NEW YORK — Teenagers are becoming frugal.

In some upscale pockets of the nation, teens continue to sashay out of their BMWs with their Prada bags slung over their shoulders. Yet in other school parking lots, teens are turning their backs on high-priced, popular brands in favor of a more realistic combination of fashion and value.

In today’s world of war and economic woes, young adults, like their parents, are tightening up their wallets and are more willing to shop at mass merchants, discount retail chains or off-price stores, where they can find trendy clothing and brands, but at lower prices.

With less money in their pockets due to smaller allowances from Mom and Dad, fewer hours from their employers or no jobs to be had, teens and young adults are getting a crash course in living within their means as the boom economy of their childhoods recedes into memory.

"The image is shifting to ‘it’s just as cool to find value at Target,’" Marshal Cohen, co-president of market research firm NPDFashionworld, said. "Teens are buying fun, new, novel bags at Target instead of Kate Spade."

Cohen’s hard statistics should send a chill down every teen retailer out there. Teens spent $20.9 billion on apparel in 2002, down 3.7 percent from the $21.6 billion they spent in 2001. That compares with the 1.7 percent drop in apparel spending by adults, to $163 billion from $165 billion. "This is one of the first times in the last seven years teens are spending less on clothing," Cohen said.

Security scares and higher oil prices have made parents more reluctant to send their kids to the mall and more likely to take them there instead. Observers of retail shopping patterns say that’s giving parents — in most cases, Baby Boomers — a more active role in their offsprings’ purchases. And with the adults already cross-shopping — buying a pair of Donna Karan jeans to wear with a T-shirt bought at Kohl’s, for instance — they are opening up a broader spectrum of shopping choices and turning their children onto Wal-Mart, Target, off-pricers, other off-the-mall locations and the occasional opportunistic sale or promotion at the mall.Dana Telsey, a retail analyst at Bear, Stearns, said the discount chains are more appealing to the junior crowd because of the upgraded quality, price and style of the merchandise. "The Wal-Marts and Targets of the world are becoming a more important part of teenagers’ spending habits," she said. "Cheap has gotten chic for teens, too."

Teens are finding what their parents had discovered before them — there’s satisfaction in rummaging through sales racks, purchasing a complete outfit, rather than just a shirt, and having money left in their wallets for a cafe mocha at Starbucks or maybe even a CD.

NPD’s Cohen, who supplements his firm’s statistical data with occasional strolls through high schools, noted teens say they want to shop at Abercrombie & Fitch, Victoria’s Secret, American Eagle, Gap and Aeropostale, but they actually get their clothes from Wal-Mart, J.C. Penney Co., Kohl’s, Target and Gap.

Indeed, to better vie for teen dollars, discount stores and moderate department stores are doing a better job catering to the younger consumer with more fashionable items, sharp price points and brands such as Mossimo at Target. At the same time, they have stepped up their marketing efforts to cater to the teen customer.

A spokesman for J.C. Penney Co. said the junior department is a huge business, enjoying double-digit sales gains in each of the last two years. He attributes the robust growth to a better combination of more attractive merchandise and marketing. "We have really updated and upgraded the merchandise, having many of the key brands like Mudd, LEI and Paris Blues, and in a significant way," he said. "Our focus on fashion and value makes us a destination for teens."

Todd Slater, a retail analyst with Lazard Frères, said, "Teens are more savvy about the value of the dollar and how to make it stretch, to the benefit of more moderate teen retailers like Target and American Eagle."

Still, he said, he doesn’t have great expectations for meaningful improvement in the teen space until supply growth begins to decelerate.

Today’s crop of teens may be highly acquisitive by nature, but they’re equally learned in the ways of retail merchandising, asserted Marcia Aaron, specialty retail analyst with Pacific Growth Equities. While she is willing to open her purse for something new and different, Aaron said teens know the same item is likely to be offered everywhere and are aware they can get it at a cheaper price.And given the fickle nature of teens, it should come as no surprise that where they shop can change, too, moving to the mall or off the mall.

The junior customer, Aaron said, "is going to selectively buy where she is getting the best value."

That could mean that the in store of last season is out, and vice versa. Aaron noted that some of Target’s customers may be now going to Old Navy. Then again, it wasn’t so long ago that Old Navy was weathering double-digit declines, as Wet Seal and Bebe have recently.

Considering year-over-year monthly comparisons, Old Navy’s same-store sales rose 17 percent this March, versus a 12 percent plunge last March. Target’s comps, indicative of far more than just apparel, slid 1.3 percent, versus a 9.4 percent increase in the prior-year period.

According to data from Teen Research Unlimited, over a recent 30-day period, 83 percent of teens surveyed said they have shopped at discount stores, compared with 81 percent saying they have gone to a shopping mall and 66 percent to a department store.

"Discount and mass merchant stores are convenient and have dedicated sections within the store teens want," Michael Wood, vice president of Teen Research Unlimited, said. "They are aggressively going after this market."

He noted that Wal-Mart recently partnered with Seventeen magazine for assistance setting up its junior section.

Pacific Sunwear of California, Hot Topic and, recently, Gap have enjoyed strong sales in the first quarter, despite the dismal results from many of their competitors. Retail observers say PacSun, which reported a 9.5 percent increase in its March comps on top of a 14.8 percent vault in February, and its Demo scion appear to be especially well positioned for growth compared with their specialty store competition.

"We are gaining market share with the help of multiple brands and a growing girls’ business," Greg Weaver, chairman and chief executive officer, told investors on a conference call last month. "PacSun and Demo have carved out a niche in the teen retail business."

Hurting results and retail "velocity" overall, but strengthening the hand of discounters, is the lack of a clear, compelling fashion trend for teens, leaving jeans and basic tops in a dominant position, but fashion as a lower priority. Also, even with teens, a large and growing segment of the population — 33 million strong and rising 7.3 percent annually — there is a wealth of competition and new stores and concepts seem to open daily.While it could alleviate some of the competition in the hard-hit young men’s business, Dallas-based Gadzooks’ recent decision to eliminate male apparel and concentrate on female customers simply adds to the square footing vying for the female teen’s dollars.

Abercrombie & Fitch, another mall mainstay, reported a 10 percent comp decrease in March comps, adding on to the 4 percent decline in February. However, the expansion-oriented company did report a decrease in promotional activity and also said it has noticed a decrease in its fringe customers, which is impacting sales. Last year, the company opened 112 stores, 60 under its newer Hollister nameplate, but weathered a 5 percent drop in comps.

Brian Tunick, a specialty retail analyst at J.P. Morgan, said he expects the majority of the weakness in the first half of 2003 to come from teen retailers, who he expects will see earnings fall 25 percent in the first half. Still, he anticipates a 14 percent profit increase for these stores in the second half. Most retailers close the books on the first quarter of their fiscal years next week.

He tied the poor financial performance for retailers dedicated to the teen demographic to continued deflation and a projected 5 to 6 percent decrease in mall traffic.

If there is to be a rebound, as he expects, it won’t be the result of less competition. Between 1995 and 2000, the number of teen stores doubled to 8,000. He expects that number to hit 10,000 by the end of this year.

Tunick said the amount of space dedicated to teens has grown close to 700 square feet per youth, compared with 253 square feet in 1995, yet the number of youths per store is practically cut in half to 5,000 customers per store, compared with 10,000 to 11,000 in 1995.

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