How to Reach Teens in a Recession? Ask Aeropostale

How to Reach Teens in a Recession? Ask Aeropostale

Can a recession actually cause teenage daughters and their moms to shop
peacefully together at the mall? Believe it or not, yes. At a New York City
shopping center one recent June evening, Adina Armstrong, 13, and her mother
Tracy sauntered out of teen retailer Aéropostale, Adina cheerily chirping
away on her cell phone, Tracy happily holding a bag full of t-shirts. Mom
just bought Adina two stylish shirts at a buy-one, get-one-free promotion.
“What I like about Aéropostale is that when they have a sale, they have a
sale,” says Tracy. Even better, Adina actually approves of the inexpensive
clothes — “they’re popular, hip and fit really well,” she says — and she
accepts that her mother won’t splurge on more costly threads in this
economy. After Adina explains all this, she goes back to talking on her cell

Teen retailers, once thought recession proof, have suffered in this current
downturn. For example Abercrombie & Fitch, which has maintained its premium
price points, saw same-store sales dip an incredible 28% in May. But
amidst such carnage, two stores stand out. The Buckle, a Nebraska-based
retailer that offers a wide range of brand-name selections at its 393 stores
around the country, saw first quarter profit jump 43.5%. Then there’s
Aéropostale, which targets 14-to-17-year old boys and girls, and operates
over 900 locations in 47 states. Same-stores sales increased 11% in the
first quarter, and the company’s first quarter profit rose an eye-popping 81%,
to $31.5 million, as it continues to steal share from Abercrombie & Fitch,
American Eagle Outfitters, and other more upscale chains. In fact, in 9
of the past 11 quarters, the company’s profits grew by better than 30%.
Whereas Buckle benefits from its geography, many stores are located in small
Midwestern locations with little competition, and the company is relatively
underexposed to crashing economies like Florida and Southern
California. Aéropostale has won because of price. So if teens are shopping at
the cheaper places, or permitting their parents to buy clothes from these
outlets, do teens, like, get it Are they fully aware that their own summer
job prospects are dim, that their parents’ employment prospects may be
dimmer, and it’s unfair to guilt mom and dad into spending money on
expensive clothes Are kids these days actually acting
responsibly “More than ever, we’re seeing that teens are responding to
value,” says Jeffrey Klinefelter, an equity research analyst at Piper
Jaffray who has written a semi-annual research report, “Taking Stock in
Teens,” for the last eight years. “They seem to be taking on some personal
responsibility and discipline in spending money.

According to Klinefelter’s research, teens are making fewer trips to the
store; teen spending on fashion products fell by 13% this spring. Only
35% of the teens Piper Jaffray surveyed had part-time work this spring,
compared with 50% four years ago. “Teens definitely have much greater
awareness of what’s going on around them now than they did eight years ago,”
says Klinefelter. “They’re seeing the news on their computers and cell
phones, and are very aware that we’re in a recession.”
If today’s teenagers are indeed spending more responsibly, how long can this
attitude last While retail analysts repeatedly claim that adults will never
consume like they have in prior years, they don’t make the same claim about
the kids. Klinefelter says there’s plenty of pent-up demand in the teen
sector. Yes, teens aren’t spending because of the recession, but that’s also because the retailers have failed to create a hot new trend.
Denim has been the default teen look for the past few years, and nothing has
knocked it off its perch. “Once the dominant new fashion trend emerges,
teens will rush back out to the stores,” says Klinefelter. “The resurgences
will require some economic relief, but the segment will make a comeback.”

Klinefelter predicts teens will start spending at high levels again in six
months to a year. So before then, enjoy the sight of young shoppers scouring
for discounts. Teens won’t stay thrifty forever. Down economy or not,
they’re still teens.