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Retailback to school

Shoppers Are Snapping Up These Items in a Strong Back-to-School Season

By
Reuters
Reuters
and
Michelle Toh
Michelle Toh
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By
Reuters
Reuters
and
Michelle Toh
Michelle Toh
Down Arrow Button Icon
September 6, 2016, 4:13 AM ET
Back to School Shopping At Wal-Mart
Customers browse school supplies at a Wal-Mart Stores Inc. location in the Porter Ranch neighborhood of Los Angeles, California, U.S., on Thursday, August 6, 2015. More U.S. parents are planning to increase back-to-school spending this fall than at any time in at least the past four years, according to a survey released Tuesday by the International Council of Shopping enters. Photographer: Patrick Fallon/Bloomberg via Getty ImagesPatrick Fallon/Bloomberg via Getty Images
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Along with the perennial run on leggings, students returning to America’s classrooms this year are making a beeline for retro sneakers, “cold-shoulder” tops, versatile laptops, and USB drives.

Demand for those hot-ticket items is helping to push back-to-school spending to its fastest growth in four years, a boon for retailers in their second most important season.

Outdone only by the post-Thanksgiving holiday bonanza, back-to-school shopping for clothing, shoes, electronics and backpacks spans most of the third quarter, from July to September, and is a key driver in the sector’s sales and profits.

For more on retail, watch Fortune’s video:

But while demand is on the rise, retailers still need to work hard to get shoppers in the door with coupons and promotions like special shopping days. An increasing share of parents are Millennials, adept at using technology to find the best deals.

Good weather is playing its part too by coaxing shoppers to malls and department stores such as J.C. Penney and Macy’s, which have endured tough competition from online giant Amazon Inc.

Total back-to-school sales rose 2% in July, compared with 1% growth in 2015 and 2014 and a 0.2% rise in 2013, according to payments technology company First Data.

Spending for back-to-school and college is expected to reach $75.8 billion this year, up from last year’s $68 billion, according to retail association National Retail Federation’s annual survey.

“They (younger shoppers) are getting mom to buy more for them, because they are agreeing to shop at these less expensive lower priced retailers,” NPD Group analyst Marshal Cohen said.

In July, electronics and appliance sales rose 5.5%, the biggest increase in four years, according to First Data. Items ranging from tablet computers to USB drives are all doing well, especially when carrying special offers.

See also: Why Pumpkin Spice Lattes Show Up Earlier Each Summer

ALWAYS APPRECIATING A BARGAIN

Sales of laptops that can double up as tablets like Dell’s Inspiron 2-in-1, have been helped by this trend, said Petter Knutrud, spokesman for Office Depot. He added that schools were asking students to save their work on USB drives, which had boosted demand for the small devices.

Electronics retailer Best Buy (BBY) has tempted students with special coupons for everything from laptops and headphones to college dorm-friendly items like compact refrigerators and microwaves.

J.C. Penney (JCP) is also using promotions to boost back-to-school sales of apparel, which in turn helped July comparable sales. Its ‘Penney Day’ promotions, which offer back-to-school staple items such as fashion leggings or tee shirts at a discount every Saturday during the season, are helping drive sales, company spokeswoman Sarah Holland said.

See also: UPS Is About to Get More Expensive

Sales of apparel and accessories have been helped by new trends such as retro sneakers like Stan Smith models from Adidas and shirts for women with cut-out shoulders known as “cold-shoulder” tops.

Good weather so far in the season has also benefited clothing sales at retailers such as Gap‘s (GPS) Old Navy chain or Urban Outfitters.

While more jobs and rising stock markets are boosting consumer wealth, customers are still putting value over brand name. Wage gains for middle-income consumers remain insufficient to encourage discretionary spending, some analysts caution.

See also: Here’s Why Shares of Lululemon Are in a Low Lunge

Lower-priced stores like Old Navy, off-price retailer TJ Maxx and Kohl’s (KSS) are 2016’s top back-to-school shopping destinations, RBC Capital Markets analyst Brian Tunick wrote in a note.

“Income rises faster than frugality changes,” NPD’s Cohen said, suggesting that bargain-hunting is hard to give up even in the best of times.

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