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Illustration: Annelise Capossela/Axios

A virtual school year will likely push retailers even closer to the brink.

Why it matters: Back-to-school season is the second-biggest revenue generating period for the retail sector, after the holidays. But retailers say typical shopping sprees will be smaller with students learning at home — another setback for their industry, which has seen a slew of store closures and bankruptcy filings since the pandemic hit.

By the numbers: Research firm GlobalData expects the lowest level of back-to-school spending for elementary and high school students since 2015 — while spending for back-to-college shopping would crater nearly 40% from last year, per the Wall Street Journal.

  • Like some retailers, Carter’s, a kid apparel company, preemptively cut its back-to-school season inventory because “that event where mom needs new clothes...as a pressing need is not there right now," Brian Lynch, the company’s top executive, said last month.
  • Under Armour told Wall Street analysts last week it doesn’t know where schools are going to be opened, or whether sports will be played — which will affect back-to-school shopping demand.
  • Pinterest warned the unique back-to-school season could "lower both engagement and advertiser demand."

Where it stands: School — from pre-k to college — looks different everywhere for the first time ever. The "emerging patchwork of policies will make it hard for retailers to allocate inventory and target discounts effectively," as Bloomberg opinion columnist Sarah Halzack wrote last week.

What they're saying: "We’re seeing a reluctant and hesitant back-to-school shopper given the uncertainty and lack of clarity ... Many schools have not even published school lists” outlining what students should buy, Ravi Saligram, the CEO of Newell Brands, which manufacturers Sharpies, Elmer's Glue and Paper Mate pens, told analysts last week.

  • The back-to-school season alone accounts for 25% of Newell Brand's pens and marker business.

The other side: Electronics sales may see an uptick from virtual education.

  • The National Retail Federation anticipates a record-breaking back-to-school shopping season — because of more money being spent than ever before on computers and other electronics to better retrofit an at-home learning environment, though a ton of households may have already made that investment.
  • Michael Pachter, an analyst at investment firm Wedbush Securities, told MarketWatch any uptick in demand for electronics will “be offset by those households with one or more parents laid off or unemployed because of the pandemic,” who won’t buy new equipment.
  • According to a Deloitte survey of parents, high-income families expect to spend 6% more than last year on “back to college” supplies during the pandemic, while spending expectations dropped 12% for middle-income parents and 4% for low-income parents.

"It's not surprising to see who the biggest winners are," Jie Zhang, a retail management fellow at the University of Maryland's School of Business, said in a research note. "Companies like Amazon, Walmart, Target, Best Buy and Apple,” are best-positioned for the online learning shift, while traditional apparel stores will struggle.

The bottom line: The retail apocalypse is being accelerated by new realities caused by the pandemic, like virtual schooling. The result could be more dominance by the already biggest players that can quickly pivot.

  • Struggling retailers are still trying to lure customers to shop. Macy’s new ad campaign has the tag line: “No matter how we school, let’s be ready.”

Go deeper

Erica Pandey, author of @Work
Nov 10, 2020 - Economy & Business

Robots vs. retail workers

Illustration: Eniola Odetunde/Axios

For years, retail has been lurching toward automation. Last week, Walmart took a significant step back.

Why it matters: In a rare win for retail workers, Walmart decided to take shelf-scanning robots out of its stores in favor of humans. But automation is still coming faster for retail jobs than for most other occupations, experts say.

1 hour ago - World

Hong Kong media tycoon Jimmy Lai detained on fraud charge

An activist holds a placard highlighting China's Tiananmen Square massacre as pro-democracy media tycoon Jimmy Lai arrives at West Kowloon Magistrates' Court in Hong Kong in November. Photo: Isaac Wong/SOPA Images/LightRocket via Getty Images

Hong Kong media tycoon Jimmy Lai is being detained until an April court hearing after the pro-democracy supporter was charged Thursday with fraud, per his Apple Daily news outlet.

Why it matters: The 72-year-old's arrest and denial of bail is another blow for the pro-democracy movement in the former British colony amid concerns about a fresh crackdown on activists.

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Inhofe loudly sets Trump straight on defense bill

Sen. Jim Inhofe speaks with reporters in the Capitol last month. Photo: Samuel Corum/Getty Images

Senator Jim Inhofe told President Trump today he'll likely fail to get two big wishes in pending defense spending legislation, bellowing into his cellphone: "This is the only chance to get our bill passed," a source who overheard part of their conversation tells Axios.

Why it matters: Republicans are ready to test whether Trump's threats of vetoing the bill, which has passed every year for more than half a century, are empty.