Challenging Economy and Low Consumer Confidence Lead to 14 Percent Drop in Teen Spending
08 April 2009 - 11:17PM
Business Wire
A challenging economy and low consumer confidence has led to a
dramatic 14 percent decline in fashion spending, according to the
�Taking Stock With Teens� survey published by Piper Jaffray. The
17th semi-annual survey is a national study, which is conducted by
senior retail research analyst Jeff Klinefelter and a collaborative
team of research analysts, aiming to determine purchasing behavior
and brand preferences among teens. This spring, the team visited
nine cities across the United States, surveying approximately 600
students with an average age of 16.3 years. In partnership with
DECA, Piper Jaffray captured online survey responses from an
additional 7,500 students with an average age of 16.7 years.
The survey results indicate that spending in the junior apparel
category has decreased 19 percent, but increased 9 percent for
footwear and 8-percent for accessories. Footwear posted the
strongest year-over-year and sequential results at a 4 percent and
21 percent gain respectively � an indication that the strong
footwear cycle, particularly relative to the weakness in apparel,
continues for the youth demographic.
�After the drop in teen spending stabilized last fall, it is
apparent that the continued challenges in the economy are having a
dramatic impact on teen spending this spring and the 14 percent
decrease is a direct reflection of this,� said senior research
analyst Jeff Klinefelter. �The decrease in spending leads us to
believe that the economy is forcing parents and teens to cut back
on spending across the board. Teens and their parents are still
buying new clothes, footwear and accessories, but are more
selective and increasingly price conscious. This will force
retailers to discount prices and offer unique promotions to keep a
steady flow of spending until the economy improves.�
Other key findings from the survey in the fashion, beauty and
personal care, video game, digital media and restaurant categories
include the following:
- West Coast Brands (e.g. Pacific
Sunwear, Volcom, Quicksilver, Zumiez) took the No. 1 spot in
clothing brand preferences among teens, followed by Hollister,
Nike, Forever 21, and American Eagle. Specifically among brands
ranked by young women, Hollister took the "most preferred"
position, while West Coast Brands continued to remain a favorite
among young men.
- Beauty spending down from last
year, but stabilizing from fall 2008 as lower-price categories of
fragrance and cosmetics outpace skin care, and department stores
continue to cede share to discount, drug, and specialty
stores.
- Survey results indicate video
game spending is now 8 percent of teen budgets, which is up from 3
percent five years ago. The results also indicate 89 percent of
teens own at least one video game console, while 59 percent own two
consoles. Additionally, GameStop remains the retail destination of
choice with 31 percent share, as teens utilize the company�s
trade-in model.
- In digital music, 86 percent of
students who own an MP3 player indicated that they own an iPod � up
from 84 percent last fall. iTunes share also rose to 97 percent
from 93 percent last fall. In addition, 8 percent of students
indicate they own an Apple iPhone (up from 6 percent year-on-year),
while 16 percent of students expect to buy an iPhone in the next 6
months.
- In the restaurant category,
Starbucks has once again secured the No 1. spot and is preferred by
teens in both the school and online surveys. Our conclusions from
the spring 2009 survey as it relates to the restaurant sector
include 1.) the average estimated teen restaurant spend has
decreased since the beginning of the recession (Fall 2007 survey),
2.) value, as a factor of influence, continues to rank higher and
higher; notably even more so than convenience and 3.) the lunch
daypart continues to gain share at the expense of dinner. As a
result, operators with a value message are gaining teen market
share; including Starbucks, Chipotle and McDonald's.
Piper Jaffray also surveyed parents and the results indicate
that spending on themselves and their teen decreased sequentially
yet spring 2009 levels appear to be stabilizing and slightly ahead
of last year. Apparel spending by parents for their teens was $915
compared to fall 2008 at $1,085 but this level is above the $883
average in spring 2008. Parents indicated that annual spending on
their own apparel declined 20 percent sequentially and 6 percent
year-over-year and with a shift toward discount and value
retailing. When shopping for themselves, parents cite Nordstrom and
Kohl�s as preferred. When shopping for their teen, parents picked
Hollister, Nordstrom, and West Coast Brands.
About Piper Jaffray
Piper Jaffray Companies (NYSE: PJC) is a leading, international
middle market investment bank and institutional securities firm,
serving the needs of middle market corporations, private equity
groups, public entities, nonprofit clients and institutional
investors. Founded in 1895, Piper Jaffray provides a comprehensive
set of products and services, including equity and debt capital
markets products; public finance services; mergers and acquisitions
advisory services; high-yield and structured products;
institutional equity and fixed-income sales and trading; and equity
and high-yield research. Piper Jaffray headquarters are located in
Minneapolis, Minnesota, with offices across the U.S. and in London,
Hong Kong and Shanghai. Piper Jaffray & Co. is the firm's
principal operating subsidiary. (www.piperjaffray.com)
Since 1895. Member SIPC and FINRA.
� 2009 Piper Jaffray & Co., 800 Nicollet Mall, Suite 800,
Minneapolis, Minnesota 55402-7020
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