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In Their Own World

Some teens aware but are shielded from recession

By Sandra M. Jones | Tribune reporter
December 21, 2008

Recession? "What's that?" said shopper Jordan DiGrazia, 18, when asked how the recession has affected her.

While most of the U.S. economy has been battered by the downturn, the $127 billion teen economy is holding up well, and some retailers catering to their fashion tastes are even growing.

From jeans to shoes to iPods and cell phones, teenagers—especially those from higher-income households—seem to have the will and resources to do what much of America has been avoiding: shop.

The last time the U.S. was in a recession in the early 1990s, most of today's teens weren't born. They grew up in a world flush with $4
Starbucks, gas-guzzling SUVs, McMansions and, often, indulgent parents. And that world has remained mostly intact, as if in a protective bubble.

"Our generation of parents, and I include myself in this, are more child-centric than they were a generation ago," said Bob Carlberg, vice president of merchandising at Buckle Inc., a teen clothing store that's enjoying robust sales. "Most parents will take away from themselves before they take away from their children."

Take Tina Nguyen. The single mom is spending less on herself these days, but she won't skimp when it comes to shopping for her teenage sons.

"I try my best to give my children nice things and to keep them happy," said Nguyen while looking for shoes for her 14-year-old son, Steven Truong, at Woodfield mall last week.

Parents spent an average $1,085 on teen apparel this fall, up 9 percent from $995 in the fall of 2007, according to a report called "Taking Stock with Teens" released in October by Minneapolis-based investment bank Piper Jaffray & Co.

Fashion—specifically clothing, shoes and accessories—accounts for the biggest portion of teen spending at 41 percent, followed by food at 15 percent and cars at 10 percent, the report said. Electronics and gadgets account for 8 percent of teen spending.

While retail chains across the board saw sales declines in October and November, marking the worse retail industry sales performance in four decades, sales jumped 15 percent during that period at Buckle and 8 percent at Hot Topic, another teen clothing store. While apparel sales overall fell 3 percent for the 12 months ended in October, teen clothing sales dipped only 0.7 percent, according to a survey from NPD Group Inc., a Port Washington, N.Y.-based market research firm.

"Teens today have never really dealt with a weak economic period," said Rob Callender, trends director at TRU, a Chicago-based market research firm. He noted that the abbreviated downturn in 2001 "didn't seem to register" with teenagers.

"What we found at that time is that parents were doing everything in their power to shield their children," Callender said.

While it is too early for Callender's firm to determine how the recession is affecting teens, he cited a survey conducted earlier this year that showed 33 percent of teens expect to spend more money in 2008 compared with 45 percent in 2003.

There are exceptions, of course, especially among teenagers growing up in households where making ends meet is a constant battle and working part-time to help pay household bills is a necessity.

Michael McNichols, 18, who is studying finance at Schurz High School on Chicago's Northwest Side, pays rent and car insurance, and he has little money left over for indulgences.

"I'm finding things to do for fun for free, like ice skating at
Millennium Park or snowball fights, good old-fashioned stuff," said McNichols, who after school is a paid intern at the federal Office of the Comptroller of the Currency's central district office in Chicago. Last summer he worked as a lifeguard.

The message that teens need to be responsible with money during these difficult economic times seems to be gaining some momentum.

Talk-show host
Oprah Winfrey took up that mantle in October when she brought on personal finance expert Suze Orman, who advocated that parents talk to their children about monthly bills so they could better grasp what purchases could be afforded.

Retail consultant Wendy Liebmann said most teens haven't seen cutbacks in their allowances or on after-school activities like sports and music lessons that cost money. But 56 percent of teenagers say they are more likely to think about how their parents will be able to afford something before they ask for it, according to a September survey from WSL Strategic Retail, a New York consulting firm.

Seeing expenditures can also have a profound impact.

Jordan DiGrazia said she was stunned, even angry at first, when her mom sent her the debit card statement last month that detailed how much she was spending.

"I didn't expect it to add up to that much," said DiGrazia. As a result, DiGrazia took a break from shopping for two weeks and limited herself to holiday gift purchases for friends and family.

Stephanie Moore, 16, of Chicago also is starting to learn that a recession means "you don't necessarily get what you want, when you want it."

Moore said the downturn didn't hit her until her mom told her that "Christmas would be tight." She's been trying to find a job, but finds that there are few openings, even in positions that traditionally are open to teens. At the same time, she has cut back on shopping with her friends, and adds, "It's kind of ruining my social life. I basically sit home and mope.

"When my mom told me about the recession, it was just a word," Moore said. "I didn't know what it was."

For further information:

TRU
Rob Callender
222 Merchandise Mart Plaza, Suite 250
Chicago, IL 60656
+1 312.951-4822
robc@tru-insight.com

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