Retailers Busting out Extreme Back-to-School Discounts

To encourage shoppers to buy more back-to-school items, retailers often implement “loss leader” strategies: that is, selling items at a loss or even giving them away in hopes that the reductions will attract shoppers who will then buy other, more profitable items.

This year, the discounts are earlier, deeper, and more creative than in previous seasons, writes the New York Times.

Fifty cents will buy a watercolor set at Target, a box of 24 Crayola crayons costs just a quarter, and eight No. 2 pencils - the ultimate back-to-school staple - costs just one penny. Staples is even giving away Elmer’s glue.

But consumers are not entirely convinced. They might be drawn to a specialty retailer by a deeply discounted item, but the advantages of one-stop shopping and low-priced items across the entire store often outweigh the one-time discounts.

And it’s not as if big-box stores are lacking similar seasonal discounts: Wal-Mart is selling notebooks for pennies too. It is also selling a week’s worth of children’s outfits (5 tops and 5 bottoms) for $60 - a discount that makes apparel retailers like Kohl’s and JC Penney uncomfortable. They are trying to compete by sending out discount cards and announcing special rewards programs for the fall.

However, analysts have predicted a frighteningly slow start for the apparel sector, saying parents will send children back to school in last year’s clothes, waiting until September or even October - when the weather cools and kids have decided what is in fashion - to use the cards and coupons.