Teen retailers, led by Aeropostale and Abercrombie & Fitch, have been deepening discounts and adding sales days to draw young shoppers into stores amid high unemployment and the absence of a major fashion trend.
Aeropostale offered a promotion every day from July 14 through Sept. 7, and the average discounts were deeper than the previous year in at least five of the eight weeks in that period, according SaleTally data analyzed by Bloomberg Industries. Abercrombie marked down merchandise an average of at least 40 percent in every week in that period, with discounts the same or steeper half of the time, according to the retail research firm's data.
Teens have less money to spend on clothing as the unemployment rate among 16- to 19-year-olds was 23 percent in August, according to a Sept. 6 report from the U.S. Labor Department. The rate has stayed above 20 percent since May 2009. Also, this year no major fashion trend like last year's colored-denim phenomenon has emerged to drive teens into stores.
“High unemployment rates and the lack of a major fashion trend are the two major drivers of fierce competition at teen retailers,” Poonam Goyal, a retail analyst with Bloomberg Industries, said. “The size of the pie of what consumers have to spend isn't changing, so those with the right product are going to do better. Even if you give the store away for free you have to have the right product.”
Parents also may not be supplementing teen's purchases as shoppers of all income levels are pulling back on unnecessary items. In recent weeks, chains from Walmart Stores to Macy's reported second-quarter sales that trailed analysts' estimates and cut forecasts, saying shoppers were spending more on their homes and cars than on less essential items.
Some retailers have been able to buck the trend. The Buckle of Kearney, Neb., and Urban Outfitters focused product assortments on minor crazes such as crop tops and high-waisted bottoms to fuel sales. Both retailers reported gains in same-store sales in the last two quarters, while American Eagle Outfitters, Abercrombie and Aeropostale all said sales at stores open at least a year declined in the first and second quarters.