Being a teen can be tough, but catering to one is even tougher.
Teen retailers are learning that the hard way this holiday season.
The longtime CEO of Abercrombie & Fitch abruptly retired Tuesday, a week after the retailer posted an 11.5 percent quarterly sales drop and slashed its annual profit forecast. And American Eagle and Aeropostale gave dismal forecasts for the quarter, which includes the holiday shopping season, after each posted weak sales for the fall.
Teen retailers are living with ho-hum results at a time when overall U.S. retail sales are up 5.1 percent over the past 12 months, the Commerce Department said Thursday.
It’s a major shift for teen retailers. They grew popular in the last decade for their logo T-shirts and trendy jeans, which became a high school uniform of sorts. But since the recession, the stores have lost favor with their core demographic.
One reason is technology. Teens are more interested in playing on smartphones than hanging out at the mall where these stores are. They’re also likelier to spend their money on iPhones and other tech gadgets than on clothes.
And when they do buy clothes, they do so differently than past generations, who found comfort in dressing like their peers. Today’s teens shun the idea of wearing the same outfit as the girl or guy sitting next to them in chemistry class.
Case in point: Olivia Nash, a 16-year-old junior from Washington, D.C. Nash used to shop at American Eagle and Abercrombie, but now she pulls together pieces at a variety of other retailers.
“When I was younger, everyone wanted what everyone else had,” she said. But now, Nash said, “everyone is putting their own individual spin” on their look.
Shift in shopping
The change in teen shopping patterns isn’t lost on retailers that spent years building their brands around a sort of “insta-look” that shoppers could buy off the rack.
The three big teen retailers are getting rid of shirts and other items that have their logos and adding trendy fashions and athletic styles. They’re allowing shoppers to buy online and pick up in stores. And they’re getting clothes in stores faster to compete with so-called fast-fashion retailers like H&M.
American Eagle, the midpriced brand of the three chains, says it’s adding jeans with different washes this holiday season. Meanwhile, Aeropostale, which is in the low-price range on jeans, at about $40, is adding everything from cropped metallic tank tops to floral lace leggings. That’s a switch for the retailer, which used to focus on basics like jeans and sweatshirts.
During a recent talk with investors, Julian Geiger, Aeropostale’s CEO, acknowledged the shift in how teens shop. But he said the chain has added too many looks in its zeal to chase after fast-fashion chains.
“I still believe that while they strive for individuality in many ways, at 14 to 17 years old, they still want to be accepted by their friends and peers and that there is still a uniform that they wear that makes them cool,” said Geiger, who was rehired as CEO in August.
For its part, Abercrombie, whose other brands include Hollister Co. and Gilly Hicks, has made the biggest changes.
The chain, which says it has hired an executive search firm to find a successor to its CEO, has added neoprene party dresses and faux-fur vests this holiday season. Additionally, it introduced black items — a color it had never used before.
But perhaps the biggest change customers will see is at the cash register. The retailer, which could easily sell $90 jeans before the recession, is permanently cutting prices across the board by 15 percent.
“It is very clear that the young-apparel sector in which we operate is going through a period of disruption and turmoil,” outgoing CEO Mike Jeffries said on a conference call with investors last week after the chain released disappointing quarterly results. “In response to that, we are making significant changes.”
Les Berglass, CEO of an executive recruiting firm that works with retailers, said Abercrombie and other teen chains also need to incorporate more technology so that as soon as customers walk in the store with their smartphones, they can recognize them and help them.
“They have to make a product that is more exciting than the iPhone 6,” he said.
Nash, the Washington, D.C., high school junior, said at least one of the teen retailers is on the right track. She said she has noticed trendier styles on Abercrombie’s website: “I think I may venture back to the store.”