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How Pre-teen Dimes Grow into Big Bucks

By Sarah Schmelling
New York Post
August 15, 2004

They may be small, plastic and not so durable, but for "tween" retailers, beads and bangles really add up.

It's no secret that 7- to 14-year-old girls have purchasing power, but nowhere is it more apparent than with stores that focus on accessories - from chunky bracelets to sparkly hair clips - specifically designed with tweens in mind.

"Girls this age are very into making the most out of their outfits, and the way to do that is through accessories," said Michael Wood, vice president of Teenage Research Limited.

Capitalizing on the trend is Florida-based Claire's Stores, a chain with more than 30 outlets in the New York area. Conceived as a women's accessory retailer in 1961, the stores were revamped 20 years ago by founder Rowland Schaefer to focus on the then-untapped pre-teen market.

Claire's saw a 9 percent increase in revenue in 2003 to $1.02 billion, and this year's sales have already surpassed that. Since 2001, the company's stock has risen 276 percent.

Marisa Jacobs, Claire's Stores' vice president of corporate communications, said Schaefer realized girls wanted stores that "didn't shoo them away as annoying little kids."

He also discovered the amount of disposable income they had at their fingertips.

Alone, tweens will spend about $38 billion of their allowance money this year, according to MarketResearch.com. Parents will spend another $126 billion directly on them, the group estimated.

Claire's now has close to 3,000 stores worldwide, including its new Icing shops for "older sisters" of Claire's customers, aged 15 to 26.

Its closest competitors are Limited Too, a tween apparel retailer, and Wet Seal, which sells apparel to a wider age range. Yet Claire's gains are leading the pack.

Jacobs attributes the company's success to its merchandising strategy, recent economic improvements and renewed popularity of jewelry. But what really helps is that the average price of an item at Claire's is $4.

Girls, she said, are "much more likely to purchase a $4 pair of earrings than a $70 pair of jeans."

As the sole accessory-only tween chain, Claire's is virtually unchallenged, Wood said.

Apparel retailers like Limited Too are ramping up their accessory supplies, but Wood said, "It's going to be hard for anyone to compete head-to-head with them, just because they're so well established and they have so many dang stores."

He added that company marketers have a great eye for trends.

"You look through magazines and you'll see a tiara on Reese Witherspoon at an awards show, and then right next to it is the $14 version that you can buy for a prom at Claire's," he said. "They're just delivering cool, innovative little products that girls love."

Wood expects the tween market boom - which he dates back to Britney Spears'
first video in 1999 - to stay strong.

But he warns it could be a challenging market for new retailers.

"If you haven't already jumped on this bandwagon, is it already too late?"
he asked.

Copyright 2004 NYP Holdings, Inc.

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+1 312.951-4822
robc@tru-insight.com

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