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Kristin Murphy, Deseret News
Suzanne Hales of Draper tried to stretch her back-to-school shopping budget by staying out of the malls and taking her five children, including twins Abigail and Isabel, to Target for new outfits.

The grocery store has been eating Suzanne Hales' cash for back-to-school fashions — so the single mother of five sought specials on a $500 budget, with the oldest child paying for her own clothes.

"We're just going to shop at Target and grab some socks and stuff at Wal-Mart," the Draper mom said. "There won't be any fun trips to the Gap or stuff like that."

But her discount-store strategy didn't work. The $500 was gone after buying 20 jeans on sale at Old Navy, four pairs of new shoes and two backpacks. Hales' children still needed socks, underwear and a couple of shirts.

She bought them Saturday, with the help of a Target gift card. Her 7-year-old daughter, who can't get more than one pair of new shoes to match her outfits, is complaining.

Many Utah parents will tread the same path as they help their children prepare for the start of the school year. More than 80 percent of Americans plan to spend less on back-to-school clothes this year, according to an online poll this summer that was commissioned by Deloitte LLP, whose companies provide financial, tax and other services.

About 90 percent of the people surveyed said they would shop at discount or value department stores, and 37 percent planned to shop at dollar stores.

"These survey results indicate that consumers will likely stick to the basics this fall, and parents may be saying 'no' more often as they head to the register," Stacy Janiak, Deloitte's U.S. retail leader, said last month in releasing the results of the survey of 5,035 consumers.

The survey, which has a margin of error of 1 percent, attributed the shoppers' pullback to rising food and gas prices. Declining home values and a shaky job market also are making consumers wary of spending much.

"It will probably be one of the two or three most disappointing back-to-school seasons this decade," said retail consultant Burt Flickinger III, managing director of Strategic Research Group. "It will be very promotional. Consumers are more cash- and credit-constrained than any other time in U.S. history."

Retailers are pulling out all the stops to entice shoppers into their stores during a difficult back-to-school season. Department stores are increasing sales and promotions, Office Depot and Staples are offering supplies for free or for pennies, and Sam's Club is giving college students a $15 gift card if they enroll.

The promotions come after retailers' July sales showed a shift away from clothing and toward food and other basics. Wal-Mart Stores Inc. and Costco Wholesale Corp. posted solid gains for July, but Wal-Mart's sales still fell short of forecasts. Sales at mall stores Limited Brands Inc. and Gap Inc. continue to fall.

Retailers also are having to make tough choices about raising prices because inflation in China is increasing U.S. costs on goods. A quarter of all the clothes sold in the United States — and 84 percent of shoes — are made in China.

China's producer price index, a measure of inflation, climbed 8.8 percent in June. That helped push U.S. costs on goods from China up 4.8 percent in June, the biggest year-over-year gain since the Labor Department started tracking the data in 2003.

Stores charging 8 percent to 9 percent more for some items are hoping to mask the inflated prices with well-promoted discounts and new merchandise, which is already priced higher, Flickinger said.

"It's a risky strategy, because people who are already buying less at full price will have even more sticker shock and be less inclined," Flickinger said. "This is simply a matter of survival."

In Utah, clothing costs rose 9.7 percent along the Wasatch Front between February and June, according to a consumer price index from Wells Fargo. Food prices, meanwhile, rose 2.7 percent in that time period. And gas prices rose 8 percent between May and June alone.

But the spending forecast might not be all clouds. Crude-oil costs are going down, and that should lower prices at the pump and buoy consumer spending confidence, said Kelly Matthews, economist at Wells Fargo in Salt Lake City.

People also have their economic-stimulus checks, courtesy of the federal government. But analysts note that many consumers have already spent that money, before back-to-school shopping.

"All in all, you certainly have a mixed bag in terms of what parents will do," Matthews said. "My guess is that there's every reason to believe that the Utah environment for back-to-school spending would be less robust than it has been in years past, but relatively speaking, more robust than a comparable, national expectation might be."


Contributing: Associated Press; Bloomberg News.

E-mail: jtcook@desnews.com; nwarburton@desnews.com