“Teens Want a Change”, courtesy of WWD

June 14, 2010 at 7:16 am (Uncategorized)

The teens want a change.

Specialty stores catering to fickle 13- to 19-year-olds are struggling as these consumers grow tired of the Americana and surf-and-skate fashions they’ve long snapped up and search for a new look — even if they’re not quite sure what that look might be. Their ennui is setting off alarm bells over the crucial back-to-school season even as schools let out for the summer.

Not only is demand soft, but competition is growing. Fast-fashion retailers such as H&M, Zara and Forever 21 are gaining momentum since their looks change every six weeks or less, and mass merchants are picking up market share, as well. According to Hana Ben-Shabat, a partner in the retail practice at the A.T. Kearney consulting firm, between 4 and 6 percent of teens last year shifted from shopping at specialty stores to shopping at mass merchants and discounters.

Part of this is being driven by the hangover from the recession — and continued high unemployment. That means teens don’t have money to spend on new clothes, and nor, in many cases, do their parents. Apparel spending, which had averaged 50 percent of teens’ discretionary purchases in 2008, fell to 40 percent last year.

According to The NPD Group, apparel spending among 13- to 19-year-olds dropped 9.4 percent to $34.7 billion in the 12 months ended April from $38.3 billion during the comparable prior-year period.

Soft demand in the teen segment and a glut of inventory that built up since the first quarter at key stores could trigger an all-out price war in the space, pressuring results for the second quarter and b-t-s, according to analysts.

Comparable-store sales at teen stores fell 2.7 percent in May, Thomson Reuters’ reported, well below the 2.6 percent increase for all stores reporting last month. Some, but not all, of the weakness could be attributed to strong year-ago results: Aéropostale Inc.’s 1 percent gain came against a 19 percent year-ago increase and The Buckle Inc.’s 5.4 percent decline compared with a 13.4 percent increase in May 2009.

The need to clear out inventory in advance of b-t-s shipments at retailers including Gap Inc., American Eagle Outfitters Inc. and Abercrombie & Fitch Co. not only could put stores under higher price and margin pressures, but also affect consumer psychology going into the important b-t-s selling season, said Kurt Salmon & Associates partner and strategist Christina Bieniek.

“Retailers have to get inventories down for b-t-s,” she said. “It will be interesting to see what that will do to the consumer.” A promotional summer could make it difficult for retailers to “flip the switch” back to full-price selling during the b-t-s season, she noted.

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