Wednesday, July 02, 2008

Teens crush market

So you think that today's continuation of market disappointments was about the non-stop increase in oil prices, or the ADP report on job losses, the continued fall of the dollar, or the realization that inflation is global. Think again. We can blame it on the American teenager.

In a May 11 post here, there was the following warning---"The most popular teen based stores had sales gains and seem unfazed thus far. IF THEY TURN DOWN, WATCH OUT."(caps added today)

Teens clothing sales growth is screeching to a halt. The latest stats show a year over year sales gain in this category of 2.9% as compared to a 12% gain last year. Revenues are showing year over year double digit declines at stores such as Abercrombie, American Eagle, and Old Navy. Aeropostale and Urban Outfitters, the hottest stores in this niche, are still seeing growth but it is moderating. White hot summer style sensation Zumiez, however, is seeing its first profit decline ever.

If there was ever a consumer category that wants to be, must be, like needs to be, recession resistant the 13 to 17 year old teen category is emphatically it. Marketers, sports stars, trends, pop stars, peers and fads drive into their self-conscious and image sensitive psyches a need to participate in the world of lookin' good. Or at least ok. Kids know it, parents know it, grandparents know it, there's no mystery here. When teens pull back, it's not because they want to stop buying or because they have the capacity to make some rational decision about a slowing economy and declining markets that require a more prudent approach. No way. They have no choice. The money is slowing down.

They'll survive. Maybe they will just get more creative faster and move into the vintage eclectic look like some of their college age siblings, bragging about how little something cost. Maybe they'll migrate further to the cachét of Targét, or even now Pennéys, Searsé or Walmarté. Good for them ultimately, but this is not a good omen for any vibrant economy coming around soon. It's the eyesnotsold most important economic news of the day. All the other stuff we already knew.

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