After a year of observing their parents pinch pennies and fret about the economy, US teenagers may be coming to grips with reality.
Sales are down sharply in recent months at nearly every major retail chain catering to teenagers, and interviews with teenagers suggest that the reasons go beyond their own difficulty finding part-time jobs.
“I think my sister and I, throughout this year we’ve kind of lost an interest in getting gifts and things like that,” said Morgan Porpora, 16, who in the past had a list of things she wanted for Christmas. “I guess we’ve noticed the economy, and we just kind of even feel bad I guess asking for a lot.”
Last month, stores that specialize in clothing and accessories for teenagers were the worst-performing sector in all of retailing, posting a 7.8 percent year-over-year sales decline, according to Thomson Reuters.
Sales at stores open at least a year, a measure of retail health known as same-store sales, tumbled by double digits last month at Abercrombie & Fitch, Hot Topic and American Apparel. Same-store sales also declined at Zumiez, Wet Seal and American Eagle Outfitters.
Teenagers’ growing mindfulness about money is influenced, of course, by the way their parents are cutting back, and by a record-high teenage unemployment rate. But the biggest factor, according to the teenagers themselves, is that they have come to understand the social moment.
“As me and my brothers get older and we realize the implications of the recession, we just kind of value presents and gifts less,” 16-year-old said Sarah Berger said.
ROUNDTABLE
Berger was among more than a dozen teenagers talking about shopping and spending last week at a roundtable in Armonk, New York. Similar gatherings have taken place across the US, many of them organized and moderated by John Morris, an analyst with BMO Capital Markets who uses the sessions to glean insights about the health of the teenage retailing market. One took place one night around a dining room table in the home of 16-year-old David Taitz.
While a couple of students said they felt slightly more optimistic this year, mainly because their parents still had jobs, most said thrift was the reigning household theme. Teenagers who celebrate Hanukkah, for instance, said they received one gift instead of presents on each of the holiday’s eight nights. Additionally, many parents had spoken with their children ahead of Christmas to lower expectations.
“I know my mom was saying that we’re going to spend a little bit less this year,” 16-year-old Katharine LaMantia said. “We’re each getting either one big gift or a couple of smaller gifts. And I’m not going to buy as many gifts for my friends because we’re trying to spend less than we did last year.”
Morris, who has led several retailing discussions with teenagers, said that unlike last holiday season, when the economic crisis was still new, teenagers now understood that nearly everyone was making sacrifices.
“What we’re hearing more and more is that these teens are empathizing with their parents,” he said. “They’re more concerned.”
PRICEY AND PREPPY
No major retailing chain has felt the effects of that concern as much as Abercrombie & Fitch, the pricey, preppy clothing purveyor that has turned in 19 consecutive months of same-store sales declines. Last month, its sales sank 17 percent.
Rachel Kaplan, 16, said the chain was once a top trendy destination.
“Now I walk in there, it’s empty,” she said. “I think it’s because they charge $80 for a polo shirt.”
While Abercrombie is suffering, Aeropostale, the value-priced clothing chain for teenagers, has fared well in this economy, posting record monthly sales figures. Last month, same-store sales rose 7 percent.
“I don’t mind it because it’s kind of the same thing as Abercrombie and Hollister but a little cheaper, so you’re not spending like $40 for a T-shirt,” 17-year-old Bryan Dunn said.
The students want low prices, but at the same time, they seem to be discovering the relationship between price and quality.
“If a shirt costs $10 but then rips every month or so, that’s a lot of T-shirts,” Kaplan said. “It adds up. Whereas if you buy a shirt that costs like $30 but it doesn’t rip, you can have it for as long as you want to wear it.”
That sentiment may explain why some teenagers are gravitating to the Gap, which is trying to pull off a turnaround. Last month’s same-store sales at Gap were unchanged from the same month last year, when they fell 10 percent. That is a better performance than most of Gap’s competitors.
“That’s your confirmation that teens are much more practical-minded,” said Morris, the BMO analyst. “You know you can just go in and get basic things and that the price is right.”
BUCKING THE TREND
The teenagers said they were also shopping more at TJ Maxx, which sells designer brands at affordable prices. As it turns out, TJX Cos, which owns TJ Maxx and Marshalls, just had its best quarter ever. The chain reported an 8 percent same-store sales increase last month, and retailing analysts said it was taking market share from teenage clothing stores.
The teenagers said they could see the impact that news reports about the economy had on their parents.
“It’s nothing you can run away from,” 16-year-old Michelle Cioffoletti said.
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