Delia's and Deb Shops both surprised retail watchers by filing bankruptcy petitions with plans to liquidate before the final weeks of the holiday season. Disappointing quarterly performances last week by Abercrombie & Fitch, American Eagle, Aeropostale and Wet Seal also underscored the widespread challenges facing teen chains.
A Forbes headline questioned whether the former kingpins, Abercrombie & Fitch, American Eagle, Aeropostale, would "be around in five years."
The challenges, according to several reports, include:
Fast fashion competition: H&M and Forever 21 are winning over teens by offering trendy fashion and runway knockoffs within weeks at bargain prices.
Uncool malls: Teens now socialize on the internet rather than at malls. Speaking to the Wall Street Journal, Neely Tamminga, an analyst at Piper Jaffray & Co., added that the ability to shop countless websites eliminates the reason to go the mall. She called it a "massive and probably permanent shift."
Tech's appeal: Headphones, iPhones, apps and other tech accessories are more fashionable than any current apparel trends.
Apparel is trendier: Teens are shunning the logos and uniform looks of the major teen chains (Abercrombie, American Eagle, Aeropostale., Hollister, etc.). Mobile phones are allowing them the find and showcase trendier looks on Instagram, Facebook, and haul videos on YouTube. ModCloth enables teens to customize outfits while Etsy provides access to countless independent designers. Chad Dickerson, CEO of Etsy, told Forbes, "In the old days of big box retailing, it was cool to have what everybody else had." Now, teens "want to have something that nobody else has."
Less money: According to the Labor Department, the unemployment rate among 16- to 19-year-olds was 22.2 percent in October and has remained above 20 percent since May 2009. Parents are also said to be more value-oriented around kids' apparel purchases. Jahnia Sandford, an analyst at Kantar Retail, told the Associated Press, "If you have limited income, you're not going to Abercrombie and Hollister and spending $40 on a pair of denim."
- Teen Retailers Becoming Out of Fashion - The Wall Street Journal (sub. required)
- Another teen retailer to file for bankruptcy - Reuters
- Is trendy tech really Abercrombie's problem? - RetailWire
- Abercrombie & Fitch Isn't Ready to Wear - The Wall Street Journal (sub. required)
- Will Aeropostale, Abercrombie And Fitch And American Eagle Be Around In Five Years? - Forbes
- Panic at the mall: Wet Seal dives 29% on bleak forecast - New York Post
- Teens, thanks to smartphones and less income, change the way they shop - The Associated Press/St. Louis Post-Dispatch