Retail Takes A Beating From High Teen Unemployment And Students Loans

If you've been watching the news lately, you may have noticed the bleak headlines about teen unemployment. “Teen employment hits record lows,” one article states. "The lost generation," another article proclaims about today’s youth. 

The numbers aren’t pretty. The share of unemployed 16 to 24 year olds not in school is at 17.1%, according to July’s job report. That’s up from 11% six years ago. More senior citizens choose to work later into their retirement, which contributes to teens having a harder time getting entry-level jobs, now that overqualified, older people continue to stay in the workforce. 

This high unemployment rate among young adults is having a very tangible effect on both their livelihood and popular retail brands. Consider the following:

  • Teen-apparel retailers reported very disappointing sales. Recently, Abercrombie & Fitch posted dismal second-quarter results, driving share prices down. Competitors American Eagle and Aeropostale also stumbled. 
  • The back-to-school shopping season was a bit disappointing. After a historic 2012, Americans pared back their back-to-school spending, according to the National Retail Federation
  • Some high-budget teen movies tanked this summer, while older moviegoers have driven the success of a few surprising hits (like “The Butler”). 



These issues aren’t just brought on by rising teen unemployment. Student loans, which have topped $1.2 trillion, compound the issues. The student loan situation is so bad that it prompted President Obama to sign new student loan interest rate legislation into law recently. 

The implications of these dismal trends for brands are enormous. If teens are taking on a lot of debt to go to school and cannot find part-time work, they have less disposable income for movies, eating out, clothing, video games, and almost anything outside their bare necessities. The fight for brands’ share of wallet is fiercer than ever before. 

The effects of high teen unemployment could also have a long-term effect for brands. For instance, in the TV industry, if young consumers are tapped out financially—and if they can find the same content online for free or nearly free—then they are less likely to ever subscribe to cable after moving out. It’s possible we’re raising a generation of “cord-nevers,” a group of consumers who grow accustomed to never subscribing to cable and paying the $75-$150 a month for TV service.

To adapt to this crisis, brands need a better grasp of consumer preferences in areas that affect them. Marketers need a deeper understanding of the macro issues affecting teens and young adults as consumers, but they also need to do more consumer insight work to understand the pressures teens are under. Much of what marketers know about Millennials is more about the older cohort, a group that largely made it out of college before the bottom fell out of the labor market. It’s time for marketers to re-examine their assumptions about this generation within the context of today’s economic realities. 

Despite these discouraging numbers, the future isn’t all doom and gloom. The economy continues to incrementally improve and as MTV found out recently, younger Millennials are showing signs of resilience, adapting the necessary skills to survive the sobering realities of today. Some businesses such as those in the restaurant industry are already thinking outside the box to reach Millennials. Marketers can bet that the kids will be all right…eventually. But, now that money is an object for this generation of consumers, it’s more important than ever for marketers to do careful research to figure out how to remain relevant.

2 comments about "Retail Takes A Beating From High Teen Unemployment And Students Loans".
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  1. Sandra Lawrence from btg design, September 12, 2013 at 11:21 a.m.

    It's a cycle that may not end anytime too soon. With common core HS testing standards raised higher, teens may be more inclined to give up and perhaps not finish HS. Then comes the hustle to find work, which has proven tougher for teens. School is not as fun especially if budget cuts call for eliminating shop or training classes along with some sports and arts. Teens are bored and you can only play some much video games. They want experiences, interesting and interactive things to do and marketers should try and figure a way to include these at local malls or partner with local businesses that could help this happen. I see it in my area where most posted activities are for the very young.

  2. Jennifer Smith from Chubb Corp., August 29, 2014 at 8:52 p.m.

    College loans have very high rates. That is why more and more people take short term personal loan. These loans help people who saved money to pay for their education. And they also help to pay back your college loan. The government has to pay attention on situation with education and they have to know how expensive is education.

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