U.S. teen retailers seek edge for back-to-school
CHICAGO (Reuters) - The back-to-school shopping season has already begun, but the forecast for U.S. clothing sales appears cloudier than in years past.
With factors such as higher gas and grocery prices weighing heavily on consumers' wallets, many industry insiders are concerned about a potentially lackluster season.
Almost half of American parents say they will keep back-to-school apparel spending to a minimum this fall, buying only replacements for garments their children have outgrown, according to a survey by America's Research Group.
Spending on clothing is expected to be sluggish, with consumers laying out an average of $232 for the season, compared to last year's $228. Electronics purchases, however, are forecast to surge 13 percent.
Apparel companies are looking for ways to ensure a strong fall season in the face of weak sales forecasts and increasing teen demand for high-tech gadgets such as mobile phones and iPods.
"Retailers have to be inventive in getting kids into the mall," said Liz Pierce, analyst at Roth Capital Partners, citing promotional efforts such as e-mail offers, music tie-ins and coupons.
Analysts said many companies are attempting more promotional tie-ins, such as one offered last year by teen apparel retailer American Eagle Outfitters, which gave a free movie ticket to customers who tried on a pair of jeans.
"American Eagle has had one of the most innovative (approaches), in terms of marketing campaigns," said Christine Chen, analyst with Needham & Co. "It drew huge traffic into their stores."
This year, the company is sponsoring a contest in which customers will choose their favorite jeans fit for fall. Shoppers who buy a pair of jeans will receive a ticket indicating which fit they chose. Customers who purchased the winning fit can redeem their ticket for a free pair of jeans in the store.
Chen described such efforts as "a carrot for the customer to come in, particularly later in September," after teens have had a chance to see what their classmates are wearing.
Getting shoppers into the stores may be half the battle. If you come in and try on several pairs of jeans, Chen said, "you're likely to buy a top to go with it."
American Eagle is also making its Web site more interactive, she said, enabling customers to send clothing pictures to their phones, friends or moms.
Teen retailer Wet Seal has teamed with A&M/Octone Records in a sweepstakes that offers the winner a trip to Los Angeles, a $500 shopping spree at its stores and tickets to a concert for the boy band Maroon 5.
Abercrombie & Fitch, with higher price points, does not do these kinds of promotions, Chen said. "They view themselves as a luxury player, and feel their merchandise speaks for itself."
This year, analysts will be carefully watching orders for Apple Inc.'s iPhone and iPod digital music players.
Pierce said she believes that electronics may be more dangerous to apparel retailers during the holiday season, when kids ask for cash to buy their own electronic gadgets rather than gift cards.
Back-to-school clothing, in contrast, is often viewed as a necessity because children and teens grow year-to-year and fashions change so quickly.
Gadgets like the iPhone "won't kill the season, but apparel retailers shouldn't be dismissive of it" either, she said.
GETTING SHOPPERS IN THE STORE
The best way for apparel retailers to attract teens, according to Pierce, is to promote "constant newness. Keep them interested and coming back."
Other companies are taking heed. Old Navy announced last month that it is shifting from seasonal to monthly merchandise shipments, allowing the brand to bring new merchandise into the stores on a more regular basis.
Chen foresees a generally solid back-to-school season for teen apparel, driven by strong demand for '80s-style fashions such as leggings, baby doll tops and skinny jeans, which have become the uniform for teens, she said.
"The '80s are back in full force for the teen customer," she said.
Which retailers are expected to do well? Abercrombie & Fitch and American Eagle "have been consistently able to predict fashion trends better than the others," including Pacific Sunwear and Aeropostale, which both struggled last year, said Brady Lemos, analyst at Morningstar.
Lemos expects Abercrombie & Fitch and American Eagle to post strong fall sales, but added that expectations for both companies are higher since they "have been hitting out of the park for so long."
Some industry watchers said they believe that, no matter what, teens will always buy clothing.
"Getting the fashion right -- that's the tricky part," Lemos said.
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