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Total teen spending on fashion declined nearly 20 percent on a
year-to-year basis, indicating a “discretionary
recession,” according to the 15th
semi-annual “Taking Stock With Teens”
research survey, recently published by Piper Jaffray. The national study
was conducted by senior research analyst Jeff Klinefelter and a
collaborative team of research analysts to determine purchasing behavior
and brand preferences among teens. Through mall research field trips and
classroom visits in 11 cities across the United States, the team
surveyed nearly 700 students using in-class, online and in-store surveys
this spring. Piper Jaffray also captured an additional 4,500 online
survey responses through the national DECA organization, which partnered
with the retail research team for the seventh time.
According to the survey results, total spending trends were weakest for
young men with a 15 percent year-over-year decline versus an 11 percent
year-over-year decline for juniors (young women). While the fashion
category represents 41 percent of the total teen budget in the spring
2008 survey and teenagers continue to spend a significant amount of
money in this category, the Piper Jaffray retail research team notes
this budget allocation is low compared with the past several years.
“We‘re currently
in the ‘transition phase’
of the fashion cycle and believe that we have not yet hit bottom,”
said Jeff Klinefelter, senior retail research analyst at Piper Jaffray. “The
current economic challenges are impacting consumers at all income levels
and ages, indicated by the historic low level of average planned
spending in the fashion category this spring.”
Key findings from the survey in the fashion, beauty and personal care,
home furnishing, video game, digital media and restaurant categories
also include the following:
The top five brands among all students in the school survey remain
largely unchanged from last fall. Hollister remains the No. 1
preferred brand by teens, as ranked by mindshare, followed by West
Coast Brands (e.g. Pacific Sunwear, Volcom, Quicksilver, Zumiez),
American Eagle, Abercrombie & Fitch and Forever 21. Specifically among
brands ranked by girls, Hollister maintained its “most
preferred” position, while West Coast
Brands continue to resonate as a favorite among young men.
A bright spot in consumer spending trends points to an increase in
spending from the fall 2007 results among teen girls in the beauty
category. Overall, spending by parents was down in both the apparel
and beauty categories. In addition, privately-held, Swedish-based IKEA
was the top choice among teens followed by Pottery Barn/PB Teen in the
home furnishing retailer or cataloger category.
By gender, electronics represented 10 percent of total budget for
young men and 4 percent for juniors this spring and 7 percent overall,
up slightly from 6 percent last year. Spending in the video game
system category increased significantly for young men to 13 percent
from 9 percent last fall.
In the digital media category, 86 percent of the students who own an
MP3 player indicated that they also own some form of an iPod, which is
an increase from 82 percent last spring. Although iTunes continues to
dominate market share at 81 percent, 61 percent of the students
surveyed indicated they download music illegally, compared to 64
percent at this time last year. In addition, 6 percent of the students
surveyed indicate they own an Apple iPhone, which is double the market
share found in the fall 2007 survey; 9 percent expect to buy an iPhone
in the next six months.
Starbucks continued to be the clear brand leader across the board in
both the school and online survey. Premium coffee is potentially a
growing category among teens as Dunkin’s
Donuts appeared in the top ten brands for the first time in the school
survey. Chipotle and McDonald’s remained in
second and third places in the school survey, while Olive Garden and
Applebee’s remained in second and third in
the online survey. However, Chipotle continues to gain teen market
share, ranking among the top ten brands in the online survey for the
first time. In total, approximately 45 percent of the students
surveyed believe they have spent more money this year at restaurants
than last year.
Piper Jaffray also polled more than 75 parents on the amount they spend
either on themselves or their teens. Parents indicated that annual
spending on teen apparel totaled $883 versus $1,487 in the spring 2007
survey, a 41 percent decline on a year-over-year basis. In addition, the
survey results show parents’ annual spending
on their apparel was down 24 percent from last year, totaling $952
versus $1,249 last spring.
About Piper Jaffray
Piper Jaffray Companies 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. With headquarters in Minneapolis, Piper
Jaffray has 25 offices across the United States and international
locations in London, Hong Kong, and Shanghai. Piper Jaffray & Co. is the
firm's principal operating subsidiary. (NYSE: PJC) (http://www.piperjaffray.com)
Since 1895. Member SIPC and FINRA.
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Mall, Suite 800, Minneapolis, Minnesota 55402-7020