NEW YORK — Once considered recession-proof, the teenage consumer market is finally feeling the economic pinch.
“Teens are certainly not insulated from what’s going on,” said Irma Zandl, founder of the Zandl Group, a New York-based consumer research firm that studies teen behavior. “We’ve been hearing from them how tough it is, and many have been seeing their parents lose their jobs.”
Amid a larger slowdown in consumer spending during recent months, teens are also finding considerably less cash in their pockets.
“Parents are contributing at least half [of what teens are spending],” said Jeffrey Klinefelter, senior research analyst at Piper Jaffray. “All indications would suggest that budgets are tighter and that if they’re not getting cut back at this point, they are certainly expected to in the future.”
In addition to the parental money crunch, many teenagers also are being affected by the poor job market, as demand for part-time workers decreases and positions are filled by more-qualified adults.
Indeed, many retailers told Footwear News that both parents and kids are increasingly price sensitive. “Parents definitely try to get their children to purchase off the sale tables,” said Kelly Cuerva, manager at Bad Doll in Portland, Ore. Zandl said parents and teens are “on the same page” when it comes to budgeting. “We have not gotten any sense of teenagers being resentful or feeling put out and annoyed at their parents,” she said.
Even when they are spending their own money from part-time work or gifts, teens are on the hunt for bargains. “I have never seen them so patient waiting for prices to drop. It’s like they are playing a game with the retailer,” Zandl noted.
Most vendors agreed that teenagers are looking for more bang for their buck. “[The key to tapping that market] is having the right look at the right price,” said Ed Goins, VP of sales at Ugg, one of last year’s strongest-performing brands.
Tom Mendes, owner of Plaza Too in New York and Connecticut, said his teenage customers are seeking multipurpose footwear. “They may buy a Frye boot that’s $200 but a decent quality, or a basic ballet flat instead of the frivolous thing. … Purchases have to make a little bit more sense.”
“[Teens] are very tuned in to relative value,” said Klinefelter, “so it’s not about the absolute lowest unit price for an item, it’s about a combination of brand strength and budget constraints.”
As they become more value-oriented, teens are also starting to broaden their shopping destinations.
In his most recent semiannual study, “Taking Stock with Teens,” Klinefelter found that while teens continue to rate specialty stores as their preferred retail channel, discount, outlet and Internet retailers have made meaningful gains.
“Most of our customers have checked out what we have online and know what they want when they come in to the store,” said Bad Doll’s Cuerva.
And for brands, the Web is just as important. “We can’t ignore the fact that online is huge. This is where kids are living,” said April Vitkus, girls’ marketing director at Vans.
But malls still play a crucial role in the youth market. “Teens, as a part of their lifestyles, do spend a bit more time in malls,” said Klinefelter, who noted that teen mall traffic has not declined as significantly as adult traffic.
“The teen is in the malls and shopping more often than her mom — she’s looking and observing,” said Gene Berkowitz, brand president for Jessica Simpson and BCBGirls footwear. “I can’t say that she actually closes a sale, but I know she is in the shoe salon.”
Despite the challenging retail environment, some companies remain upbeat about the market’s potential. “The juniors’ consumer is the part of the market that will continue to grow. The money they’re earning is their own to spend,” said Bob Goldman, CEO of Los Angeles-based Chinese Laundry. The brand has plans to ramp up both retail and wholesale in the coming year.
Some juniors’ brands also seem to be benefiting from older consumers trading down. “This year, our best business has been Madden Girl,” said Ed Rosenfeld, chairman and CEO of Steven Madden. “[Madden Girl] does skew a little bit younger, but it’s also fashion footwear that’s more moderately priced than Steve Madden. Some of these economic factors have driven [adult customers to the line].”
Indeed, in 2008, Steven Madden was one of the few firms to report positive sales trends, and after the third quarter, raised its earnings guidance.
But Madden Girl isn’t the only brand capitalizing on a more fashion-forward consumer. “One thing that’s newer for the juniors’ customer is that she can be very dressy,” said Lanie Pilnock, Candies’ VP of brand management.
Berkowitz agreed: “Heel heights have definitely gotten higher in both [Jessica Simpson and BCBGirls]. As our heels have gotten higher, they’ve been more successful, and the younger generation is shopping for those shoes.”
But casual footwear is still a big focus for many juniors’ companies, too.
“She’s definitely wearing heels to school, but she might also wear a casual moccasin the next day,” Pilnock said. “You really have to cover all the categories for just that one consumer.”
According to Cuerva, casual brands that are resonating with teen consumers include Vans, DC and Converse, which carry moderate price points. “Anything under $60 is usually the sweet spot for them, and most of the skate shoes are right around that range,” she said.
Airwalk’s VP of brand management, Eric Dreyer, said the current trend in skate shoes is a stripped-down, back-to-basics approach. “Vulcanized constructions that are low-profile and simple are very relevant,” he said. “It’s a much more muted palette: monotone blacks, browns, navys.”
Erica Young, girls’ category manager at Vans, said the brand is branching out from traditional styles to offer a wider range of product. “We will always have our vulcanized looks that we are known for,” she said. “But boots are really big, and we’ve had success with them and are going to continue forward [with them].”
As many brands work to diversify their product assortments, there is still no must-have item in the marketplace. “There is no dominant fashion trend right now, which makes it easier for fast-fashion retailers to offer value-priced product and very broad assortments,” Klinefelter said. “We don’t know what it is yet, but [a new trend] will surface in the next 12 months and that will be what drives replenishment.”
Zandl said she expects spending to spike in time for the back-to-school season. “By that time, I anticipate there might be pent-up excitement about replenishing the wardrobe.”