Teens' changing shopping habits hurting Abercrombie, others

Bloomberg NewsNovember 11, 2013 

— Teens don’t shop the way they used to.

Where young consumers with spare cash once thronged the likes of Abercrombie & Fitch and American Eagle Outfitters for clothing that telegraphed their identities, the new generation is poorer, shuns logos and socializes more on the Internet than at the mall. They’re also increasingly global fashion citizens, mixing garments from brands across the world that are now accessible from their smartphones.

The changing shopping patterns in what Piper Jaffray Cos. estimates is a $30 billion market are providing fertile ground for upstarts such as Brandy Melville USA, which relies more on Instagram followers than television ads. They’re also causing a drain from the established chains that have been slow to turn away from their expansive stores and uniform, all-American style that worked so well for so long.

“Everything gets old,” Allen Adamson, a managing director at Landor Associates, a San Francisco-based brand consulting firm, said in an interview. “They stayed on their game, but the market shifted.”

Abercrombie, American Eagle and Aeropostale all are projected to have sales declines in the year ending in January after gains in the previous year. The chains’ shares also are lagging other retailers in 2013, with Abercrombie, American Eagle and Aeropostale all down more than 20 percent through Nov. 8, while the Standard & Poor’s 500 Retailing Index gained 36 percent.

One reason is that teens have less money. The unemployment rate among 16- to 19-year-olds was 22.2 percent in October, the most recent month for which Labor Department data are available. The rate has stayed above 20 percent since May 2009. Parents aren’t as able to help out, and shoppers of all income levels are pulling back on unnecessary items.

“Parents are being more value-oriented,” said Jahnia Sandford, a Columbus, Ohio-based apparel analyst at Kantar Retail. “If you have limited income, you’re not going to Abercrombie and Hollister and spending $40 on a pair of denim.”

The teens who do have money are spending it differently. About 60 percent of millennial shoppers use smartphones, according to Pew Research Center. That means they can compare prices without entering or leaving a mall, where the traditional teen chains have most of their stores.

Those phones, loaded with Facebook’s social network and its Instagram photo-blogging app, provide them a gateway to a world of fashion trends. The Internet allows shoppers to be pickier, comparing prices and customizing the size, color and design of much of what they purchase.

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