TORONTO - Victoria Keith, a budget-minded Mom in Brantford, Ont., has already dropped over $200 on back-to-school shopping -- and that's only for one of her two school-aged children.
And while her kids would love to show off an entirely new back-to-school wardrobe, Keith feels the current economic uncertainty means it is no time to splurge.
Instead, Keith, who is also the mother of two pre-schoolers, is teaching her kids a valuable lesson in frugality.
She reasoned with her 11-year-old foster daughter: "Okay, you don't need a new lunch bag, we bought a new backpack because your backpack was damaged and it has a hole in it, but your lunch bag was new last year."
"Yes, it would be nice to have a new lunch bag that matches your backpack, but there's nothing wrong with it."'
Back-to-school comes this year just as signs point to a slowing economy and reduced consumer spending.
Retailers have slashed prices on everything from lined paper and markers for elementary students to small appliances for university dorm rooms as they try to lure consumers into their shops.
But many Canadians are delaying their back-to-school purchases in hopes that stores will slash prices further, said Daniel Baer, a retail and wholesale industry expert at Ernst and Young.
He estimates that back-to-school sales this year will increase four or five per cent from last year, but points out 2009 sales were very weak compared with prior years.
Consumer sentiment has turned negative in recent months amidst a spate of dismal economic news, including headlines pondering whether the economy is headed for a double dip recession and still high unemployment rates, both of which have sharpened consumer resistance to spend, he said.
"Putting all that together and given what consumers have lived through in the last 18 months, they continue to be cautious," he said.
"And a cautious consumer obviously thinks hard before they do make a purchase."
Keith puts it this way: "Everybody's trying to watch what they're spending, but at the same time, if the kid needs it, he needs it. It's a catch 22."
She has already spent over $100 on clothing for her daughter -- all purchased on clearance -- and another $70 on school supplies. And like many recession-battered shoppers, she's planning on waiting to shop for her five-year-old son's needs until after the first bell rings in September.
An Ipsos-Reid survey released this week found that in some regions of the country shoppers aren't any more enthusiastic than last year.
In B.C., consumers are expected to spend about the same as they did during the back-to-school season last year, which would be considered a disappointment since the recession was still looming at that time.
Slumping retail spending is also reflected in two major economic reports from Statistics Canada released this week.
The Consumer Price Index released Friday found that prices for clothing and footwear are one of only two categories to show declines in the past year.
And the agency's leading economic indicator index -- a monthly gauge of where the economy appears headed in the coming months -- suggests retail will continue to be a drag on the economy.
The index slowed to a 0.4 per cent increase in July, after a gain of 0.7 per cent in June, driven down by a decline in the household goods sector. The contribution of consumer spending to GDP is expected to back off recent highs of three per cent to around 1.5 per cent as households focus on debt repayment.
However, retail analyst Robert Cavallo says that while retailers will be challenged they likely won't fare as badly as recent economic data suggests.
A delayed back-to-school period this year -- Labour Day isn't until Sept. 6 -- could make August sales figures seem weak, with strengthening seen in the last week of the month and first week of September as consumers wait for greater markdowns.
But consumers may be waiting for dramatic sales and clearances in vain, he adds.
"We saw this phenomenon with Black Friday in the U.S. where you saw a weak buildup until the actual weekend because consumers were expecting dramatic price cuts ... and we didn't get that," he said.
"You're going to see a strong promotional environment but I don't think you're going to see drastic markdowns to drive sales because I still don't think in this environment it's worth it."
