This year's back-to-school outfits will be replaced by gadgets, and more people will be browsing screens than walking malls, according to Teresa Rivas and Avi Salzman of Barron's.

Back-to-school spending is expected to end up about flat with last year's $28.1B, or $529 per student, according to Deloitte, the writers point out. Large retailers already have taken a bigger slice of the pie during the pandemic, and some of those winners "can keep delivering outsize growth," say Rivas and Salzman.

While some retail stores like Macy's (M) and Kohl's (KSS) are suffering, there are retailers that can still outperform in a "strange" back-to-school season, including Nike (NKE), Walmart (WMT), Target (TGT) and TJX (TJX), they say.

 

‘Back to School’ Is Not the Same. Here Are 4 Stock Picks to Play the Changes

By Teresa Rivas and Avi Salzman

When Alice Cooper sang “school’s out forever,” he didn’t quite have this in mind.

Of the country’s 20 largest school districts, 18 are expected to offer only remote instruction when they reopen. More than 60% of public-school students are likely to start the year via online courses.

That means back-to-school outfits will be replaced by gadgets, and more people will be browsing screens than walking malls.

Retailers are scrambling to keep up with the changes. Target (ticker: TGT), for instance, will extend its back-to-school season, featuring items for longer than usual, to accommodate places where school may not start until October or even January. It is even selling items for college in parking lots. “Each and every day, there’s new information,” Target CEO Brian Cornell said on the company’s earnings call this past week.

Overall, back-to-school spending—second in importance on the retail calendar only to the holiday shopping season—is expected to end up about flat with last year’s, at $28.1 billion, or $529 per student, according to Deloitte.

Large retailers already have taken a bigger slice of the pie during the pandemic, while many struggling specialty stores and mall stalwarts have fallen further behind. Some of those winners can keep delivering outsize growth. They include Nike (NKE), Walmart (WMT), Target, and TJX (TJX).

Walmart and Target win because they sell across categories—an advantage that takes on more resonance as consumers appear to be making fewer trips out, and buying more when they do.

Continue reading on Barron's.