While marketers are preoccupied with satisfying the needs of millennials, another demographic group with enormous spending power is nipping at their heels: teenagers.
There are about 26 million teens in the United States and 39 percent of them are employed part-time. Teens are part of the larger Generation Z demographic group — those born between 1996 and 2015.
While similar to millennials, teens have some distinct preferences. The recently released Spring 2017 “Taking Stock with Teens” report from investment firm Piper Jaffray provides insights into teen online and offline purchasing trends. Based on a survey of 5,500 teens — 75 percent average income and 25 percent upper income — the report describes shopping trends and spending patterns. Piper Jaffray has done this semi-annual survey 33 times.
How Teens Differ
The term “digital natives” has been used to describe Generation Z. They are the first generation to always have the Internet at their disposal. They grew up in a world that is seamlessly connected. Teens are brand conscious but not brand loyal. They look for quality products and rely on social media to advise them.
Forty-one percent of teens identify an athletic apparel brand as their preferred clothing brand with Nike topping the list.
They are the first generation to always have the Internet at their disposal. They grew up in a world that is seamlessly connected.
They are not spendthrifts. Despite having $44 billion in buying power, teenagers are generally buying less. Spending by teens dropped 2.4 percent from 2016 to 2017 to about $2,500, according to the Piper Jaffray survey. Thirty-nine percent of teens are employed part-time and the drop in spending is not necessarily an economic issue. Parents’ contribution to teen spending was at 63 percent, down from 68 percent in the previous survey.
A growing preference for experiences over possessions gave food a bigger share in their budgets. For male teens, food was the largest expenditure followed by clothing and video games. Females ranked clothing their top spending priority followed by food and personal care items. Overall, apparel sales fell to 19 percent of teenagers’ spending, down from 21 percent in the same period in 2014.
Where Do Teens Shop?
While they have not given up on brick-and-mortar stores, the days of roaming through malls for hours are over. Online-only merchants captured 17 percent of teen shopping time, up from 10 percent in fall 2013, and became the second most popular channel. Specialty brick-and-mortar stores was where teens spent most of their time in 2016 with a 24 percent share, down from 27 percent in fall 2013.
Specialty chains that cater to teens and millennials are either filing for bankruptcy or closing stores. The latest is teen clothing store rue21, which recently announced it is closing 400 stores nationwide to focus on online sales. Wet Seal, another former teen favorite, closed all its stores this past January. Aeropostale, once a teen favorite, emerged from bankruptcy in 2016 with only 230 of its roughly 800 retail stores remaining.
Not unlike older people, teens like to visit Amazon. It is the favorite website for both males and females, capturing 43 percent of Internet share. The next most popular sites were Nike and American Eagle, both garnering 5 percent of teen visits. eBay suffered a small decline in share, garnering 2.5 percent of teen attention.
Amazon Prime adoption has grown across all income brackets in each of the past six Piper Jaffray surveys, most recently showing 58 percent of households with teenagers subscribe to Amazon Prime.
Snapchat and Instagram are the teens’ favorite social media platforms. Eighty-one percent of teens visit Snapchat at least once a month and 79 percent visit Instagram. Twitter comes in third at 56 percent and Facebook registers 51 percent of teens visiting at least once a month.
When asked “What is the best way for a retailer/brand to communicate with you about new products or promotions?,” 52 percent of teen respondents said Instagram. Second most popular was email at 51 percent.
YouTube is becoming more popular among teens for watching video, second only to Netflix. YouTube reaches more teens and adults ages 18 to 34 than any cable network. For the first time, YouTube outpaced cable TV as to how teens spend their free time.
- Teenagers are fully immersed in the digital world. Merchants should use digital channels to gain their business.
- Mobile is the way to go. Many teens live in a household without a landline or a desktop computer. Mobile is how they communicate and shop.
- To reach teens, merchants should engage them on Snapchat and Instagram.
- Selling to teens on Amazon is a winning strategy.