I’m a Teen, Watch Me Shop; It’s Goodbye to Big Brand Names, Hello to Cheap ‘Fast Fashion’

I’m a Teen, Watch Me Shop

It’s Goodbye to Big Brand Names, Hello to Cheap ‘Fast Fashion’

SARA GERMANO

Updated Nov. 26, 2013 8:03 p.m. ET

OVERLAND PARK, Kan.—Upon entering the massive Forever 21 store here at the Oak Park Mall, Goldia Kiteck and three of her close friends scattered like spilled marbles. The high-school seniors were on separate missions and pursued them through corridors filled with clingy leggings, racks of chunky necklaces and tank tops with kittens across the front.“It has all my favorite things, in one place,” Ms. Kiteck said of the store, where she spent $51 on a skirt, a pair of earrings and a black sweatshirt with the words “Super Awesome” emblazoned in gold print across the chest.

Fast-fashion chains such as Forever 21 and H&M HM-B.SK +0.54% are eating the lunch of traditional teen retailers like Abercrombie & Fitch, American Eagle OutfittersAEO -0.68%

and Aéropostale. The sector’s onetime leader, Abercrombie, posted a loss of $11.5 million in the nine months ended Nov. 2, as sales fell nearly 7%.

To learn more about where teens are shopping and why, The Wall Street Journal went on an extended tour of the mall with two groups of committed shoppers, and it is clear why fast fashion is winning.

Teens’ tastes can be fickle, but on the Journal trips, buying decisions were almost invariably driven by two considerations: developing an individual style, and doing so for less.

Both impulses benefit stores like Forever 21 and H&M, which turn over fashions quickly, sell them cheaply and don’t bother with the heavy use of logos, once the mainstays of teen retail.

On a recent trip to the Oak Park mall outside Kansas City, the first stop was a newly opened H&M. Ms. Kiteck, along with friends Savannah Rattanavong and Kathy Hammer, spent about half an hour browsing before Ms. Rattanavong bought a black cotton blazer—for $11.

Next stop was Forever 21, where the group met up with Caitie McNulty, 18 years old. They spent an hour in the store, the bulk of their trip, picking out and trying on items. Ms. Kiteck had spotted the “Awesome” sweater in the display window and focused on finding it inside. She wanted it in gray, but eventually settled for black.

The attraction of the store is that its offerings are varied enough that friends can all find something, regardless of whether they want an edgy look or a preppy one, said Ms. McNulty, who wore a simple black T-shirt and jean shorts. It also works for a range of budgets.

On this particular trip, the girls’ budgets were as diverse as their shades of lipstick, ranging from around $20 to more than $300 each. Ms. McNulty was at the high end. She works at Applebee’s on the weekends to earn money for shopping and gas. That makes her an outlier. About 22% of teens age 16-19 who tried to find a job this past summer were unable to do so, according to the Labor Department, compared with an overall unemployment rate of 7.3% in September.

The group managed to spend an afternoon shopping together, mostly within the same stores, browsing through accessories if they couldn’t splurge on clothes.

They focused on cheap basics, saving their money to splurge on special items for which they’d pay a premium.

Over the course of the eight-hour shopping day, Ms. Hammer passed up a few desired items at H&M and other stores to save her money for the afternoon’s last stop: the M.A.C. cosmetics store, where she bought a $16 tube of matte lipstick.

Ms. McNulty tried on a sweater at Forever 21 but didn’t buy it, then steered the group to American Eagle. The choice wasn’t uniformly praised.

“I don’t like coming in here and combing through the racks of size 00s, then 0s, then 2s,” said Ms. Hammer, who wore a cream-colored knit sweater and had shaved off half her bleached-blonde hair. “I’m a size 7. Like, leave me alone. It’s demoralizing.”

Ms. Kiteck agreed, saying she wouldn’t ever buy anything at the store, until a worker came by and said a lot of the clothes were 40% off. “Well, if everything’s 40% off, maybe,” Ms. Kiteck said.

Traditional teen retailers have staked their market on the unofficial teenage uniform: jeans, T-shirts, and hooded sweatshirts, offered in a rainbow of cuts and colors and priced to a premium.

“The storefront philosophy has always been, ‘pile it high and watch ’em fly,'” said Richard Jaffe, an analyst with Stifel Nicolaus. The shoppers have noticed.

“They make a lot of the same few things,” Ms. McNulty said.

The teens interviewed for this article hailed American Eagle’s jeans. (“Forever 21 sucks for jeans,” Ms. McNulty said, even though they can sell for as little as $8.)

But, jeans aside, American Eagle nowadays is seen as a reliable source for a few items rather than a shopping destination, the teens indicated.

American Eagle and Forever 21 declined to comment

The group passed the Abercrombie store, with its dark wood and loud music. They didn’t go in.

“You can smell the Axe all the way out here,” Ms. Kiteck said, referring to the brand of body spray.

Abercrombie has acknowledged the challenges it faces. In early November, the company held its first meeting with analysts in more than two and a half years, and executives revealed plans to expand its offering of sizes and colors in an effort to better compete with the fast-fashion set.

Craig Brommers, senior vice president of marketing at Abercrombie, said the store concept features loud music and heavy doses of a scent it calls ‘Fierce’ because, “shopping should engage all of our senses.”

Lily Warford and Ciara Cullen, two 15-year-olds who were shopping at Crossgates Mall in Albany, N.Y., also skipped Abercrombie, instead spending an hour and a collective $95 in Forever 21, now occupies about 62,900 square feet of space there.

“When you’re in middle school, everyone wants to look the same. Everyone wears North Face jackets, American Eagle jeans, and Ugg boots,” Ms. Warford said. “In high school, you’re more yourself. It’s about discovering who you are.”

The pair said they were careful with their budgets. To save money, they sometimes buy items to share, as Ms. Cullen does with a fall jacket that they both like. On the trip, Ms. Cullen wears jeans borrowed from another friend.

As they were browsing through the racks at Banana Republic, Ms. Warford spotted army-green down vest. “Oooh, C.C.! Look!” she said to her shopping companion while holding the vest up to her body. Her expression soured at the price.

“Ugh, $80 for this?” she said. “Let’s go to Forever 21. I can get it for thirty.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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