“Heading into the second half of the year, we are optimistic that overall economic growth and consumer spending will continue to improve as they did in the first two quarters of the year,” he said. “We fully expect retailers to be aggressive with offering great deals both in stores and online for back-to-school shoppers.”

The average spending layout for families with children in grades K-12 is expected to be about $674 on apparel and accessories, electronics, shoes and school supplies, up 9.6 percent from last year’s roughly $630.

The federation found that shoppers often spend more in the third year after using longer-lasting items such as backpacks and computers for two years. Children outgrow clothes, and some items need to be replaced, the survey found.

Consumer confidence in the economy continues to grow and is a significant factor in how families will spend for back-to-school this year, according to the retail group.

The number who say they are spending less overall is down at 23 percent compared with 27 percent last year. And the number who say the economy will have no effect on their plans is at 27 percent, up from 24 percent last year and the highest level in the survey’s history.

“The budget-conscious consumer is not forgetting about price, quality or value, and we continue to see this when it comes to back-to-school shopping,” said Pam Goodfellow, the principal analyst for Prosper Insights and Analytics, which conducted the survey for the National Retail Federation. “That is why many parents are taking advantage of shopping early, scouring ads and websites for the best deals, and taking advantage of free shipping with online purchases.”

For those parents with children going off to college, spending will average about $889. That’s down about $10 from last year, but overall back-to-college spending is expected to rise because of more people shopping this year.

“Whether it’s laptops for class or mini-fridges for the dorm, college simply costs more than the lower grades,” said Shay, head of the retail group. “Some of these big-ticket items can last all four years, but when they need to be replaced it’s a bigger investment than pencils and lunchboxes.”

Similar to the survey’s results for the lower grades, 30 percent of college consumers say the economy will not affect their shopping plans, up from 26 percent last year and the highest level in the survey’s history. Fewer will shop for sales, spend less overall or buy more generic products.

The National Retail Federation’s forecast is a lot rosier than that of Britt Beemer, chairman and CEO of Summerville-based America’s Research Group.

Beemer predicts back-to-school sales will be flat or down 2 percent this year.

He found that 49 percent of the 1,000 parents of children in K-12 he surveyed nationwide over three days in mid-July said they haven’t had a pay increase in six years,

“People are still struggling to pay their bills,” he said.

He also learned 59 percent said they would buy only what they need and defer other purchases to the holiday sales season when they hope to get a better price.

Shoe stores will do better than clothing retailers, he predicted.

“Children outgrow their shoes,” Beemer said. “Parents will never force their children to wear shoes too tight on their feet.”

He predicted mall-based stores, other than shoe retailers, will continue to struggle as people flock to discount stores for the majority of their purchases.

He also learned that some schools are now supplying children with computers, which will drive down electronics purchases.

“I think it’s going to be a slugfest to survive among retailers,” Beemer added.

The director of the state chapter of the National Federation of Independent Business believes the sales tax holiday could provide a “much-needed lift” to many small stores and businesses.

“It’s been a ho-hum summer for a lot of small businesses,” Ben Homeyer said. “The sales-tax holiday should help people get fired up and in the mood to spend.”

Small-business confidence improved by only a fraction of one percent in June, according to the group’s latest optimism index.

“Small businesses are in maintenance mode,” said NFIB Chief Economist Bill Dunkelberg. “Uncertainty is high, expectations for better business conditions are low, and future business investments look weak.”

The sales tax holiday should spur people to shop, Homeyer said.

“Combined with the back-to-school sales a lot of stores are having, the sales-tax holiday is going to help people get a bigger bang for their buck,” Homeyer said. “The more we can do to encourage people to shop at small businesses, the more jobs we’ll save, and the faster our economy will grow.”

Not all items will be tax-free this weekend. Jewelry, cosmetics, eyewear, furniture and items placed on layaway are not exempt from sales taxes.

Reach Warren L. Wise at 843-937-5524 or twitter.com/warrenlancewise.