LONDON, United Kingdom — Recent years have been tough for traditional teen retailers. Abercrombie & Fitch, Aéropostale and American Eagle — once sought-after brands among high-school kids in the US — have seen their popularity and profits plummet. Since 2010, Abercrombie & Fitch has closed more than 275 stores, while Aéropostale shuttered over 120 stores in 2014 alone.
For one, these retailers were hurt by their over-reliance on footfall to shopping malls and failed to adapt quickly enough to the rise of social media platforms, where today's teenagers spend far more time. At the same time, they were out-priced and out-designed by fast fashion giants like H&M and Zara.
Strategic failures like these have played a significant role in the downfall of traditional teen retailers. But many of the fundamental consumer behaviours, attitudes and values on which these brands were built have simply shifted under their feet, as Generation Z — also known as the post-Millennials — came of age.
Living Digital Lives
Generation Z was born digital. “They have no idea that there’s been a technology revolution,” says Piers Guilar, executive strategy director of Fitch, a retail and branding consultancy. “They’re above ‘tech savvy,’” agrees Nancy Nessel, founder of marketing advice website Getting to Know Generation Z. “I call them ‘tech genius.’”
Indeed, 92 percent of US teens go online daily, and 24 percent are online “almost constantly,” according to a 2015 report by the Pew Research Center. This digital fluency has changed the places where teenagers congregate and the channels they use to shop. “The old rules of retail no longer apply,” explains Guilar. “Teenagers don’t distinguish between buying online, looking at things on Twitter and buying in a bricks-and-mortar store.”
Technology has also changed what teenagers spend their money on. From 2005 to 2015, fashion purchases including clothing, accessories and footwear dropped from 45 to 38 percent of teenage spend, according to consultancy firm Piper Jaffray’s latest teen spending review, published in October 2015. Over the same period, expenditure on electronics and gadgets doubled, rising from 4 to 8 percent of teenage spend. “They’ve grown up with choices of other things to spend it on. Millennials grew into technology, whereas Generation Z, since birth, has distributed their income,” explains Marcie Merriman, executive director of growth strategy and retail innovation at Ernst & Young. Today’s teenagers are more likely to ask for smartphones, tablets or wearable technology for Christmas and birthday presents, instead of clothing, she says.
Value and Values
Teenagers aren’t just spending less on fashion — they’re spending less altogether. Generation Z has lived through the aftermath of 9/11 and experienced war and an economic recession — a turbulent upbringing that has made them “more self-aware, self-reliant and driven,” according to a 2015 survey by Ernst & Young. It has also made them more cautious, socially minded consumers. Teen spending in the US fell 31 percent from 1997 to 2014, according to The Futures Company, a global consultancy. “There’s simply an awareness that we’re in a slow growth economy,” explains Rob Callender, the company’s director of youth insights. Nessel agrees: “They’ve seen how hard life can be, and so they don’t want to be in that position themselves.”
Generation Z also scrutinizes brands more carefully: “They’re much more ambitious about going out and learning the back stories of various brands, to make sure that the choices they make with their fairly limited funds are ones that they feel comfortable making,” says Callender. In the past, teenagers used fashion brands as a kind of social signal — a set-up that suited the logo-heavy products and aspirational messaging of teen retailers like Abercrombie and Fitch. Generation Z, however, is more self-assured. In a survey by The Futures Company, the percentage of teenagers who agreed with the statement, “I care a lot about whether my clothes are in style,” dropped from 65 percent in 1997 to 47 percent in 2014.
For today’s teenager, fashion is less about fitting in, and more about making choices that reflect their own identity. “They’re interested in saying, ‘I have chosen this brand because this brand shares certain commonalities with my outlook and my lifestyle and my priorities,’” says Callender. Nessel agrees that today’s teenagers are more “altruistic” and “entrepreneurial” than their millennial forebears. “They’re looking for brands that have personality and authenticity,” she says.
Indeed, long-suffering traditional teen retailer American Eagle tapped this sentiment with its ‘Aerie Real’ lingerie campaigns, launched two years ago. The campaign images are not retouched and feature ‘real’ teenagers like 19-year-old plus-size model Barbie Ferrieria. This approach appears to be resonating with consumers: in the first nine months of 2015, same-sale stores of the Aerie brand rose 17 percent.
A Shift to Shareable Experiences
Above all, teens are prioritising experiential purchases that they can share on social media. According to Piper Jaffray’s 2015 survey, Generation Z’s favourite app is Instagram. “Their entire life, if it’s not shareable, it didn’t happen,” says Merriman. “Experiences define them much more than the products that they buy.” Piper Jaffray also reports that teens now spend 22 percent of their income on food, up 7 percent from 2005, particularly in Instagram-friendly locations like Starbucks.
For the generations who grew up before Facebook and Snapchat, fashion was a kind of social elixir — wearing the right brand could make you cool. But today’s teens live out their lives on social media, where social currency is built on experiences. “They don’t want to buy stuff. They’re buying an experience and the product they get through it is kind of a bonus,” continues Merriman.
Irish fast fashion company Primark, which doesn’t have an e-commerce business, has engaged teenage shoppers by transforming its bricks-and-mortar stores into a shareable experience. The retailer encourages customers to upload pictures of purchases to its website with the hashtag #Primania, which are then displayed on a rolling feed in select stores, including its US flagship in Boston. Primark has also outfitted some stores with free wifi and changing rooms large enough for two shoppers, to be more selfie-friendly. Customers have uploaded nearly 10,000 images to its website.
A Constellation of Inspiration
The new teen customer finds fashion inspiration online and regularly updates his or her ‘look’. Teenagers still use fashion to explore their identities during adolescence. But the days of John Hughes’ ‘The Breakfast Club,’ when “the brain, the athlete, the basket case and the princess” in a group of teens could be clearly identified by their choice of clothing, are over.
Furthermore, teen retailers like Abercrombie & Fitch were “built on being cool and the whole idea of, ‘You can’t sit with us,’” says Kissane. But today’s teenagers do not respond to this message of exclusivity. “They’re not just going to look at the washboard stomach of an Abercrombie & Fitch model and think, ‘I want to be that person,” says Guilar. Rather, teenagers can access a broader range of style influences, from it-girls like Kendall Jenner, to fashion and beauty bloggers. “They take inspiration from thousands of places online — Pinterest, Instagram, Snapchat — and they mix and match,” says Guilar.
For brands, resonating with — and staying relevant to — Generation Z will take a Herculean effort. “Retailers will be required to use every tool at their disposal to deliver experiences shoppers cannot bear to live without,” predicts Ernst & Young’s report. According to Guilar, successful brands will cater to modern teens’ cravings for authenticity and “realise they’re a part of society and have a role to play, instead of just selling.”