A Glimpse into Demographic Headwinds for Teen Retail
Since 1998, the population growth of consumers between the ages of 13 and 23 has been slowing, and in 2010 will reach negative levels that will last through 2016. Broadly speaking, it suggest that teen retailers will lose approximately 815,000 consumers over the next 7 years which equates to a loss of approximately $1.3 bn (using 2008 levels of apparel and footwear spending of $1,604 by consumers age 25 and under). With all the complex Macro cross currents, having $190 mm (118,750 people x $1,604 spent on apparel and footwear) fewer dollars to capture is the last thing the teen retail space needs in 2010.
One can argue that diversification is a positive here – like Abercrombie – which has concepts to capture different parts of each sub-segment that carry varying growth rates. But we’re not sold on that one. We’d argue that it leaves a diversified company with a ‘consistently mediocre’ portfolio as it relates to demographic exposure.