Teen Spending Slows; Browsing More on Mobile

According to the recent Piper Jaffray semi-annual "Taking Stock With Teens" consumer insights project, teens are experiencing general spending fatigue across key categories, specifically fashion related items. The absence of a clear product catalyst is a key contributing factor to diminished spending proclivity. (Steph Wissink, senior research analyst at Piper Jaffray)

“Intent to spend also moderated, despite over two-thirds of teens signaling confidence the economy is stable to improving… also observing trends that imply teens are browsing regularly on their mobile devices, shopping less frequently and engaging with brands ‘on demand’ on their own time… “ Wissink said.

The report says that these findings point to a sign of spending moderation and tempered intent to spend across multiple categories and household income levels. Spending declined mid-single digits to the prior year and prior season. Shopping frequency declined and trip measures are down nearly 25% from prior peak. Households are digesting the payroll tax increases from early-2013 as parent contribution to teen spending returned to normal levels.

Key findings from the survey in fashion, beauty and personal care, restaurants, media, gaming and entertainment include:

1. The fashion category accounts for roughly 39% of teen budgets, consistent with prior survey cycles.

  • Footwear is outperforming apparel and accessories and insights into key trend changes include a modest improvement in action sports mindshare, further contracting demand for fast fashion, a stable refined classic or preppy aesthetic, and growing preference for fashion athletic wear

2. Teens are shopping less in single brand, vertically integrated stores and more in multi-branded, multi-category and online retail environment.

  • 78% of females and 82% of males shop online, and respondents indicated that a mid-teens percentage of their spending is online. 60-70% of teens indicate they prefer to shop the Web sites of their favorite stores-based retailers. In addition, teens prefer labels to logos and seek value in their purchases, owing to the rise of spending in the outlet and off-price channels. 71% of teen girls and 57% of teen boys shop at off-price stores and 52% and 45%, respectively, indicated it is popular to do so. The shift toward digital is proliferating softlines, hardlines and media purchases. DVD by mail and streaming account for 52% of movie rentals and online music provider Pandora accounts for 25% of preferred music sources

3. Teens have cited "friends" as the strongest influence over their purchase decisions for the duration of the survey history, but "Internet" is quickly rising in profile.

  • More than half of teens indicate that social media impacts their purchases with Twitter being the most important, eclipsing Facebook, followed closely by Instagram. But the popularity of Facebook is waning among teens with 23% citing it as the most important, down from 33% six months ago and 42% a year ago

4. Beauty spending among upper-income teens declined high single to low double digits to the prior year and prior season.

  • MAC was cited as the No. 1 cosmetics brand for upper-income teens for the sixth survey in a row and Cover Girl ranks at the top of the list for average-income teens. Teens continue to demand greater diversity of cosmetics offerings, likely spurred by several emerging cosmetics brands coming to market with new and superior innovations, says the report

5. Teens are increasingly choosing organic food options, with 39% eating organics versus just 33% two years ago.

  • This trend is likely to support ongoing demand for natural and organic grocery, as teens age into young adults and establish independent households. When eating out, 60% of teens prefer limited service restaurants, up steadily from 43% four years ago. In addition to classifying by segment, preferred restaurant brands also provide insight into various cuisine profiles. For American Cuisine, teens favor Cheesecake Factory; for Italian, teens favor Olive Garden; and for Mexican-inspired fare, teens favor Chipotle Mexican Grill

6. Teens represent more than one-third of video game players, and gaming accounts for 7% of teen spending.

  • Interest in traditional gaming consoles remains strong entering a new console cycle. Awareness of next generation consoles was 86% among teens that play video games at least monthly. Approximately 49% of teens intend to purchase a next generation console. Buying and selling used video games remains a critical component of the gaming industry, with 64% of gamers buying used games and 26% of teens trading in old games to fund new software and hardware purchases

The "Taking Stock With Teens" survey is a semi-annual research project comprised of gathering input from approximately 8,650 teens with an average age of 16.2 years. Teen spending patterns, fashion trends, and brand and media preferences were assessed through visits to a geographically diverse subset of high schools in 13 U.S. states and through a national online survey of a wider group of teens from 37 different states.

For additional information from Piper Jaffray, please visit here.



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