Behind the Failures of Teen Retailers

by Sean Ogino |

Behind the Failures of Teen Retailers

Rue21 Inc.’s recent filing for Chapter 11 bankruptcy is yet another example of the failures of teen retailers to stay afloat in a changing commerce landscape.This cascading story that started back in 2010, if not earlier. American Eagle announced in 2013 that its third-quarter profits were down a whopping 68% from 2012. In the same year, Abercrombie & Fitch also lost 30% of its value over the past year. Then came the last year when a former staple merchant of California cool, PacSun also filed for bankruptcy protection from creditors. Clearly, these failures of teen retailers have raised questions about their sustainability.

Naturally, only one particular reason is never at the helm of such a gigantic degradation; especially when it is observed in all areas. These various failures of teen-centered malls are no exceptions. It’s a cumulative effect of the multiple factors which has brought a sudden downfall of the teen malls. The following listing pinpoints some of those factors that appear on the surface.

New Competitors for Teen Retailers

Intense competition has ended the hegemony of a select few brands. There are simply more sartorial options today than there were 10 or 15 years ago when certain brands dominated. With the opening up of the market, largely thanks to e-commerce,  the teen apparel industry saw innumerable entrants.

Low-cost brands have  become the center of the universe for teens. Unlike millennials, they aren’t financially independent, as their parents usually pay for their shopping. This dependency has made them more price-conscious, and new entrants and fast fashion brands like Zara, H&M, and Forever 21 have been successful in exploiting this vulnerability. A $40 tank top from Abercrombie is much less desirable than the $15 tank top that Forever 21 sells.

Another reason for the failures of teen retailers is  Amazon. Teenagers are rapidly getting familiar with the idea of buying clothes online. Amazon has been incredibly successful in holding sway over its young customers due to  the great variety that it offers and the quick delivery system. Other retailers have been scrambling to catch up with them. Morgan Stanley has recently predicted that by 2020, Amazon will hold the majority share of the apparel market. Clearly, it and other online sellers  have reduced the need to go to stores. As most of teen apparel chains are located in malls, this has negatively affected  the footfall in their respective malls as well.

Teenagers’ Changing Tastes

The aspirations of teenagers regarding what they want to wear have changed significantly. The most important thing that they want now is variety. They don’t want to be boxed into one look — they want to mix, match and stand out. Brian Sozzi, CEO of Belus, has pinpointed this need very well by saying that “in 1999 it was about wearing Abercrombie to fit in, but today it’s about expressing yourself through a unique t-shirt from H&M with a pair of $8 leggings from Forever 21.”

This is mainly because teenagers generally get bored with many teen retailers’ similar “beachy” styles. After all, how many ways can you slice and dice a hoodie? In short, many teen brands have lost touch with changing trends; this has \alienated teens and furthered the failures of teen retailers.

Besides, a Business Insider survey revealed one surprising trend. It says that many teenagers don’t hang out at the mall anymore; they don’t think it’s cool. 59.26% of those surveyed said the mall is not a cool place to hang out. Respondents said that “good music, cute clothes, [a] chill atmosphere, [and[ modern and sleek” design make a store “cool.”  They also listed factors like “good prices, good customer service/atmosphere,” and not over-perfuming the store – the latter of which sounds like a call-out to Abercrombie & Fitch’s infamous scent. Indeed, the survey tells something about what is creating the disconnect between teens and malls.

Read on below for more about the struggles of teen retailers…

Taking Social Responsibility

Unlike the previous generations, today’s teens are more aware of the world and the responsibility that they have towards the society in which they live. They are weighing social impact into their decisions. They opt for high-quality clothing that doesn’t shout its brand origins, as well as recycled and sustainable clothing that supports charities.

Many teenagers stopped buying from Abercrombie & Fitch and Hollister after reading about their propensity to hire only slim and attractive sales staff. This statement  from Molly Henderson, 17, speaks a lot about how teenagers think about the social impact that their buying will have. She says, “They even hang up to a size three out and put the larger sizes on the shelves. Although I would fit the sizes on the hangers, that doesn’t mean I want to shop at a place that treats other people badly”.

Competing Beyond the Closet

Another trend that has compounded the failures of teen retailers is that teenagers and their families are spending more on electronics and “fast casual” restaurants.. More evidence for spending shifting away from clothing has been provided by data from Refuel, which indicates that technology and mobile devices comprise $29bn in college students’ discretionary spending, beating out the $19bn spent on clothing.

It’s then fairly easy to conclude that multiple kinds of social, economical and behavioral shifts have hastened the various failures of teen retailers. Brands can only avoid these losses when they get into the complex world of teenagers and map their aspirations and desires. And unfortunately, this is exactly the thing that they aren’t doing. When Business Insider asked teens if they felt like retailers understood them, one teen succinctly – and validly – noted that “they’ve never asked.”

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