How Fickle Teens Flummox Retailers

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Interestingly enough, even Hollister, which is a popular retail brand among teenagers, performed poorly. Launched as a separate store chain by Abercrombie, Hollister refers to its male shoppers as "Dudes" and its female shoppers as "Bettys," and has been a popular concept. However, in July, Hollister's sales dipped 7%.

The challenge then for retailers lies in striking the right balance in luring teenagers with cool and unique offerings but avoiding the slip toward ubiquitousness. "One of the interesting paradoxes of being a teenager is trying to be unique but not wanting to be singled out in a peer group," says Whitfield.

Indeed, stores that manage to cut into that sweet spot are performing quite well. Everett (Wash.)-based Zumiez (pronounced "zoomies") said Aug. 9 that its comparable-store sales increased 9.7% for the four-week period ended Aug. 4, vs. a comparable-store sales increase of 8.4% in the same period a year ago. A retail concept that's becoming very popular among teenagers in the heartland is Kearney (Neb.)-based Buckle, a mecca for denim that offers a high level of customer service at its stores. In July, Buckle recorded a 7.6% growth in same-store sales.

Family Matters

A factor that is playing out in weak sales at teen retailers is the slump in the housing market and higher interest rates on adjustable rate mortgages. TNS Retail Forward's Whitfield points out that parents control spending and, more than likely, back-to-school shopping budgets are getting tighter this year.

The Zandl Group, which tracks teenage culture trends, notes that today's teens are very cognizant of how broader economic trends are affecting their parents. "If parents are stressed, it affects the whole family dynamic, and the housing market slump and high interest rates [are] washing over teens as well," says company Principal Irma Zandl.

Of course, these economic factors, coupled with high gas prices, have been affecting overall retail sales for a while now. But until recently it seemed that teens had a bottomless appetite for shopping. Now, it seems, that appetite has diminished.

Gogoi is a contributing writer for BusinessWeek.com.