NEW YORK — When the economy is a little soft and the merchandise in the stores is a little ho-hum, it turns out that even teens will cut back on their apparel purchasing.
This story first appeared in the November 20, 2003 issue of WWD. Subscribe Today.
Several market-research groups reported that teen spending on clothing has declined over the past year, with teens opting to spend less on the garments they buy and increasingly turning to lower-priced outlets.
However, some sources noted that there are signs that is turning around, with teen spending during the critical back-to-school period having picked up.
According to Cambridge, Mass.-based STS Market Research Inc., females aged 13 to 19 spent $4.5 billion on casual sportswear during the 12-month period ended in August, the most recent period for which data is available. That’s down 8.2 percent from $4.9 billion spent a year earlier.
STS, which gets its data by polling a panel of more than 10,000 U.S. females and males aged 13 and up, found that teens paid on average $19.49 for each apparel item they bought during that period, down 5 percent from $20.29 a year earlier. (See Table 1.)
“There’s clearly retail deflation going on,” said Art Spar, president of STS. “Business has been poor. I think that we are in a very difficult economic situation and I think that stores have really been competing hard to get dollars. The way they have been competing is through price, so what the consumer is doing to get those prices down is holding onto their dollars as tightly as possible. Demand has been soft, supply has been ample and there are too many stores, plenty of product and they have been discounting it, putting it on sale sooner and discounting it deeper.”
However, Spar noted that in recent months there have been signs that teen spending is picking up. For August and September, he said, teen girls’ spending on apparel was up 2 percent from a year earlier.
“There seems to be some momentum gathering on the positive side,” he said.
Another major market research concern, NPD Group Inc., recently released a report showing that spending by all teens, both male and female, on apparel dropped 13.8 percent during the 12 months ended in July, with teen shoppers increasingly seeking out lower-priced goods.
“Kids today are learning to shop for value,” said Marshal Cohen, chief industry analyst at Port Washington, N.Y.-based NPD. “They are now stretching their dollars across many retail categories, just as their parents are.”
Another sign of teen shoppers’ quest for value is growing market share in the chain and discount store channels, combined with declines for department and specialty store channels, according to STS. Despite specialty stores’ declining market share, they still attract almost half of teens’ apparel outlay. (See Table 2.)
Part of the reason teens are cutting back on apparel spending, observers suggested, is to have more money left over to pay for consumer electronics such as MP3 players and cell phones.
“Teens are figuring out that if they spend less on clothes then they have more to spend somewhere else,” said Michael Wood, vice president of Northbrook, Ill.-based Teenage Research Unlimited. “The mass merchandisers are giving them a reason to shop and at the same time so many different people in different categories are interested in their dollars. There’s more of an acceptance of what their money can buy at these discount stores.”
Wood said he didn’t believe the decline in apparel spending reflected teens being pinched for cash.
“Their number-one source of income is their parents,” he said. “This is an area that most parents are reluctant to cut back on.”
One unusual phenomenon is that, through the first eight months of this year in the jeans category, mass merchants bucked the phenomenon of price deflation. At a time when teens spent an average $24.10 on each pair of jeans they bought across all retail channels, 5.2 percent less on than a year earlier, the average price they paid at mass merchants rose by 11.9 percent, according to STS data provided by Cotton Incorporated. (See Table 3.) A Cotton Inc. official suggested that the rise in price at mass merchants in part reflected the launch of the Levi Strauss Signature jeans line at Wal-Mart Stores this summer.
Interestingly, the average price of $24.10 that teens 13 to 19 paid for jeans is well below the $38.37 that teens aged 16 to 19 polled by Cotton Inc.’s Lifestyle Monitor said they would be willing to pay for a pair of jeans that fit well. While that number might in part reflect older shoppers’ ability to spend more, a Cotton official said it also suggests that teens are dissatisfied with the fits of jeans available on the market today.
While specialty stores as a whole have lost teen market share this year, several specialty chains remain among the top sellers for teens. STS said that five of the top outlets for teen girls this year were specialty stores, though, of those five, only one, American Eagle Outfitters, gained market share this year. (See Table 4.)
The continued specialty-store hegemony was also clear in a ranking of teens’ top brands: Eight of them were specialty-store banners, though the moderate jeans brands LEI and Mudd also worked their way onto the list. (See Table 5.)
Overall, teen females continued to outspend other women on apparel on a per capita basis. STS found that teen women aged 13 to 19 for the year ended in August spent $330.15 per capita on apparel, compared with $300.63 per capita for all women 13 and up. Teens spent significantly more on jeans than their elders, and less on other types of pants. (See Table 6.)
Teens spent more this year on jeans than on any other category of apparel, a phenomenon that reflects the category’s strong run in recent years. According to Cotton Inc.’s Lifestyle Monitor, teen women aged 16 to 19 surveyed during the first nine months of 2003 said they owned, on average, 10.5 pairs of jeans, up from 10.1 pairs a year earlier, and well above the average of 7.5 pairs owned by women 20 and up.
But their answers to a few questions suggested that their intense interest in jeans might be fading: 19 percent of teens said they preferred to wear casual slacks instead of jeans, up from 13 percent a year ago, and 12 percent said they “don’t need and won’t buy” jeans, up from 9 percent a year ago.
Overall, sources said what would be most likely to encourage teens to boost their apparel spending again would be strong new fashion looks.
“If they feel like everybody is doing the same look, everybody is showing the same thing, that makes them feel a little less inclined to buy,” said Jane Rinsler Buckingham, president of New York-based marketing consultant Youth Intelligence.