TOKYO — Young people in Japan are some of the most fashionable on the planet, but teenagers and young adults are facing shrinking budgets for apparel and accessories.

High school students’ average monthly allowances fell 11.4 percent in 2009 to 6,045 yen, or about $64.68 at average exchange for the period, according to a recent survey by the Bank of Japan’s Central Council for Financial Services Information. That’s the lowest level in 19 years. Allowances of university students fell 4 percent to 25,839 yen, or $276.48, during the same period.

This story first appeared in the April 5, 2010 issue of WWD. Subscribe Today.

It’s only logical that young Japanese have less money to spend. Their parents are grappling with a sluggish economy, declining incomes and concerns over job security.

Shoppers with smaller budgets appear to be heading to international fast-fashion chains like Hennes & Mauritz and Forever 21, which tend to stock cheaper goods than smaller local chains and specialty stores. Before the influx of international brands like H&M began a few years ago, the trendy shops of the Harajuku and Shibuya areas practically monopolized the youth fashion market. They remain important players, but there’s evidence that is starting to change.

Shibuya 109 shopping mall, a complex of small stores selling everything from cupcake-shaped pendants to platform boots and Chanel knockoffs, is expecting its first decrease in sales in 14 years for the financial year ending March 31. Swarms of young women fill the complex every day, and it’s tricky to navigate the narrow hallways between the stores during the after-school rush and weekends.

A spokesman from Shibuya 109’s corporate parent, Tokyu Malls Development (TMD) Corp., downplayed the severity of the decline but acknowledged the mall is “expecting a drop in sales of a few percent.”

Although Shibuya 109 was swarming with young shoppers on a recent Saturday, some of them are finding the mall’s prices too expensive.

“I used to go to 109 every weekend, even if I didn’t buy anything, but these days I’ve been going there less often,” said Makiko Teramura, a third-year high school student from Tokyo. “Since H&M and Forever 21 opened, I’ve been going there, because they have cute clothes that are cheaper than the clothes at 109.”

Japan’s largest local fast-fashion chain, Uniqlo, is taking advantage of decreased spending by younger people with the opening last month of a new megastore in Shibuya, next to Shibuya 109. The three-story, 21,377-square-foot store opened with a series of promotional items starting at as low as 500 yen, or about $5.64 at current exchange.

Naoki Otoma, chief operating officer of Fast Retailing Co. Ltd., Uniqlo’s corporate parent, said the new Shibuya store will mainly target shoppers in their teens to 20s. Uniqlo’s core customers in its other locations are generally in their mid-20s to 30s.

“Shibuya is an area of young people,” Otoma said. “Until now, Uniqlo has been aimed at families, with [mostly] basic styles. But this store will cater more to young people with a high sensitivity to fashion.”

To that end, Uniqlo styled the store’s mannequins in a more youthful, fashion-forward manner than it does in other stores, which tend to focus on more basic items like fleece pullovers or down jackets. In the new store, mannequins are styled in edgy combinations of colorful printed leggings, slogan T-shirts, synthetic leather biker vests and colored denim miniskirts.

But having less money to spend on clothes is just part of the problem with the youth market in Japan, warned Hiroyuki Murai, chairman and chief executive officer of Baroque Japan, which owns popular Shibuya 109 brands Moussy and Sly. He said Japan’s youth has embraced a more introverted, solitary lifestyle than that of previous generations.

“Now most teenagers spend their spare time playing video games, reading books, watching TV or using the Internet, and [they are socializing] less,” Murai said. “This is quite a big problem for our business.”

Still, Murai is hoping cut-price fashion will lure youth away from their computer screens and into his stores. Last year, Baroque Japan launched a lower-priced diffusion line, called Azul by Moussy. The collection sells at prices about 40 percent lower than that of Moussy, a brand known for its casual-chic style and skinny jeans.

In its first year, the brand opened 16 shops in suburban shopping malls and saw sales of about $33 million. Murai said he is hoping Azul by Moussy will achieve sales of $100 million in 2010.

Many of Japan’s youth-oriented brands participate in Tokyo Girls Collection, a large-scale consumer fashion show at which visitors can purchase styles via mobile phone shortly after they go down the runway. The most recent edition of Tokyo Girls Collection took place in early March at a sports arena in nearby Yokohama.

But a spokeswoman for the event said she doesn’t expect young people’s shrinking allowances to significantly affect Tokyo Girls Collection’s business. The show’s core audience is made up of women in their mid- to late 20s who have their own incomes, she explained, although students make up a small percentage of attendees.

“Students have always had less spending money than other attendees, so they don’t usually purchase much anyway,” the spokeswoman said.

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