April 22, 2008
Kids Without Cash
In the past it has seemed as though teens had an inexhaustible supply of cash. Whether it was from part-time jobs, money from the Bank of Mom and Dad, birthday, graduation, gifts, etc. – kids were out and spending.
Now, it seems, even indefatigable teens and their wannabes (tweens) are cutting back due to a lack of funds. The costs of products that kids buy are going up with everything from gas to a slice of pizza to jeans at prices this generation has never seen before.
According to a piece by USA Today, teen hiring has been down five percent since March of last year. The same report noted that some economists believe this could be the worst year for teen spending since the early 1990s.
Same-store sales at retailers targeting teens were down 0.5 percent last year compared to increases of 3.3 percent in 2006 and 12.1 percent in 2005, according to figures from the International Council of Shopping Centers and UBS.
Higher-end teen stores such as Abercrombie & Fitch and American Eagle have been hit harder than lower-priced chains such as H&M.
Second-hand stores have also seen an influx of teens looking to make their limited dollars go farther.
“It is way cooler to get a super deal on that shirt rather than being able to spend the most money on something,” Anna D’Agrosa, director of Consumer Insights at The Zandl Group, told USA Today. “Kids are becoming really aware of what is happening to their economy and to their families.”
Discussion Questions: How acutely affected are teens and tweens by the current state of the economy? How important are teen and tween dollars to retailers? How should retailers be adapting to current conditions to maintain the link they have with these consumers?
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The beginning of the article compares the alleged impact on H&M versus Abercrombie & Fitch and American Eagle. The impact, as measured by investor perceptions, isn’t so clear. Over the past year H&M stock declined 18% while Abercrombie & Fitch declined only 13%. American Eagle Outfitters declined about 50%. Of course, H&M is a global retailer, while the other two aren’t, so the stock prices don’t tell the whole story. And there’s a huge difference in the stock performance of two seemingly similar brands: Abercrombie & Fitch versus American Eagle.
Want to encourage teen employment? Ask your local school board to set up a student employment telephone hotline and web site. Both could be run by the students themselves. Employers who’d like to hire students often call local high schools only to get a negative reception.
Teaching teens to stretch the dollars is the hardest job a parent has, but based on personal experiences with three of them, it can be done. Giving them some visibility to the family budget really helps, so they understand what trade-offs we all make every month in order to pay for college tuition without huge loans. The impact at many retailers is significant. My kids will now watch for sales, plan a trip to an outlet mall, visit Old Navy for lower end “seasonal fashion” and are fans of DSW for shoes. The major mall hasn’t seen much of them in the past year, and if they need cash, they ask for it in smaller increments than they used to.
My question is this: which retailers could step up and help teach the teens about practical ways to be fashionable? Could Abercrombie & Fitch take a stand? Could Old Navy give kids some advice on seasonal spending parameters? I think retail needs to be a part of the solution and create a meaningful relationship with teens, not just in good times, but in bad.
As their parents are affected by the economy and move to cut expenses, teens and tweens will be similarly feel the pinch. Rather than sugar coat economic realities, parents should share information with their children. Many children that grew into their teen years during the recent economic boom don’t know about delayed gratification or trading down to a less expensive item. Living on a budget is an important live lesson, one that is best taught at home.
Teens (and to a lesser degree tweens) are affected by the same economic issues affecting their parents. First of all, if the job market is getting tighter (think of the retailers who are closing doors) then the opportunity to earn a few extra bucks diminishes. Second, any teen whose parents provide an allowance has to make the same choices–between paying for gas, cell phone usage or discretionary purchases like clothing–as their parents do.
Keep in mind: Some of the softness in apparel sales may result from macroeconomic issues, but a lot of it has to do with merchandise content, lack of a trend, etc.
This is a heck of a way to learn an economic lesson but it is one that will most likely only be learned the hard way. Depending on the survey and research you read the average 15-17 year old in this country had over $240 on the low end to almost $400 on the high end to spend every month. That is while we had the lowest involvement of teenagers in the workforce since the BLS has been keeping records.
Yes, teenage employment is down but for the teenagers who are still REALLY willing to work, I know of employers who are looking to hire them. It may be the first job but at least they have not been trained to think that work is not always something you want to do but is something you need to do. All learning has a price.
From the retailer perspective, this is just going to be a lesson that goes back to yesterday’s conversation about bankruptcy and good or bad management.
I wondered when we would get to a discussion topic like this. When I was 15 I rode my bike to a local Chinese restaurant to serve as a hostess. That was my first “real” job. At 16, I went to work for Kmart (they paid 5 cents more an hour). The money I earned was split between savings and discretionary funds. And what I had to spend, you better believe I spent!
I contrast that with the teens I know today. At their high school, they are required to do so many hours of community service–volunteering. I don’t honestly know how it works exactly, but reflecting on my own activity level, I can tell you that I would not have been able to work AND volunteer on any regular basis. And the flip side is, the teens I know complain that retailers don’t want to hire them! These are good kids and definitely the kind that you could put in front of customers. But they find themselves in a catch-22 where they haven’t had their first job and no one wants to be the one who gives them the first job–yet “Help Wanted” signs are in storefront windows all over the place.
I don’t get it. Here is your biggest base of disposable income, and you’re not willing to give them the job that supplies such a large chunk of their spending? At RSR, we’ve brought up the notion that in a down economy, retail becomes a more desirable job–which means teens are going to be competing with more experienced workers for the same jobs that were tough to get before. Seems like a vicious cycle for retailers selling to that market–no jobs, no money to spend, and therefor fewer jobs….
I remember my dad telling me stories about growing up during the Depression. He told my about all the clever ways he would earn money and help support his family.
Weaker economic times can be a blessing because they are a great learning experience for young people and they get a good lesson in economics. Teens and tweens will learn to adjust like anyone else. Retailers will do the same. I think we need a good long Depression again to help teach people how to manage money and to become wise consumers.
When I was growing up, the summer job was the primary source of disposable income for the rest of the year, and to a large extent the usual summer jobs–camp counselor, lifeguard, painting, yardwork, etc–are still available to teens. During the school year, high school kids are definitely more occupied with volunteer work, in addition to the usual sports and activities, than we were. Bottom line, I’m not convinced kids have less money because they can’t get jobs.
Rather, I agree that teens reflect their parent’s concerns and behaviors more than they’d ever dare admit. I overhead two young teenage girls over the weekend “You should check out the jeans at PacSun–they’re two for $55” said one. “What brand?” said the other. “It’s PacSun’s own brand; they’re really nice.” Trends among teens can change in a flash, and as they sense the shift in their parents from accumulation to conservation, they are no doubt shifting their own values.
The current economy presents a life lesson in frugality for many families. Teens, tweens and their parents should communicate about their individual financial situation and have everyone assume some responsibility. For kids, this could be the first time they’ll need to cut back or eliminate some purchases. And that could be their most important life lesson.
Retailers can offer money saving strategies in their ads, in-store and on their websites. Just this weekend, Home Depot and Lowe’s offered ways to reduce home expenses through purchases of “green products and energy efficient light bulbs.” Supermarkets can develop campaigns to explain unit pricing, money saving tips and recipes based on sale items in their ads. Retailers like the Container Store can offer products geared to students “going to college on a budget.”
It will be interesting to see what the seeds planted by today’s economic situation will grow into say, fifteen to twenty years from now. Reflecting back on growing up, I can now see a trend where the desire to improve oneself becomes an obsession to have more, have the best, at any cost. Purchasing became not a necessity, but a game of doing the neighbor one better. Credit became an easy tool to obtain allowing us to buy even more.
Will our children, when they become our age now, remember the lessons we ourselves should have learned as children growing up, or will the same cycle of events and societal morays repeat once again, causing economic turmoil and grief? After all, this is not the first recessionary period we have gone through in this nation, and it won’t be the last.
But even further, are we as retailers going to simply take what we can off the buffet and run with the spoils, or shall we take a position to use our industry as a conduit to rebuild the nation’s economy where government refuses to do so?
The primary source of Tween and Teen money is the same–their parents. Recessions that impact adults hurt kids. It’s trickle down economics for the Bush generation.
How parents communicate to their kids impacts those kids’ reaction to all societal topics: drugs, sex, violence, and certainly the economy and responsible financial decision-making. The current economic situation provides parents with a terrific opportunity to teach valuable life lessons regarding thrift, savings, value, and prioritization.
Certainly, the simple fact that parents have cut back allowances and other funding methods has led to less teen spending. The lower the family is on the economic ladder, the more acutely this is felt. Those lost dollars are of great import across many parts of the retail landscape including convenience and grocery stores, quick-serve restaurants and of course, teen and tween apparel and accessory stores.
Retailers must focus on their own value proposition, be it price, quality, service, social networking, etc, and should not start focusing on price if that hasn’t been their calling-card. Stick to your niche–this economic valley too shall pass.
It’s about time young people were re-acquainted with the value of money and the effort it takes to earn it. I’m no advocate of harsh lessons, and I am truly concerned about the suffering that is likely to result from the current downturn. Teens can adapt well–healthily, even–to less conspicuous patterns of consumption.
My sons, now 17 and 20, have been expected to do some part-time work since each passed his 16th birthday and acquired a used car. By the way, their cars were purchased using savings accumulated since their early youth. They pay their own driving costs, including part of their insurance.
I know some parents believe their children will achieve better by focusing on academics, sports, music and extracurriculars that build the high-school resume. These are fine pursuits, but there is nothing wrong with young people learning a bit about work-life balance. They gain a sense of independence and accomplishment. Maybe that third school club isn’t so necessary, compared with earning a little gas money.
As the economy falters, Dad and Mom’s wallets tighten. Many people speak as if the children in these families understand there is to be a tightening of the wallet strings, but unfortunately, we are not seeing that happen for the younger set. Instead, Dad and Mom do with less while Dad and Mom try to maintain their children’s frivolous spending habits. Several parents have been heard to say, “I cannot let my child suffer, what will their friends think?” Instead they make sure the child has the newest technology, hair and nails done, with a full tank of gas and a more than generous clothing allowance.
Perhaps the parents should have begun long ago in teaching the children the value of a dollar, instead of waiting, now the parents have to relearn how to “stretch” the value of a dollar.
The fact is, teens do not work as much as previous generations. When I was growing up we all had paper routes and as we got older just about everyone got some type of job in high school. In those days parents did not buy their kids cars. If they wanted a car you bought your own and paid for all related expenses. Today, parents buy their kids cars and cover all expenses. This was true for a lot of things like clothes, movies and music.
You just do not see teens working like you used too. It’s funny, if you drove by my high school parking lot in the 1980s, most of cars were 10 years old. Today most of them are less than four years old. Teens just are not expected to work for the extra things they want any more. so they don’t. Think about it…when was last time a teen came to your home and asked if you would like your lawn mowed?
For a variety of reasons, kids I know are just not hanging out at the mall so much anymore. And when they are not hanging around the mall they are not SPENDING at the mall. The attraction of games and other fun things to do on the internet (such as social sites,) the greater emphasis and time commitment on homework and volunteering through school, less discretionary cash and more parental concerns about mall safety are but a few contributing factors.
Teen and tween spending and peer pressure for them to have the latest and greatest has been an important engine for retailers for at least the last decade. A slowdown in the buying power and profligate spending habits of this demographic group will negatively impact retailers in the short term–but may well be ultimately beneficial for society.
I’m not sure the problem is there are no jobs for teens. I think it is a bigger problem that there are not enough teens for the available jobs. When I was growing up (and had to walk miles in the snow to go to school), working at Dominick’s in Chicago was considered a plumb job. There was a waiting list to become a bagger, and a greater waiting list to become a cashier. It was considered cool to have a job, and make your own money.
Today, when talking to teens, they look at work as something only older people do. And in fact, their parents point out that their kids should not have to work. The problem is with the way the kids are being raised. They don’t want to work, and they are used to being handed money when they need it, for really vital things like skinny jeans, Crocs, etc.
Is there less spending by teens? Probably. Solution: they should go out and get a job!
Parents need to take the “opportunity” of the economic downturn to teach their kids why the economy is in its current state, not just how to deal with having a few less dollars in their pocket.
Everyone needs to learn the lesson of what happens when you overextend your credit. Hopefully you can learn from someone else’s mistake instead of your own.
I think it depends on the area we are referring to. If it is education, or well-being related, I think parents will foot the bill. If it’s a weekend trip with friends, or purchasing something expensive, they may have to go without, or delay until a bargain comes along.
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The beginning of the article compares the alleged impact on H&M versus Abercrombie & Fitch and American Eagle. The impact, as measured by investor perceptions, isn’t so clear. Over the past year H&M stock declined 18% while Abercrombie & Fitch declined only 13%. American Eagle Outfitters declined about 50%. Of course, H&M is a global retailer, while the other two aren’t, so the stock prices don’t tell the whole story. And there’s a huge difference in the stock performance of two seemingly similar brands: Abercrombie & Fitch versus American Eagle.
Want to encourage teen employment? Ask your local school board to set up a student employment telephone hotline and web site. Both could be run by the students themselves. Employers who’d like to hire students often call local high schools only to get a negative reception.
Teaching teens to stretch the dollars is the hardest job a parent has, but based on personal experiences with three of them, it can be done. Giving them some visibility to the family budget really helps, so they understand what trade-offs we all make every month in order to pay for college tuition without huge loans. The impact at many retailers is significant. My kids will now watch for sales, plan a trip to an outlet mall, visit Old Navy for lower end “seasonal fashion” and are fans of DSW for shoes. The major mall hasn’t seen much of them in the past year, and if they need cash, they ask for it in smaller increments than they used to.
My question is this: which retailers could step up and help teach the teens about practical ways to be fashionable? Could Abercrombie & Fitch take a stand? Could Old Navy give kids some advice on seasonal spending parameters? I think retail needs to be a part of the solution and create a meaningful relationship with teens, not just in good times, but in bad.
As their parents are affected by the economy and move to cut expenses, teens and tweens will be similarly feel the pinch. Rather than sugar coat economic realities, parents should share information with their children. Many children that grew into their teen years during the recent economic boom don’t know about delayed gratification or trading down to a less expensive item. Living on a budget is an important live lesson, one that is best taught at home.
Teens (and to a lesser degree tweens) are affected by the same economic issues affecting their parents. First of all, if the job market is getting tighter (think of the retailers who are closing doors) then the opportunity to earn a few extra bucks diminishes. Second, any teen whose parents provide an allowance has to make the same choices–between paying for gas, cell phone usage or discretionary purchases like clothing–as their parents do.
Keep in mind: Some of the softness in apparel sales may result from macroeconomic issues, but a lot of it has to do with merchandise content, lack of a trend, etc.
This is a heck of a way to learn an economic lesson but it is one that will most likely only be learned the hard way. Depending on the survey and research you read the average 15-17 year old in this country had over $240 on the low end to almost $400 on the high end to spend every month. That is while we had the lowest involvement of teenagers in the workforce since the BLS has been keeping records.
Yes, teenage employment is down but for the teenagers who are still REALLY willing to work, I know of employers who are looking to hire them. It may be the first job but at least they have not been trained to think that work is not always something you want to do but is something you need to do. All learning has a price.
From the retailer perspective, this is just going to be a lesson that goes back to yesterday’s conversation about bankruptcy and good or bad management.
I wondered when we would get to a discussion topic like this. When I was 15 I rode my bike to a local Chinese restaurant to serve as a hostess. That was my first “real” job. At 16, I went to work for Kmart (they paid 5 cents more an hour). The money I earned was split between savings and discretionary funds. And what I had to spend, you better believe I spent!
I contrast that with the teens I know today. At their high school, they are required to do so many hours of community service–volunteering. I don’t honestly know how it works exactly, but reflecting on my own activity level, I can tell you that I would not have been able to work AND volunteer on any regular basis. And the flip side is, the teens I know complain that retailers don’t want to hire them! These are good kids and definitely the kind that you could put in front of customers. But they find themselves in a catch-22 where they haven’t had their first job and no one wants to be the one who gives them the first job–yet “Help Wanted” signs are in storefront windows all over the place.
I don’t get it. Here is your biggest base of disposable income, and you’re not willing to give them the job that supplies such a large chunk of their spending? At RSR, we’ve brought up the notion that in a down economy, retail becomes a more desirable job–which means teens are going to be competing with more experienced workers for the same jobs that were tough to get before. Seems like a vicious cycle for retailers selling to that market–no jobs, no money to spend, and therefor fewer jobs….
I remember my dad telling me stories about growing up during the Depression. He told my about all the clever ways he would earn money and help support his family.
Weaker economic times can be a blessing because they are a great learning experience for young people and they get a good lesson in economics. Teens and tweens will learn to adjust like anyone else. Retailers will do the same. I think we need a good long Depression again to help teach people how to manage money and to become wise consumers.
When I was growing up, the summer job was the primary source of disposable income for the rest of the year, and to a large extent the usual summer jobs–camp counselor, lifeguard, painting, yardwork, etc–are still available to teens. During the school year, high school kids are definitely more occupied with volunteer work, in addition to the usual sports and activities, than we were. Bottom line, I’m not convinced kids have less money because they can’t get jobs.
Rather, I agree that teens reflect their parent’s concerns and behaviors more than they’d ever dare admit. I overhead two young teenage girls over the weekend “You should check out the jeans at PacSun–they’re two for $55” said one. “What brand?” said the other. “It’s PacSun’s own brand; they’re really nice.” Trends among teens can change in a flash, and as they sense the shift in their parents from accumulation to conservation, they are no doubt shifting their own values.
The current economy presents a life lesson in frugality for many families. Teens, tweens and their parents should communicate about their individual financial situation and have everyone assume some responsibility. For kids, this could be the first time they’ll need to cut back or eliminate some purchases. And that could be their most important life lesson.
Retailers can offer money saving strategies in their ads, in-store and on their websites. Just this weekend, Home Depot and Lowe’s offered ways to reduce home expenses through purchases of “green products and energy efficient light bulbs.” Supermarkets can develop campaigns to explain unit pricing, money saving tips and recipes based on sale items in their ads. Retailers like the Container Store can offer products geared to students “going to college on a budget.”
It will be interesting to see what the seeds planted by today’s economic situation will grow into say, fifteen to twenty years from now. Reflecting back on growing up, I can now see a trend where the desire to improve oneself becomes an obsession to have more, have the best, at any cost. Purchasing became not a necessity, but a game of doing the neighbor one better. Credit became an easy tool to obtain allowing us to buy even more.
Will our children, when they become our age now, remember the lessons we ourselves should have learned as children growing up, or will the same cycle of events and societal morays repeat once again, causing economic turmoil and grief? After all, this is not the first recessionary period we have gone through in this nation, and it won’t be the last.
But even further, are we as retailers going to simply take what we can off the buffet and run with the spoils, or shall we take a position to use our industry as a conduit to rebuild the nation’s economy where government refuses to do so?
The primary source of Tween and Teen money is the same–their parents. Recessions that impact adults hurt kids. It’s trickle down economics for the Bush generation.
How parents communicate to their kids impacts those kids’ reaction to all societal topics: drugs, sex, violence, and certainly the economy and responsible financial decision-making. The current economic situation provides parents with a terrific opportunity to teach valuable life lessons regarding thrift, savings, value, and prioritization.
Certainly, the simple fact that parents have cut back allowances and other funding methods has led to less teen spending. The lower the family is on the economic ladder, the more acutely this is felt. Those lost dollars are of great import across many parts of the retail landscape including convenience and grocery stores, quick-serve restaurants and of course, teen and tween apparel and accessory stores.
Retailers must focus on their own value proposition, be it price, quality, service, social networking, etc, and should not start focusing on price if that hasn’t been their calling-card. Stick to your niche–this economic valley too shall pass.
It’s about time young people were re-acquainted with the value of money and the effort it takes to earn it. I’m no advocate of harsh lessons, and I am truly concerned about the suffering that is likely to result from the current downturn. Teens can adapt well–healthily, even–to less conspicuous patterns of consumption.
My sons, now 17 and 20, have been expected to do some part-time work since each passed his 16th birthday and acquired a used car. By the way, their cars were purchased using savings accumulated since their early youth. They pay their own driving costs, including part of their insurance.
I know some parents believe their children will achieve better by focusing on academics, sports, music and extracurriculars that build the high-school resume. These are fine pursuits, but there is nothing wrong with young people learning a bit about work-life balance. They gain a sense of independence and accomplishment. Maybe that third school club isn’t so necessary, compared with earning a little gas money.
As the economy falters, Dad and Mom’s wallets tighten. Many people speak as if the children in these families understand there is to be a tightening of the wallet strings, but unfortunately, we are not seeing that happen for the younger set. Instead, Dad and Mom do with less while Dad and Mom try to maintain their children’s frivolous spending habits. Several parents have been heard to say, “I cannot let my child suffer, what will their friends think?” Instead they make sure the child has the newest technology, hair and nails done, with a full tank of gas and a more than generous clothing allowance.
Perhaps the parents should have begun long ago in teaching the children the value of a dollar, instead of waiting, now the parents have to relearn how to “stretch” the value of a dollar.
The fact is, teens do not work as much as previous generations. When I was growing up we all had paper routes and as we got older just about everyone got some type of job in high school. In those days parents did not buy their kids cars. If they wanted a car you bought your own and paid for all related expenses. Today, parents buy their kids cars and cover all expenses. This was true for a lot of things like clothes, movies and music.
You just do not see teens working like you used too. It’s funny, if you drove by my high school parking lot in the 1980s, most of cars were 10 years old. Today most of them are less than four years old. Teens just are not expected to work for the extra things they want any more. so they don’t. Think about it…when was last time a teen came to your home and asked if you would like your lawn mowed?
For a variety of reasons, kids I know are just not hanging out at the mall so much anymore. And when they are not hanging around the mall they are not SPENDING at the mall. The attraction of games and other fun things to do on the internet (such as social sites,) the greater emphasis and time commitment on homework and volunteering through school, less discretionary cash and more parental concerns about mall safety are but a few contributing factors.
Teen and tween spending and peer pressure for them to have the latest and greatest has been an important engine for retailers for at least the last decade. A slowdown in the buying power and profligate spending habits of this demographic group will negatively impact retailers in the short term–but may well be ultimately beneficial for society.
I’m not sure the problem is there are no jobs for teens. I think it is a bigger problem that there are not enough teens for the available jobs. When I was growing up (and had to walk miles in the snow to go to school), working at Dominick’s in Chicago was considered a plumb job. There was a waiting list to become a bagger, and a greater waiting list to become a cashier. It was considered cool to have a job, and make your own money.
Today, when talking to teens, they look at work as something only older people do. And in fact, their parents point out that their kids should not have to work. The problem is with the way the kids are being raised. They don’t want to work, and they are used to being handed money when they need it, for really vital things like skinny jeans, Crocs, etc.
Is there less spending by teens? Probably. Solution: they should go out and get a job!
Parents need to take the “opportunity” of the economic downturn to teach their kids why the economy is in its current state, not just how to deal with having a few less dollars in their pocket.
Everyone needs to learn the lesson of what happens when you overextend your credit. Hopefully you can learn from someone else’s mistake instead of your own.
I think it depends on the area we are referring to. If it is education, or well-being related, I think parents will foot the bill. If it’s a weekend trip with friends, or purchasing something expensive, they may have to go without, or delay until a bargain comes along.