Retailers are not feeling optimistic about the back-to-school push. According to New York-based business information and research firm Thomson Reuters, August marked the 12th consecutive month of negative growth for retailers, and for the first time since they began tracking the figures in 1995, stock analysts at Citigroup predict a decline in back-to-school sales.

The industry declined 2.9 percent in August compared to the same period last year, and followed a five percent drop in July. The National Retail Federation, a Washington D.C.-based retail trade group, expects the average family with school-age children to spend approximately eight percent less across the board throughout this school year than last.
"It has become cool, not embarrassing, to reuse," explains Mara Devitt, a retail consultant and partner at McMillan Doolittle, a Chicago-based retail consulting and concept development firm. "People are reusing last year's backpack and last year's notebook; people are asking, 'Do I really need 24 new pencils?"

Large and small retailers alike are hiring strategists, providing online coupons and physically handing out money for customers to spend in stores. But smaller retailers may have a small advantage over larger ones, says Mike Gatti, the executive director of the Retail Advertising and Marketing Association, a division of the National Retail Federation.

"The small retailers have a slight advantage," says Gatti, despite the fact that larger retailers will almost always have lower prices. "They have a better relationship with consumers; they almost have a partnership with the consumer to create the type of environment [kids] need to be successful in school."

Devitt adds, "Because there is a renewed focus on customer experience and a renewed interest in store execution" smaller companies may be able to build more customer loyalty and customer familiarity. "They really know their customers." Because most small businesses understand their core customers and specialize in specific products, Devitt explains, consumers could be drawn to the familiar feel of a store they know and an owner they trust.
With consumer confidence up to 54.1 from 47.4 this month, according to the National Retail Federation, there is still hope for small businesses this season.