By  on June 28, 2007

When iT comes to shopping, teens are calling the shots.

On a constant hunt for the next "It" item, this generation's savvy teens have unlimited access to fashion and more choices than ever, leaving retailers struggling to keep up.

While more than half of the Baby Boomers surveyed by WWD are buying fewer clothes and accessories for themselves than they did a year ago, teen spending is on the rise.

When asked to compare their shopping habits today versus a year ago, 69 percent of teens aged 13 to 17 said they buy more clothes now than they did last year compared with 26 percent who said they buy less.

And they are not planning to slow their spending anytime soon.

Over the next six months, 51 percent said they will spend the same amount on clothes as they did during the first half of the year, and 37 percent said they will spend more. Only 13 percent plan to spend less.

"Young people always spend money and always find a way to make that money. They would rather starve then go without the hot item of the moment," said J. Elias Portnoy, chief brand strategist at the Portnoy Group. "Parents are spending less on themselves in order to make sure their kids can have this stuff. Spending will continue to be strong as long as parents can afford it."

Slated to be the strongest sector in terms of purchasing power, teens make up 7 percent of the U.S. population, but actually contribute 11 percent to spending, said Marshal Cohen, chief industry analyst at The NPD Group.

According to a survey conducted by, the teen population has a total income of $80 billion and parents spend an additional $110 billion annually on their teen children.

And while the minimum wage hike is adding costs for retailers, it is also putting more money in teens' pockets, said Christine Chen, specialty retail analyst at Needham & Co. LLC.

"Teens are out spending, which makes them a desirable group for retailers," Cohen said.

But competition in the market has reached saturation, with teen retailers taking up about 60 percent of mall space. And as more stores chase after the teen dollar, vying for their attention has become a constant battle."Teens no longer have brand loyalty and are shopping at different tiers of retailers and mixing and matching items and price points," Portnoy said.

They are turning to fast-fashion retailers like H&M and Forever 21 for trendy, price-right merchandise they can pair with designer denim and high-ticket accessories.

"Teens are looking for items they can wear for a couple of weeks and then get something else. There is more of an emphasis on trend buying and buying for the moment and not thinking about long-term," Portnoy said. "It's a tough place to be for retailing. You can be cool today and uncool tomorrow. Teens are constantly re-creating coolness."

Specialty retailers like Pacific Sunwear and Hot Topic, which up until two or three years ago were on top of their game, are now struggling to stay afloat, speaking to just how fickle this customer base has become, said Marc Hays, senior vice president for leasing at Developers Diversified Realty.

"Teens are moving away from the Abercrombie & Fitches because they are bored. These styles are becoming uniform. They have been 'Gaptized.' There is too much of them everywhere," Portnoy said.

In an attempt to hook teens and keep them as loyal customers, many specialty retailers have revamped their stores to create an exciting and sensual environment.

But teens may not be impressed.

Only 3.6 percent of the teens surveyed said they chose a store based on the atmosphere. The majority, 41 percent, looks for an assortment of styles, while 34 percent shop by price.

Specialty stores are still teens' number-one shopping destination.

According to the survey, 36 percent prefer to shop in specialty chains, while 25 percent go to department stores and 24 percent head to discounters.

"Department stores were trying to earn some teen business, but they realized they can't move that quickly. So in a way, they have given up and are focusing on the older customer. They are not equipped operationally to handle the teen shopper," Portnoy said.

But where shopping has remained relatively consistent is in malls that appeal to teens.According to the WWD survey, 71 percent of teens said they prefer to shop in traditional malls over lifestyle and strip centers.

"It's an easy place for them to meet and hang out," Hays said. "Most of the teen stores are primarily mall-based. They may have some street stores or stores located in lifestyle centers, but their best-performing stores are still located in the mall."

And while studies have shown traffic is down at the mall, customers are purchasing more each trip, said Jane Hali, vice president and director of retail and merchandise consulting, at Coleman Research Group.

"I think you are seeing even more spending and mall shopping driven by the rage in denim," Portnoy said.

Though denim recently took a back seat to dresses, teens will continue to buy jeans for back-to-school.

This past year, 88.5 percent of the teens purchased jeans.

Skinny and boot-cut jeans are expected to continue to remain popular, while wide-leg jeans and newness should spark some interest, Hali said. Colored denim will also continue to gain market share.

But while teens might still be purchasing denim, they are no longer buying in bulk.

"Two years ago, jeans could do no wrong, but now it's all about handbags. Soon, it will be all about sunglasses," Cohen said. "Teens are diversifying their spending."

Inspired and influenced by the cult of celebrity fashion, teens have garnered an interest in luxury merchandise.

"The impact of MTV is that teens are spending more on luxury. There is so much brand awareness going all the way down to tweens," Chen said.

Attracted to entry-level accessories and designer jeans, teens are saving money — or asking their parents — so they can become mini celebutantes.

"You can't underestimate the power L.A. is having — young actors, singers and performers are influencing fashion," Hays said. "That's because celebrities like Paris Hilton, Lindsay Lohan and Justin Timberlake are everywhere, in magazines on TV, on the news. And teens are more tuned-in than ever."

And the Internet is only proliferating this brand awareness."They are learning how to shop in a much more savvy environment. They are using the Internet to pre-shop and find items they can't find in local stores," Cohen said.

"Teens have become the influencers. They are using the Internet to shop for parents and grandparents and are doing all the homework because the adults are intimidated or confused by the 'Net," he continued.

While teens might be doing research online, 61 percent said they have never purchased clothing or accessories for themselves on the Internet, preferring to try on merchandise.

"Teens today have more experience and knowledge and are willing to shift gears rapidly. They want things now, and a week from now are going to want something else," Portnoy said. "The biggest change we have seen in the teen sector is you can no longer definitely say "This is the trend of the moment.""

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