Teens Missing Retail Party

Let's see what the May comp sales numbers actually look like before drawing too many conclusions about the state of the junior apparel market. But there is no doubt that the economic slowdown has had a "trickle-down" effect on this segment of the business.

First, the "new normal" dictates that consumers live more strictly with a household budget; this is likely to put a damper on parents' willingness to spend on "nice to have" instead of "must-have" clothes for their teenagers. Second, and more important, high unemployment is hitting teens especially hard, in terms of "first jobs" and summer jobs too. Until employment rates improve, the real and perceived impact on teens' spending is going to continue.

Richard Seesel, Principal, Retailing In Focus LLC

I agree with Richard. The economy has seen a bump because people have been putting off spending as much as they can and at some point, there are just some things they have to replace. However, the unemployment rate and fear is still high. Even for those of us who are gainfully employed, the fear of inevitable tax increases and government overspending is making us more cautious with our spending.

In addition, a NY Times article recently reported that only 24% of college grads have jobs as they enter the work force and those that have offers are getting 1.7-8.9% less than in April of 2009, depending on their majors. In addition, more are taking internships or returning to school.

One area that I disagree with Reuters on is their claim that some of the slower sales can be attributed to "cooler weather." Having 3 teens of my own, I can tell you that cooler weather is when they like to shop. If it's sunny and hot outside, they are outside enjoying the weather with their friends. If anything, cooler weather at this time of the year should be helping sales.

Janet Dorenkott, VP & Co-owner, Relational Solutions, Inc.

This market is typically feast or famine and is one of the hardest to draw trends from. That said, I think Richard is correct that the key damper is Mom and Dad are seeing little reason for optimism and are pulling back on discretionary spending.

Bill Emerson, President, Emerson Advisors

Have to agree with Richard and Janet that the economy has placed the biggest burden on junior sales. Some 30%+ of eligible teens are likely to be unemployed this summer. Mom and Dad, and friends and neighbors are acting, "prudently cautious."

Teens are NOT CLUELESS. They, too, have reacted to the overall marketplace. They have continued to support those who have supported them since the 2008 downturn--Buckle, Aeropostle--and have been opportunity buyers at the Gap/Old Navy stores in selected months.

Retailers have cleared merchandise from 18 months ago. What is slightly surprising is to view some of the pricing that teen retailers are seeking on merchandise now. Teens will be patient enough to find the best value in a market economy like today's.

Roger Saunders, Managing Director, PROSPER BUSINESS DEVELOPMENT / BIGinsight

The word recovery is relative, but in any case, the teens are way behind the curve. Simply, it is all about the economy. The trickle down from parents to teens has shrunk considerably. The teen unemployment is at record levels. Summer jobs for teens will be scarce. The results should be no surprise.

Implications on overall consumer spending? Could one imagine what the impact might be if teens suddenly realized that they really didn't need all those fads and trends that a few years ago were a must?

Gene Detroyer, Professor, Entrepreneur, Adviser, Consultant, Independent

First, I'd dispute the quote in the piece that suggests that parents would be willing to give a child $100 to buy a pair of jeans. (Not in my house.) The economy isn't back to normal yet, and high teen unemployment just has to take a bite out of teen retailers' profits. That said, there are some terrific bargains out there.

Cathy Hotka, Principal, Cathy Hotka & Associates

The economy has a lot to do with this. Household budgets have been watched and lived within for so long. Now the ones putting the money in to supply the budget are not willing to go outside the budget spending unless a true emergency exists. A $500.00 pair of jeans is still not considered an emergency in most households. Walking the mall just before Mother's Day, I noticed more families together than teens in small groups.

Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

If I remember correctly, some teen retailers (like Aeropostale) were up against increases from the previous year.

I wonder how the teen sector compares with retailers overall, when you look at increases over 2 years ago?

'myopinion'

All of the factors listed in the article are reasons for slow teen sales.

1. The low percentage of teenagers able to find work.
2. The economy as a whole. Families with less spendable income.
3. No new hot trends.
4. Too many stores competing for to few dollars.
5. Change in buying habits.
6. The love of technology is eating up expendable dollars.

Mel Kleiman, President, Humetrics

It's as simple as 1-2-3. (1.)There are no/few teen job opportunities to earn their own cash. (2.) Kids get their clothing money from mom and dad. (3.)Many moms and dads aren't dishing out the dough with gay abandon these days.

But, many of the kids I know are still shopping machines. They have adapted. It has become a cool thing to spend hours in second-hand, resale and consignment shops putting together unexpected, creative, funky, and inexpensive outfits. Not only does it assuage their shopping gene while they see how it stretches their available money, but also they are finding out just how fun it is to put together and wear an ensemble that has friends and classmates going, "OMG, how cute is that"! They call it "vintage."

Teen retailers need to be adapting right now as well, for when the parental money starts flowing again a lot of kids are just not going to be satisfied with the generic blah clothing that seems to fill the racks at many teen stores.

'Liatt'

As I read the article summary, my first impressions were that teen spending was down as a reflection of overall consumer confidence as well as the dismal teen job market.

Reading full article, my instincts were confirmed by comments from the WSJ and Laura Gurski, partner and leader of the North American consumer and retail practice at A.T. Kearney saying "Parents don't have the money to support their spending habits."

This is the key, isn't it? Cash has to come from somewhere and if the parents aren't willing to turn it loose and jobs are harder to come by this summer, it leaves teens with less to spend at the mall.

I think this is much more the root cause for the lower sales numbers than any failure in merchandising by the retailers mentioned.

Bill Hanifin, Managing Director, Hanifin Loyalty LLC

Am I missing something or was there no mention of Forever XXI in the article? XXI, to me, is representative of what really makes teen retail tick: hot fashion. And boy, are they good at it. They're not only good at fashion, they're even better at pricing. The combo; hot fashion at crazy prices, is the 'killer app' for that segment. That also A) puts them into a new league and B) makes their competitors look sick in one fell swoop.

Bottom line (literally): the teen fashion business is missing the 'fashion' part of the equation. If they could get that right, you'd see the 'business' part turn. Just ask XXI.

Lee Peterson, EVP Creative Services, WD Partners

I agree the "economy" has the largest impact upon teen spending, but it is not alone in changing teen behavior. Yesterday's Ad Age article on the impact of new technology upon the acquisition of a driver's license and ownership of a vehicle showed a fundamental behavioral shift.

Wexner once said, "retail is detail." The more things change, the more they stay the same.

Dig deep customer centric garmentos! That is why we say: Retail ain't for sissies.

'IMRetail'

Good points made by a number of people here already, and I agree with all of them: economy first, lack of options second and new behaviors as third. I have a teen daughter and a teen god-daughter, and part of their motivation in shopping secondhand is environmental. Teens are more fluid than us "set in our ways" adults, and they have learned to want less. Some of them, like my admittedly small sample, are seeing it as a plus to the green movement.

'clbriant'

Heck, Laura Gurski (in the article) said exactly what I would have said. Where do teens get money? Parents and temporary, low-level jobs. Budget-conscious parents and non-existent jobs team up to put a damper on so-called "teen discretionary spending." What a non-sequitur. All spending by teens is discretionary, as opposed to spending FOR teens.

M. Jericho Banks PhD, President, CEO, Forensic Marketing LLC

I'm astounded that nobody has postulated the possibility that a quantum shift in consumption patterns might be underway. Our teens have spent their entire lives hearing how stuff and waste is destroying their planet's future. Maybe, just maybe they're doing something about it by reducing consumption. Retailers who recognise this and adjust their product, their messaging and their behaviour might be rewarded by these mega-informed teens who--wait for it--might just be smarter than their parents.

mark schroeder, CEO, Emstream

Mom and dad are probably not shelling out the cash they did to the kids previously, trying to teach them a lesson about frugality so they don't get into the same kind of trouble the older generation did. Plus there are fewer part-time jobs for the kids to earn their own spending money.

Jerry Gelsomino, Principal, FutureBest

It's a two prong issue; the economy and merchandise assortment. Most teens get cash from parents, but with high unemployment, disposable dollars have evaporated. The teen market is generic, nothing cool. For those retail veterans that remember Merry Go Round, they did create the buzz, capture the market and create raving fans. Today H&M, Zara, and AF by in large have been bland.

Brian Anderson, President, BA Search Group

Research shows that today's teens spend much of their time outside school and sleep sending and receiving text messages. According to Pew Research, half of teens send 50 or more text messages a day, or 1,500 texts a month, and one in three send more than 100 texts a day, or more than 3,000 texts a month. Are teen apparel retailers designing text-based promotional campaigns to meet the communication preferences of this demographic?

Dan Berthiaume, Editor, Independent consultant