Teen retail as we know it is dying
But that's all changed.
Teen retailer Aeropostale just filed for bankruptcy, becoming the latest brand to fall victim to the capricious nature of teens' wallets.
Last month, Pacific Sunwear filed for bankruptcy, and in September, Quiksilver did the same. Wet Seal also filed for bankruptcy in 2015.
The mall - once a sanctuary for cool teens - is practically turning into a cemetery. Aeropostale fell victim to the same problem that has plagued many others. It was unable to keep up with the increasing demands of young consumers, many of whom don't want to buy clothes anyway and would would rather spend money on fancy gadgets and experiences.
"Aero went through something of a torrid time as teen spending on fashion declined and young shoppers found other ways to spend their money," Neil Saunders, CEO of consulting firm Conlumino, wrote in an email to Business Insider. "However, unlike other teen retailers, Aero's declines never really bottomed out and sales continued to decline at breakneck speed even when the sales of rivals started to recover."
The rivals Saunders is referring to could include American Eagle and Abercrombie & Fitch. American Eagle has seen sales climb, and Abercrombie & Fitch has been digging itself out of a hole, while also profiting off of its successful little sister, Hollister.
American Eagle has honed in on its bohemian, college-friendly look and enjoyed the success of its body-positive lingerie brand, Aerie. And Abercrombie & Fitch has streamlined its selections to look more classic, simple, and refined.
"The majority of the blame for recent poor performance lies squarely with Aero which has failed to realign itself to the changing fashion demands of younger shoppers. Indeed, Aero has a range that looks more at home in the mid 2000s than 2015 and which fails to provoke the interest of younger shoppers," Saunders wrote.
Today, young shoppers know they can buy cheap, trendy clothes through fast fashion stores, like Forever 21.
Pacific Sunwear's downfall proves how important the price tag has become. Pushing a ubiquitous look that teens could buy anywhere, the company needed something to draw in customers - and it couldn't find that.
"That's where you compete on price and .... They just couldn't compete on price," Gabriella Santaniello, founder of A Line Partners, a retail consulting firm, told Business Insider last month.
To make matter worse, teens have so many alternative options.
"There's just a lot of options out there, and there's a lot of cheap options," she said in a recent interview, while pointing out teens' ambivalence towards logos "levels the playing field, and it's all about pricing and what sort of value you're going to give to the consumer."
Further, a name brand plastered on somebody's shirt doesn't carry the same weight as it did for teens a decade ago. High school girls don't need Abercrombie & Fitch plastered across their shirts anymore to sit at the cool lunch table; a graphic Forever 21 (or a plain Brandy Melville tee) will suffice.
To that end, Abercrombie & Fitch, though working its way back to relevance, ditched trying to appeal to teens. Chairman Arthur Martinez told Business Insider in November that the company now aims to sell to 18 to 25 year olds.
That's an incredibly smart move, in part, because it puts less pressure on teens, but also, because one reason Aeropostale struggled was that it stopped catering to older customers and strictly focused on teens, A Line's Santaniello recently told Business Insider.
Aside from lessons about setting prices and playing the market well, the failure of teen retailers raises other questions. What do fickle teens like, anyway? How is it possible for any teen retailer to stay afloat?
According to Piper Jaffray's semiannual taking Stock with Teens survey, they're taken by activewear. The two most favored brands among upper-income high school seniors were Nike and Forever 21. Forever 21 famously sells runway-inspired apparel at attractive (cheap) price points.
Oddly, PacSun cracked that same list of that sector's favorite brands, proving that ultimately, even the love of teens isn't enough to salvage a brand's financial woes.
It appears that winning teen retail comes down to being quicker than their social media feeds.
"You need to be ten steps ahead of your customer, and I think the whole space was shaken up by fast fashion and Forever 21," Santaniello said.
"Constant newness to engage and stimulate is one of [the ways to engage teens]," Saunders wrote in an email to Business Insider. "A good digital strategy in terms of marketing and shopping is another. Value for money is definitely a third: teens have so many things they want to buy so what they have to spend on particular items is often constrained.
That makes for quite a difficult puzzle for retailers.
"Of course, the problem is that these three things are difficult to balance while remaining profitable," Saunders wrote.