Big pitch to uneasy school shoppers

Retailers ready deals amid grim indicators

Staples is unveiling television ads today that empathize with concerns over costs and promise to make school shopping more affordable.

Anxious merchants are trying to get ahead of the sputtering economy by rolling out penny bargains and promoting price cuts to lure reluctant back-to-school shoppers.

Framingham office supplier Staples Inc. today is unveiling its back-to-school campaign, including television ads called "Gas" and "Grocery" that empathize with consumer concerns over soaring costs and promise to make school shopping more affordable. Last week, rival OfficeMax Inc. launched its "Power to the Penny" campaign, with offers for single-cent glue and protractors, and other deals. Meanwhile, some retailers, including Target and Aeropostale, are promoting free shipping for school purchases, a perk usually reserved for the holidays.

These marketing efforts are the latest example of retailers responding to reduced consumer spending. And there's reason for more concern: 71 percent of shoppers are planning to slash their back-to-school budgets this year, according to a Deloitte LLP retail survey released yesterday. Almost half of those surveyed expect to reduce their household spending by more than $100 and 88 percent plan to do their school shopping at discounters and value department stores.

"Consumers will likely stick to the basics this fall, and parents may be saying 'no' more often as they head to the registers," Stacy Janiak, Deloitte's US retail leader, said in the report.

Consumers are getting hit from all sides. Despite the recent retreat in oil prices, gasoline prices, comfortably above $4 a gallon, are near all-time highs. Overall inflation for the past year, 5 percent as of June, is running at its fastest rate in nearly 20 years. Food prices are rising even faster, up 5.3 percent from a year ago, the fastest climb since 1990. Meanwhile, the job market is weakening: The unemployment rate has climbed nearly a percentage point over the past year, to 5.5 percent.

Although millions of tax rebate checks hit mailboxes in June, consumer spending remained soft last month, making retailers especially nervous for the back-to-school season, which is typically the second largest shopping period after Christmas. Back-to-school spending nationwide, including college students, is projected to grow about 2.5 percent to $51.4 billion compared with last year, the lowest increase in spending since at least 2003, according to the National Retail Federation, a Washington, D.C., trade group. The organization, which is releasing its report today, said college back-to-school spending will drop significantly in the Northeast, to an average of $669.61, compared with $760.05 last year.

Andrea Maffeo, 38, of Billerica, is planning to halve her back-to-school budget to $250 for her two children. "The kids are getting essentials. A new pair of sneakers, a backpack and not as many clothes as they would normally get," she said. "The price of gas, food, oil is crazy. We had to redo our budget."

Maffeo is constantly scouting coupons and sales, and last week scored big with a promotion at children's clothier Limited Too that offered consumers two $25 coupons off their next purchase when they spent $50. She received more than $200 in coupons for her spree.

"Things are tight right now for everyone and I think stores are aware of that," Maffeo said.

In Massachusetts, state legislators also are hoping to jump-start consumer spending. The House took steps yesterday to introduce a bill that would designate the weekend of Aug. 16-17 as a sales tax holiday, despite recent concerns by some officials that the state could not afford the annual tradition.

For its part, Staples, which typically focuses its back-to-school marketing on the chain's wide selection, now is touting deep discounts on school supplies. For example, the retailer featured 5-cent deals in this week's circular, including erasers and paper folders. Staples also advertised several "two-for" deals, including Sharpie highlighters, originally $4.29 each, as two for $5.

But with discounters and warehouse clubs taking an increasing share of back-to-school sales for basic supplies, Staples has also set its eyes on college students, joining forces for the first time with Bed Bath & Beyond to promote a sweepstakes for customers to win gift cards and prizes at the retailers.

At OfficeMax, executives said it became clear this summer that the faltering economy was weighing heavy on consumers. So the Illinois chain honed in on the most compelling offer: the penny.

As part of the campaign, OfficeMax sent an actor with a hidden camera around New York City trying to buy a used car, jewelry, and carriage rides all with pennies. In nearly every case, the "Penny Prank" actor was rejected by unsuspecting shop owners. The clips are posted on YouTube.

"These people won't take your pennies but we will," said Ryan Vero, OfficeMax's chief merchandising officer. "With the difficult economy, what stands more for low price than one cent? You really can't sell something for less than that. You can't even buy a piece of gum for a penny anymore."

Rob Gavin of the Globe staff contributed to this story. Jenn Abelson can be reached at abelson@globe.com.