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Shoppers Turn to Small Retailers to Outfit Kids for Back-to-School

U.S. small businesses continued to outpace the growth of overall retail sales in July, an upward trend that began more than 12 months ago.  According to the latest MasterCard SpendingPulse for Small Business report, sales at smaller retailers rose 7.2 percent year-over-year in July, compared to 4.6 percent for overall retail. That growth extended across all retail categories, but was most significant among small Family Apparel retailers, a critical sector for the back-to-school season, which posted its highest July sales total on record.

By comparison, Family Apparel sales for large retailers showed modest growth in July, and overall Children’s Apparel sales declined versus last year.

“It’s clear that some of the back-to-school shopping is shifting to specialty outlets and boutiques, despite heavy promotions and discounting by larger retailers,” said Sarah Quinlan, Senior Vice President, Market Insights for MasterCard Advisors, which produces SpendingPulse. “However, the growth in sales from small retailers will not make up for the overall lag in total Apparel sales, which we’ve previously reported.”

back to schooleCommerce will also be key for small retailers’ success during back-to-school and through the end of the year. In July, online sales for large Children’s Apparel retailers showed a significant double-digit spike. However, research shows that while 90% of small businesses have an online presence, only 1 in 5 of them offers the ability to order their products online.

“While parents are increasingly shopping for their children’s clothing at specialty bricks-and-mortar stores, they are also shifting spend to online for their overall Apparel needs, which means many small businesses are missing out on these sales,” said Quinlan. “An eCommerce strategy will be paramount if small retailers want to compete during the holidays.”

For additional insights into U.S. retail sales and how small businesses are performing compared to the overall retail industry, check out MasterCard’s Market Insights on-demand webinar series here.