Teens’ Changing Tastes – And Lower Spending – Drive Retail Innovation

Teens have been big drivers of commerce for going on a century now, and that’s even more prevalent as marketers find more precise ways to target those young consumers – who, in turn, are experts with their mobile devices.

Engagement Labs, the data and analytics company that assists marketers, says the group of people born between 1997 and 2016 are 86 million strong, and influence $600 billion of spending by families. This group is also big on conversations – both online and offline – with Engagement Labs finding them to drive 19 percent of purchases.

“You see an advertisement, people know it’s a paid endorsement,” says Brad Fay, Engagement Labs’ chief commercial officer. “It’s only got so much credibility … the most powerful messages are ones that come from someone you know.”

Engagement Labs surveyed 6,736 teens during the course of 12 months about what they talked about in the previous 24 hours, and found that those topics included gadgets, drinks and snack foods. Fay noted that they found Generation Z to be a very social group of people. As a result, digital devices from the likes of Apple and Samsung will be popular with this group, as are food and beverage brands.

“Coca-Cola, McDonald’s and Pepsi are all brands you typically consume with other people face-to-face, so they, too, could be thought of as social brands,” said Fay. He noted that young people aren’t too keen on unhealthy products like soda. “Both Coke and Pepsi are taking significant declines, and I think that is symptomatic of a shift away from the more sugary types of beverages toward a wider diversity of healthier types of beverages.”

Teen Spending

Even so, teen spending seems to be on the decline.

Recent data has found that American teens are estimated to spend $2,371 per year – the lowest level for the age group since the fall of 2011. A survey by Piper Jaffray gathered the data from 9,500 teens across 42 U.S. states, with an average age of 15.8 years. It found that 32 percent of teens believe the economy is getting worse, up from the 25 percent reported in the fall of 2018. That belief has led them to be more cautious with their spending.

“Our fall teen survey continues to validate several characteristics of this digitally native demographic: 83 percent of teens have an iPhone, 52 percent of teens claim Amazon as their favorite online shopping website, and we saw an acceleration of VSCO and TikTok mentions,” said Erinn Murphy, Piper Jaffray senior research analyst, according to a report. “Importantly, however, we saw the lowest teen spending levels in eight years. The two most challenged categories were handbags and cosmetics, as females reprioritize their spending with eating out and footwear/apparel. Broadly, the casualization of fashion continues: Nike gained share within its No. 1 rank, and lululemon hit a new survey high as the No. 7 preferred apparel brand. Within footwear, Crocs also achieved a new survey record as the 7^th preferred footwear brand.”

Females spend most of their money on clothing, with many preferring athletic brands over preppy designers like Sperry, Ralph Lauren and Vineyard Vines. Accessories spending hit a record low, while cosmetics spending fell 20 percent over last year to the lowest levels in more than nine years. When they do shop for makeup, 91 percent of female teens prefer to do so in a store rather than online. Ulta Beauty is still the preferred beauty destination against Sephora for the second survey in a row.

Handbags don’t seem to be the same status symbol they once were, with female teens reporting that they spend an average of $90 per year on handbags, compared to peak spending of $197 per year.

Those are the trends to which retailers will have to respond in the coming decade.