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Spending is up for back-to-school purchases

Van Dyke & Bacon Shoes owner John Bacon and several customers of the store react to tax free back to school shopping week. (Amy Davis, Baltimore Sun video)

Lured by mid-August sales and a break on the state's sales tax, Mimi Fissiha chose to take her children shopping for school clothes and supplies this week.

"It only happens once a year, so we're taking advantage of it," said Fissiha's daughter, Saron Abera, a 16-year-old rising senior at Eastern Technical High School.

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With three children ages 8 to 16 and a lengthy shopping list — jeans, shirts, backpacks, jackets, shorts, leggings and sneakers — every little bit helps, said Fissiha of Essex.

Retailers are heavily promoting Maryland's annual tax-free week, now in its eighth year and running through Sunday, as a way to draw customers and kick off several weeks of back-to-school spending. Some shoppers who made their way to Baltimore area stores and malls this week said they plan school-related buying around the tax holiday, in which items costing $100 or less are exempt from the state's 6 percent sales tax.

But some retailers see the week as more of a marketing event than sales boon, saying it merely shifts business they would have received in other weeks.

"All they've done with this is moved business from other times in the month to this week," said Gilbert Cohen, the third generation owner of Cohen's Clothiers in Cockeysville, where the more than century-old retailer has run a men's, women's and children's apparel and shoe store since 1969.

Tax-free week has been around in Maryland since 2010. The General Assembly authorized the event in 2007, intending to tie it to back-to-school shopping and give the state's small retailers a boost. Maryland is one of 16 states that offer tax-free weekends or weeks, many of them tied to back-to-school buying.

"From a retailer's perspective, it gives them the opportunity to sell items at a lower cost without having to subsidize the promotion," said Adam Silverman, a former retail analyst and current senior vice president of marketing for Dallas-based retail technology company Theatro. "It lowers the cost of the product. Consumers are very well aware of this. They will save up their money ... for these holiday events."

But such limited-time promotions tend to benefit most the mass merchants and retailers that successfully blend online and in-store experiences, Silverman said. As online and discount shopping has grown, he said, that likely comes at the expense of specialty stores.

At JCPenney in White Marsh, store signs in the children's departments promote tax-free savings along with specials on backpacks for $7 and Izod shirts for $9.99 and other items for 40 percent off.

"The week has been very positive," said MIchele Lozanski, general manger. "We're really making sure that we're price-conscious. We're really trying to make it worth moms' while to come in and shop with us."

Small retailers said they use tax-free week as a way to promote what they says sets them apart from mass merchants — a deeper understanding of their customers' needs and an ability to pay greater attention to service.

Retailers such as Cohen's, and Van Dyke & Bacon Shoes, a family owned retailer that dates to 1938 and now operates seven stores, said they find out dress code requirements at local private and public schools and make sure they are stocked with items students will need.

For Van Dyke & Bacon, that means stocking up on shoes that are permitted under dress codes, Mary Jane-style shoes, saddle shoes, suede bucks, brands such as Sperry's and sneakers for gym class, said Ron Germack, manager of the Van Dyke's store in Ellicott City.

John Bacon, an owner of the chain, said August has remained one of the stronger months because of school shopping, but tax-free week can be a gamble. A store that usually is staffed with five people might need eight to handle an anticipated increase in shoppers, which might or might not pan out.

"Tax-free week definitely shifts the sales," Bacon said. "You may win a little bit in sales, but we kind of have to watch the expenses and payroll."

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Bridget Quinn Stickline, owner and president of Wee Chic Boutique, a children's apparel retailer in Greenspring Station, sees tax-free week as a chance to remind customers about locally owned brick-and-mortar stores.

"As a small business competing in this marketplace, where you can go online and buy almost anything tax-free, it is nice to have that opportunity," she said. "People do show up to shop. It's an incentive to get out and get started. The clients appreciate it. It tends to be a kickoff to our back-to-school season."

She said it's the second busiest time of year for her shop.

This year, with school starting after Labor Day in many counties, businesses also are hoping the prolonged summer break translates into a surge in spending not only during tax-free week but during the last two weeks of the month — and beyond. Spending on school apparel and supplies is often viewed as a pre-cursor to the crucial holiday shopping season.

Lori Cucuzzella started back-to-school shopping Tuesday, buying sneakers for her 10-year-old daughter Anna at Van Dyke & Bacon's Ellicott City store, where she went to get help with the right fit as well as a break on sales tax.

The Ellicott City resident said she buys clothing for her kids, ages, 8, 10 and 12, throughout the year, but buys shoes for each one before school. For those purchases, she waits for tax-free week.

With three kids, she said, "it makes a big difference."

Nationally, back-to-school and back-to-college spending is expected to reach more than $83 billion, a more than 10 percent jump from last year's spending, with families of elementary to high school students spending an average of $687.82 each, the National Retail Federation said.

Matthew Shay, the retail group's president and CEO, attributes the rosy expectations to increased consumer confidence.

"With stronger employment levels and a continued increase in wages, consumers are spending more," Shay said in a statement.

Bel Air resident Heather Stanley, who was shopping Tuesday at White Marsh Mall with her mother and two children, said her family had just returned from vacation near outlets in Delaware, which has no state sales tax, and wanted to take advantage of even a brief tax-free shopping period at home. They were on the hunt for shirts, jeans and other items for Stanley's 15-year-old son and 12-year-old daughter.

"We're trying to get a jump on the fall stuff," Stanley said. "It kind of makes you feel good to save the little bit that you can on tax-free week, absolutely, especially since everything they like is Nike and Under Armour and American Eagle, so that adds up quickly."

At the American Eagle store, she said, she bought khaki pants on clearance for her son.

"And no sales tax on top of that, you can't beat that," she said.

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Olretta Drake headed to Boscov's in White Marsh Tuesday with her 16-year-old grandson, Dasaun Hendricks, where they bought shorts, four pairs of pants and two sweatshirt jackets.

"Everything that we got was on sale, and we didn't have to pay that extra tax," Drake said.

Quinn Stickline of Wee Chic said she expects sales increases this season compared to last year's back-to-school for the same reason her business has grown overall in the past eight years.

"We know our customers," she said. "We've grown up with their children. There is something about that personal experience that you can't match online."

Cohen said it is too early to tell how back-to-school spending will compare to last year, but he expects sales to be about the same. In an age of online buying and discounters, his business has been able to thrive, he said, by serving those consumers who want extra attention in selecting and fitting their wardrobes.

Not counting the holiday season, the store is busiest from the third week of July through early September, as families stock up on the pants, shirts and other apparel required in area private schools' dress codes. Back-to-school accounts for 80 percent of the store's business this time of year.

"If a customer needs service or wants it," Cohen said, "this is where we excel."

Betsy Derrick of Galesville in Anne Arundel County said she looks for retailers that focus on personal service when she takes each of her eight grandchildren for a traditional outing each year to buy new shoes for school.

On Wednesday, she had three grandchildren in tow at Van Dyke's Ellicott City store, where two were trying on New Balance sneakers.

Watching as grandson, Hal Derrick, 8, and granddaughter, Virginia Derrick, 5, were fitted for shoes then walked around the store brought back memories of going as a child to a family-owned shoe store where "we were always measured, and there were lots of choices, and you always found something you liked."

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