Analysis: Retailers see tablets hitting classrooms soon

NEW YORK Tue Jun 7, 2011 3:14pm EDT

A young customer looks at Apple's iPad 2 at Zurich's Apple store after its official launch for direct purchase in Switzerland March 25, 2011. REUTERS/Christian Hartmann

A young customer looks at Apple's iPad 2 at Zurich's Apple store after its official launch for direct purchase in Switzerland March 25, 2011.

Credit: Reuters/Christian Hartmann

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NEW YORK (Reuters) - For Wal-Mart CEO Mike Duke who grew up in rural Georgia, back-to-school season meant a new pair of jeans, and if he was lucky, a couple of shirts too.

"That was about it. That's what shopping was like for my family. That's what shopping was like for much of America in the 1960s," Duke said last week at the company's annual meeting.

Fast forward to 2011, and retailers are betting tech-savvy teens will urge their parents to splurge on tablet computers instead, in the second biggest selling season of the year.

"A dynamic taking place in the market is the increased use of technology by students in the classroom and the advent of a large expansion in the tablet arena," Ryan Vero, OfficeMax's chief merchandising officer, said.

Baylor School in Chattanooga, Tennessee has already told students they will have to buy or lease an iPad by next fall.

"The iPad is just one tool we will use to enhance the learning experience for our students, but we are convinced that it could potentially transform our classrooms," headmaster Scott Wilson said in an online post.

Last year this time, Apple's iPad -- the current version of which ranges from $499 to $829 -- was the only branded tablet in the market. After seeing the overwhelming reception the iPad got, a slew of manufacturers rushed to make something similar. While many tablets hit the market early this year, supply constraints and high prices have kept them away from classrooms.

That may change soon as retailers carry more tablets this back-to-school season.

"The year will be the first year where there is a broad set of competitive products out in the marketplace," Vero said. "Everybody is pretty bullish about the potential for that product."

The chief of Wal-Mart's U.S. entertainment division also recently said tablets were selling well and the world's largest retailer was keen to sell more.

OfficeMax customers can choose from a wide range of tablets, including those from Acer and Blackberry maker Research in Motion.

Larger rival Staples Inc, which carries tablets ranging from $300 Dell Streak 7 to $600 Motorola Xoom, promises to sell tablets from HP and Toshiba later this year.

Best Buy did not shed light on its new products for the critical season, but said it will stay competitive in all must-have categories including tablets.

And if budget-conscious Americans spend more on tablets, they may not splurge elsewhere, Craig Johnson, president of Customer Growth Partners, warned.

"Dollars and share of wallet are rotating out of apparel ... into technology," he said.

U.S. shoppers set aside a budget of $225.47 on average for clothes in the 2010 back-to-school season versus $231.80 in 2007. Their budget for gadgets rose to $181.61 last year from the pre-recession level of $129.24, data from trade group National Retail Federation showed.

For a related graphic, click r.reuters.com/maf99r

"For apparel players, they are hit coming and going, by a shrinking share of wallet ... at the same time as their costs are going up," Johnson said. "So this will be a very difficult back-to-school."

(Reporting by Dhanya Skariachan; additional reporting by Jessica Wohl in Chicago; Editing by Bernard Orr)

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