Young Money Few Pennies: Teen Spending Drops to its Lowest
Teen spending drops to records lows, but how to recapture them?
Of all the generational categories of ecommerce spending, we probably think the least about teens. And it makes sense. Most of them are in school and many (most?) are not working, so their disposable income is pretty much fixed to that of their parents generosity.
Yet marketing knows the importance of the teen market and the focus on the demographic is constant. However, one of the trends that has emerged since the pandemic is that teens – as statisticians like to refer to as Generation Z. These digital natives have a tendency to consume less drugs and alcohol than their parents and grandparents generations (shame on you!), yet now seem set to come of age in a world plagued by a 100-year pandemic.
We’ve seen that for the majority of 2020 has been hit by negative consumer spending overall, yet it’s particularly pronounced among the younger generations.
In a report by the investment bank Piper Sandler, it found that teen spending dipped to the lowest levels in the last two decades. For those under the age of 16, the average spend during 2020 is set to reach $2,150. Compared to last year, that’s a 9% drop, when teens spent $2,371 – that’s a difference of $221, about the price of some Beats by Dre headphones.
Yet if you’re assuming “Ah, that must be the broader implications on the pandemic, with this short-term decline in teen spending directly connected, and that as the pandemic dies out, tene spending will probably – inversely – rise,” you’re sady wrong. Our assumptions can’t always be spot on.
Teen spending has actually been sliding for some time now, since it reached its peak of $3,023 14 years ago in 2006.
But the pandemic has created a deeper dive, given that younger workers are most likely to be employed in the service industry – behind the bar, waiting tables, caring for children etc. Precisely those types of jobs hit hardest by lockdowns.
Hardest hit sectors
When teens spend less, certain sectors of the economy are hit more than others. And the report found that clothing and apparel dropped 11% from last year to this year.
Accessories were also hit hard, with handbags dropping to another record low of an average of $87 among teen girls. Yet confusingly, high-end, luxury handbag brands have been performing better with teens than their lower-priced competitors; teens are buying less bags but higher-priced ones.
(We are actually carrying out an analysis of handbag brands and which ecommerce platforms they’re using to provide their customers with digital experiences – our working estimate is that Salesforce Commerce Cloud is going to dominate the sector, with both Magento and Shopify likely to have a strong showing – but watch this space, because we’ll have much more to say about this)
The ecommerce platforms that they use are actually highly important, and not only because it’s extremely key to shopping right now, but because teens really love the internet, and consequently online shopping. During the fall, 9 in 10 teens have bought something online.
“Think of the children”
So what is the best way to build up your teen following and get them to think of your brand? Perhaps the most effective way to do this is to give the kids the opportunity to buy on platforms that they use the most. In other words, spread out your ecommerce network to include emerging digital touchpoints. If they’re hanging out on games consoles, hang out on games consoles, too. If they’re on TikTok, get moving on TikTok.
And this goes hand-in-hand with the quality of experience that you offer online. This is going to depend on which ecommerce platform you host your website on. If your deal is high-volume sales with more complex needs – like use a/b testing, the ability to show different versions of your sites to different audiences, that depend on the location of your users, then higher-end platforms like Salesforce Commerce Cloud can deliver exactly that.
PS: ArganoUV is one of the world’s leading Salesforce Commerce Cloud (Demandware) experts. Contact us to see how we can work together.