Analysts Give a Positive Spin for Back-to-School Season

The back-to-school shopping season is right around the corner and with teen spending up, analysts believe the age group will be in the stores well before they hit the books.

The back-to-school shopping season is right around the corner and with teen spending up, analysts believe the age group will be in the stores well before they hit the books.

According to Christine Chen, specialty retail analyst at Needham & Co. LLC, a San Francisco-based investment firm, stores like Abercrombie & Fitch, Aéropostale and Hollister are stocked with trend-right merchandise that will entice teens.

“Last year it was really the more popular, fashion-oriented girls picking up the skinny jeans and baby-doll styles,” Chen explained. “But this year it’s everywhere and it seems to be the new uniform for teens.”

Chen said that on the negative end, gas prices remain high, but with many of their parents paying to fill their tanks and minimum wages rising, teens will continue to have money to spend.

“The rise in minimum wage has a huge impact on the teen customer,” she said. “I know that retailers aren’t seeing this as a good thing since they have to pay their employees more money, but for teens, this will give them more money to spend on the three things they love to spend on — food, entertainment and clothing. I think that in the end, retailers will see that the minimum wage hike is a good thing.”

That said, teens are consistently looking to buy affordable merchandise, hoping to stretch their money as far as it will go. But the cash is there. According to a survey conducted by MarketResearch.com, the teen population has a total income of $80 billion, and parents spend an additional $110 billion annually on their teen children.

A new survey done by Burson-Marsteller, a New York-based marketing and public relations firm, said teens are big spenders on everything from food and beverages to music and apparel. The company surveyed kids aged 10 to 18 — called “youth-fluentials,” or the popular, influencing teens. The survey looked into where and why the age group makes certain purchases.

“Affordability is most important,” said Ame Wadler, chief strategic officer at Burson-Marsteller. “Of course the fashion has to be there, but they are most likely to spend their money on items that fit within their own budgets.”

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Dana Telsey, of Telsey Advisory Group, predicts a challenging, but still profitable, b-t-s season, especially since teens have begun shopping earlier.

“One of the most challenging things for retailers is the calendar shift that’s happening,” Telsey said. “They will need to serve those shopping in July, August and in September, which means they will need to have a lot of buy-now, wear-now product in the stores.”

Telsey said stores like American Eagle Outfitters and Forever 21 are sure to have a good season because of their wide teen appeal. Abercrombie & Fitch will also have some “must-have items” for b-t-s and Kohl’s has an array of reinvigorated lines ready for fall, she added.

“There is a place for everyone for back-to-school this year,” Telsey said. “And that is very promising.”

WWD’s “Where America Shops” survey, which was completed on May 29 and surveyed 521 teens age 13 to 17, showed that teen spending is on the rise — another indication of a strong b-t-s season to come. The survey indicated that 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. Over the next six months, more than half said they will spend the same amount on clothes as they did during the first half of the year. Only 13 percent plan to spend less.

“Teens will always find ways to buy what they want,” Chen said. “She will eat Ramen all month so that she can afford that new bag. And there are still plenty of teens who will go back-to-school shopping with mom, which pretty much guarantees new clothes.”