Teen spending takes a dive: Guys splurge on footwear, while a natural look for girls hurts makeup sales

Shoppers look over merchandise at an American Eagle Outfitters Inc. store in San Francisco, California.

David Paul Morris | Bloomberg | Getty Images

Today’s teens are worried about the economy and the coronavirus pandemic, just like many of the rest of us. Though the sustainability-minded generation still puts the environment first among their top concerns, a new survey finds. 

While Gen Z’s total spending is down sharply, when they do go shopping, brands like Nike, Lululemon and Amazon are top on the list. Often, that’s after they’ve stopped at Chik-fil-A or Starbucks to fuel up. While the guys are splurging on footwear, teen girls are spending less on handbags, cosmetics and apparel. Under Armour, Ralph Lauren and L Brands’ Victoria’s Secret are among the brands falling out of favor.

Piper Sandler conducted its biannual “Taking Stock with Teens” survey between Feb. 17 and March 27, polling 5,200 teens in 41 states. The last three weeks of the survey covered an unprecedented time for America, with schools shut down to help prevent the spread of COVID-19, and teens figuring out how to learn from home.

When teens were asked for their top social or political concern, coronavirus was named as the number two worry, garnering 11% of unaided responses. The environment remained in the top spot with 16% of responses, the same as in the fall.

Piper Sandler said the first teen to highlight COVID-19 as a concern did so on Feb. 18, much earlier than many governments in the Western hemisphere. At that point, the vast majority of cases were in China, where the coronavirus outbreak orginated. About 30 cases had been identified in the U.S. 

Gen Z has grown more concerned about the U.S. economy as the virus outbreak has spread, according to the survey. About 47% of teens said the economy is getting worse, compared with 28% that said so a year ago, and 32% in the fall.

It is likely the concern about the economy that is weighing on spending. Teens reported their annual spending was down 13% this spring to $2,300 compared with the same period last year, and down 4% from the fall. That amount is the lowest spending level reported by teens since fall 2011.

Piper Sandler said one teen in the survey worried about his own financial circumstances, saying, “Restaurants are closing, I lost my job due to it.”

Overall spending may be down for teens, but food accounts for the largest share of males’ budgets, and is in a very close second place for females, behind apparel. Teens report a quarter of their spending goes to food.

Chik-fil-A holds onto the top spot for teens’ favorite restaurant brand, followed by Starbucks for at least the fourth-straight survey. Chipotle Mexican Grill takes number three for the higher-income teens, McDonald’s is third for the average income teens.

Guys splurge on Nike and Vans

Female teens may be spending more on clothing than other categories, but spending on apparel has fallen 14% from last spring. Footwear spending is down 5% over the same period.

Still, athletic brands reign supreme for teens, as the once-popular preppy trend wanes. Females are increasingly interested in athletic brands, according to the survey. Thirty-seven percent of teens named athletic brands as their most preferred, fairly steady from the last two surveys, but down from the category’s 41% peak in spring 2017. Females preferance for athletic brands grew by 600 basis points over last spring.

Nike remains the most preferred brand among teens — for nine-and-a-half years running. In apparel, one in four Gen Z’ers named Nike as the favorite brand. 

American Eagle Outfitters and Adidas again take second and third place, respectively. Lululemon apparel moves up the list to a new survey high, Vans moderates. Ralph Lauren and Victoria’s Secret fall in favor, well out of the top ten.

Teen footwear spending has also contracted, down 5% over last year to $284. However, spending is markedly different by gender. Females reported a mid-teens decline in footwear spending, while males spent 4% more, and outspent female counterparts by around $100 annually.

Same as with apparel, Nike remains the top brand with 47% naming it as the favorite footwear brand. Vans holds steady at number two with 20% share. Under Armour falls out of the top ten footwear preferences to number 14 from number 9 in the fall and 12 last spring. Sperry also falls further down the preference list to number 15 from number 11 last spring. Crocs, meantime, sees a surge with its highest ever springtime spot, at number 12 from number 19 last spring.

Girls prefer a more natural look

Personal care spending follows clothing and food for females for share of wallet, but within that, cosmetic spending fell 26%, marking a 10-year survey low. Experts point to the VSCO girl trend, which favors a more natural look, to partly explain the decline in cosmetics spending for Gen Z.

When beauty spending is occurring, Ulta Beauty again takes the top spot at 39%, followed by Sephora at 24%.

While Amazon Prime households hit 80% of respondents in the survey, and teens pick the behemoth again as their favorite e-commerce site, when it comes to beauty purchases, 90% of teens still prefer to shop at bricks-and-mortar store.

Teens said $89 a year is the average budgeted for spending on handbags, down 15% over last spring —  and a new survey low. The high-point of the survey was back in spring 2006 when that amount stood at $197.

While Capri Holdings’ Michael Kors holds onto the number one spot as most preferred handbag brand, it’s seen its share fall as Louis Vuitton moves up to the number two spot. Kate Spade takes third place, also with share deceleration, Coach is next, with steady share. Both Kate Spade and Coach are owned by Tapestry.

While teens give European luxury handbags brands a total of 31% mindshare, up 3 percentage points from last year. Piper Sandler said, “while we think it is highly unlikely that teens are purchasing handbags from these brands in the primary market, we believe teens are responding favorably to the GenZ/millennial-appropriate marketing direction that LVMH and Kering in particular are taking. Too, through robust development of secondary platforms like StockX and The RealReal, teens now have access to luxury for less.”

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