VOL. 38 | NO. 49 | Friday, December 5, 2014
Teen retailers get the cold shoulder for holidays
A glance at now defunct teen brands
NEW YORK (AP) — Remember Merry-Go-Round, a once-hot teen retailer that filed for bankruptcy in 1996? Teens' fickle behavior has helped write the obituaries of many once hot-retailers and brands over the last two decades:
Ruehl's: A division of Abercrombie & Fitch that launched in 2004 and catered to affluent young shoppers in their 20s. It shuttered all 29 stores in 2009.
Demo: A division of teen chain Pacific Sunwear of California that launched in 1998 and sold hip-hop fashions shuttered its 154 stores in 2008.
Bugle Boy: The brand, founded in the 1980s, was popular for its parachute-style denim jeans. It was known for its clever TV commercial that featured a young man in Bugle Boy jeans who gets asked by a woman, "Excuse me, are those Bugle Jeans that you're wearing?" It went out of business in 2001.
Merry-Go-Round Enterprises Inc.: The national teen clothing chain, based in Joppa, Maryland, thrived from the 1970s to the early 1990s. In its heyday, it had more than 800 stores. But it made some big merchandising mistakes like not chasing after the lumber-jack look— flannel shirts and heavy boots— and went out of favor with teens. It ended up liquidating its business in 1996.
NEW YORK (AP) — Being a teen can be tough, but catering to one is even more difficult.
Teen retailers are learning that lesson the hard way this holiday season.
The longtime CEO of Abercrombie & Fitch on Tuesday abruptly retired just 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 that includes the holiday shopping season after each posted weak sales for the fall.
Teen retailers are facing 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 became popular in the last decade for their logo tees and trendy jeans, which became a high school uniform of sorts. But since the recession, these stores have been losing 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 more likely 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 says. But now, Nash says "everyone is putting their own individual spin" on their look.
This 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 right 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 fashions in stores faster in an effort to compete with so-called fast-fashion retailers like H&M.
American Eagle, the mid-priced brand of the three chains, says it's adding jeans with different washes this holiday season. Meanwhile, Aeropostale, which is at the low-price range with 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.
Julian Geiger, Aeropostale's CEO, acknowledged the shift in the way teens shop during a talk with investors last week. 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, the chain's former CEO who was rehired in August.
For its part, Abercrombie, whose other brands Hollister Co. and Gilly Hicks, has made the biggest changes.
The chain, which says it's 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 — something it had never done 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," said outgoing CEO Mike Jeffries 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 iPhone6," 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's noticed trendier styles on Abercrombie's website: "I think I may venture back to the store."