Teens Missing Retail Party
By Tom Ryan
While most of retail appears to be in recovery mode this
spring, one petulant sector — teen retailers — is failing to participate.
figures come out this Thursday, teen retailers — represented by
Aeropostale, Abercrombie & Fitch, Hot Topic, Pacific Sunwear, The Buckle,
and Zumiez — are expected to squeeze out a 0.7 percent increase, compared
with a 3.7 percent gain expected for retailers overall, according to Thomson
retailers underperformed in the first quarter as well. A Wall Street
Journal article suggested that weak teen spending may not be a good sign
for the retail recovery.
“Teen retailers are a good proxy of discretionary spending because teens
generally don’t have many big expenses, so they can more easily spend their
money, and, if their parents feel good about the economy, they are more inclined
to give their child $100 to buy a pair of jeans,” Jharonne Martis, retail
analyst at Thomson Reuters, told the Journal.
“Parents don’t have the money to support their spending habits,” Laura
Gurski, partner and leader of the North American consumer and retail practice
at A.T. Kearney, told The Associated Press after teen chains delivered
subpar results for April. “Teen merchants could face a difficult summer
as job opportunities for teens will likely be slim.”
Analysts also told
the Journal that the teen retail group is suffering
from an overabundance of stores that don’t carry enough fresh merchandise.
“We aren’t seeing the dramatic pickup in spending that everyone was hoping
for in regard to teens,” said Lisa Walters, principal at Retail Eye Partners,
an equity research and consulting firm. “Buying remains constrained and
value-oriented for the majority of them, with most still shopping around for
the best deals.”
According to a recent survey by Piper Jaffray, students
indicated they would be spending an average of $932 on the fashion category
in 2010. In a survey last fall, they were expecting to spend $1,083. Specialty
stores continue to be the top preference of teen consumers, with a 29 percent
share, but discount stores and major chains are gaining share as well, the
May’s sales figures are also expected to be impacted by a shift
of the Memorial Day holiday to the last weekend of the month, pushing more
sales into June. Cooler weather everywhere but the Northeast, as well as heavier
rain in the Northwest, also slowed sales of summer apparel, according to Reuters.
Discussion Question: What do you think is behind the recent weakness in
teen spending? Does the softness in the teen retail business have implications
for consumer spending overall?
- Teen Retailers Tell A Tempered Story
About The Economy – The Wall
- May retail sales seen up but spending erratic – Reuters
- Shoppers hand retailers solid spring – The Associated Press/Google