Young buyers revitalize retail, strut tall at mall

The most coveted shopper these days isn't a wealthy housewife toting a Chanel handbag. It's more likely her daughter.

By most accounts, teenagers are ideal consumers: Typically unhampered by debt, bills and mortgages, they spend freely and impulsively. Unlike their time-strapped parents, they hit the malls frequently and stay longer. Peer pressure at school makes it easy to justify dropping all of last week's allowance on the latest Lady Gaga album, Xbox 360 video game or premium jeans.

So retail industry watchers were alarmed when teen spending plunged during the recession. "Bank of Mom and Dad -- on pretty much all income levels -- basically shut down in the back end of '08 and the beginning of '09," said Christine Chen, a retail analyst at Needham & Co.

But teen shoppers are making a comeback. For two months in a row, teen retailers have soared past sales expectations. Notably, Abercrombie & Fitch Co., known for its sexy advertising and casual-but-pricey fashions, snapped its 20-month streak of negative sales with an 8 percent increase in January.

Teens are hanging out at the mall after school again, goofing around with friends in dressing rooms, snacking on junk food at the food court and giving retailers hope that they'll help kick-start a greater wave of spending industrywide.

Last week, Vintage Faire Mall in Modesto was crawling with teenagers who were out of school for spring break. The food courts, stores and walkways were filled with groups of teens hanging out and carrying distinctive yellow, pink and blue bags from their favorite stores.

"The economy doesn't hit us so bad because our parents give us money," said Marissa Reyes, a Merced High junior who was shopping with her sister Rosemary at the mall Thursday afternoon. "I don't have a problem spending money because it's not mine."

That lack of hesitation when it comes to walking up to the the cash register is exactly what retails want to see.

"Whether it be sports equipment, whether it be athletic footwear, whether it be fashion, whether it be electronics, the teen market is showing signs of life and positive growth," said Marshal Cohen, chief industry analyst at market research firm NPD Group.

To be sure, not everyone is joining the spending party, and many teens say they are more cautious than before and continue to hunt for bargains. Yet teens today are spending about 6 percent to 8 percent more in general compared with a year ago, Cohen said.

"Clearly, the teen is leading the charge when it comes to the return."

Friends Andromada Murden and Armani Abonce, juniors at Johansen High in Modesto, also were hanging out at the mall Thursday. The girls said they shop at the mall about four times a month and always stop at their favorite store, Forever 21.

"I'm spending way more (than a year ago) because my mom got a better job," said Armani, 16. "I'll look at the sales, but if I see something really pretty I just get it."

Andromada, also 16, said she is more cautious. "I look for bargains more than I used to."

Janice Curtin, Vintage Faire's senior marketing manager, said many of the stores that have opened in the past year cater to teens and twentysomethings. "The teen shopper has always been one of our best, and most loyal, customers here," she said. "Their demand for more fast fashion options brought great new retailers like H&M, Love Culture and an expanded Forever 21 to the market. The success of these stores, and others like Vans, Buckle and Aéropostale, indicates that teens have money to spend."

Shoppers turn buyers

Nationally, the rise in teen spending is good news for retailers.

"2009 was a very difficult year for us, and we're starting to see the uptick," said Patti Whisler, regional planning manager of Macy's southwest region. "Juniors is at the forefront of our improved business, so it's outpacing some of the other businesses that we have right now."

Rob Vaughn, manager of the Buckle at Vintage Faire, said teens have always been a strong customer base for the store. Recently he said he has noticed a trend toward quality items rather than quantity in younger shoppers. While older shoppers might gravitate toward the sales, teens know what they want.

"They are looking for the hottest item, the trendiest stuff," he said.

Since the holidays, the Best Buy in West Los Angeles has seen business pick up among teen boys, said Jackie Martinez, a store supervisor. "They always come in. It was just a matter of whether they were buying or not," she said. "Before, they were probably just getting a main product, but now they're also getting the accessories to go with it because they have more to spend."

Macy's is working on expanding its juniors assortment and increasing its social media and digital marketing efforts. Forever 21 recently launched HTG81, a kids' line, and Love & Beauty, a cosmetics line. It also added swimwear and active wear, expanded its plus-size Faith 21 line and relaunched its men's line.

J.C. Penney is upping its social media efforts and recently launched a celebrity fashion line for teens with Mary-Kate and Ashley Olsen called Olsenboye. H&M is aggressively opening stores, including one at the Modesto mall in November.

"We're inspired by how teens dress -- they're influencers, they're not afraid to take fashion risks," H&M spokeswoman Nicole Christie said. "When we do trend forecasting for seasons ahead, we definitely look to them on new takes on existing trends. They are key to our design process, but they're also key to our business, sales-wise."

Teen fashion cents

In January, Billabong launched its Runway swim collection, which features higher-ticket pieces that focus on novelty trims, prints and silhouettes.

Patterson teens Abigail Grisel and Gracie Bradley, both 15, arrived at the mall ready to shop for a friend's quinceañera. They, too, like stores like Forever 21 and Wet Seal, and both said they are spending more than a year ago.

"If something was $10, I'd buy it before," Gracie said. "But now if it's $20, I'll buy it anyway."

After 18 months of declines, the sector posted a 6.5 percent year-over-year increase in January, making it the month's best performer.

Last month, teen retailers again beat expectations with a 5 percent sales increase, far better than the 2.3 percent decline analysts had forecast, Thomson Reuters said. Results are based on sales at stores open at least a year, known as same-store sales, and considered a reliable measure of retail health.

"You've seen teens come back pretty aggressively in terms of spending," retail analyst Chen said. "Teenagers are not a savings-oriented bunch. They spend every dollar they get."

Part of the strength comes from easy-to-beat 2009 sales figures, but it's also due to pent-up demand among an age group that derives a lot of enjoyment and a sense of identity from material purchases, analysts said. Also, as parents slowly recover from the downturn, money tends to get funneled to their children first, industry analyst Cohen said. Because teens are still growing, there's often a real need for a new jacket or pair of sneakers.

And if a teenager wants something, if they have the money he or she usually buys it. Take 17-year-old Marissa, a Merced resident. Shopping with her sister, she said her strategy is simple, "Usually I go out with a set amount of money and I'll spend it until it's gone."