If there's one season a year you can count on kids and teens spending big, it's back-to-school time. By now, nothing fits anymore and even if it does, it's like, so last year. As the demographic surge known as the echo boom (now aged 5 to 22) works its way through the population chain, some retailers and manufacturers are finding that third-quarter sales have begun to rival or even surpass Christmas sales as a percentage of revenues.
It's an emerging trend that shouldn't be ignored. From 1994 to 1998, holiday revenues increased 19 percent to $174 billion, while third-quarter sales (non-auto and non-durable) grew 27 percent to $98 billion, according to the National Retail Federation. As the shift away from "event" buying continues, some marketers have accelerated ad spending in the summer season, duking it out for a larger share of the $168 billion spent by or on youths aged 4 to 19 last year. According to Competitive Media Reporting, fourth-quarter ad spending rose 36.7 percent, while third-quarter spending increased 42 percent, between 1995 and 1998.
But students today aren't spending the way their predecessors did. And marketers, still jaded by Generation X's cynicism, may need some remedial training in order to capture this new crowd. "Marketers have dollar signs in their eyes, but the awareness of this huge swell has not really changed the way they do business," says Wendy Liebmann, president of WSL Strategic Retail in New York City. According to Liebmann, marketers must adjust their products and pitches to the very different lifestyles, attitudes, and spending patterns of today's kids and teens. That is, if they don't want to misjudge what is destined to be the largest teen population in U.S. history, currently some 31 million kids between the ages of 12 and 19, according to the Census Bureau, and projected to grow to 34 million by 2010.
"Kids 12- or 13-years-old have a totally different life experience than did people who are 23 or 24," says Liebmann. "Their lives are driven as much by changing household patterns and the presence of two working parents as by computers and access to information over the Internet."
In a recent study of echo boomers, Saatchi & Saatchi Advertising examined various attitudes of today's youth. "Previous generations have had a sort of surly sense of entitlement that this generation doesn't have," says Anne Adriance, executive vice president and planning director of Saatchi's Kid Connection division. "The affluence and technology they've grown up with has made them a really engaged and enthusiastic group." And echo boomers are taking on increased family responsibilities in the present and nurturing high aspirations for the future. Their autonomy is fueled by the Internet, where anyone with a search engine can become an instant expert, an instant artist, an instant comparison shopper. Bred on the Web, kids today are the most informed consumers ever, period.
"Technology has made them savvy - but not savvy as in skeptical," says Adriance. "Savvy as in they really know a lot and are comfortable making decisions." Indeed, savviness is a personal characteristic highly valued by teens. In a survey by Sputnik, a New York City market research firm, teenagers were asked to name the one thing they'd like to possess, above all else. The number-one response? Intelligence.
So when this bunch goes shopping for back-to-school (BTS) stuff, they don't just wander off to the local mall. They research product and brand names on the Internet, exchange e-mails with friends about what's hot, check out their peers' views in online chat groups, and then plot their best buys. Increasingly, they're making those purchases online. In a consumer survey by Jupiter Communications, 20 percent of online teen respondents said they had made an online purchase, and 52 percent said they would make more such purchases if they could.
Meanwhile, a booming economy is attracting more teens than ever to the workforce. According to the Bureau of Labor Statistics, more than half of young people aged 14 to 24 today hold some kind of a job. That means more money to spend, but less time to roam the mall.
This is also a group with very fretful parents: The high-school slayings in Littleton, Colorado, are just the latest reminder that parents must worry about their children's safety, even at school - an anxiety reflected in BTS purchases ranging from pagers to telephone cards to see-through backpacks.
Just as the attitudes of the BTS buyer have changed, so too has the buying season. Once confined to late August and early September, research by the School and Home Office Products Association (SHOPA) and others shows the season now starts in July and runs beyond October. Another wave of school-related buying picks up during the holidays and in early January, as students gear up for the second semester.
And consumers are increasingly less tied to traditional shopping occasions - like Easter, Black Friday, and Mothers' Day - and are spreading their shopping sprees more evenly throughout the year. "The types of products that this audience buys transcend the whole year," says Michael Racz, a principal in RDA International, an advertising agency in Manhattan.
What do marketers need to know in order to understand today's BTS consumers? Here's a primer of major trends.
Can I Help You With That?
Time was, cereal was thought of as a convenient fast food. Now to be considered convenient, cereal has to come with its own bowl, spoon, and milk.
The K-12 age group is redefining convenience: "Effortless" is the new standard. Whether it's a parent packing lunch before work or the kids grabbing their own breakfast on the way to the bus, nobody wants to waste time on food preparation - or even assembly. Sitting down to eat is also out. Manufacturers are responding with "grab-and-go" food products. Meals designed to be eaten cold are also hot.
Nowhere is the convenience trend more apparent than in Go-GURT, new from the Yoplait division of General Mills. It's yogurt in a tube, sized to fit in a lunch box. Squeeze it, suck it, chug it. No spoon required. "Utensils are inherently not as convenient," says Josh Resnik, assistant marketing manager for Go-GURT. After consulting consumer research and conducting multiple rounds of focus groups, his team spent months designing a package that could be opened without scissors. And Go-GURT can be eaten frozen, half-thawed, or right out of the refrigerator. "Freezability is a new dimension of convenience," says Resnik. "Whenever or wherever you want to eat it, it's ready."
Focus groups revealed that kids wanted to have fun with their food - and the package, too. "Older kids loved to slam it down quickly; they were practically chugging the yogurt," Resnik says. "The 8-to-12-year-olds would finish the yogurt in about 15 seconds, then spend 10 or 15 minutes playing with the package. One kid took a pen and pressed the container to get every last drop."
The Adult Teen
So long, slackers. Generation Y scores high on maturity, and while their attitude is often edgy - piercings and tattoos and Mohawk hairdos are the norm in this crowd - they're a very optimistic bunch.
"This is a generation that has been very much a part of the running of the household," says Liebmann. "They're used to clothing, feeding, minding themselves, earning their own money, maybe doing the family shopping. They're intelligent and experienced shoppers who know how to get information and make informed buying decisions - and they won't overpay for anything. If you don't treat them with respect, if you talk down to them, you lose them.
"I continue to hear marketers refer to this group as `kids with money.' These are not kids. I call this group `adult teens.'"
Saatchi's study confirms Liebmann's insights: Teens are doing household tasks, from cooking and shopping to the family laundry. According to Myra Stark, Saatchi's director of knowledge management, the conclusion was clear: "Advertise up."
"Our study showed that this is a generation that recognizes, in an information economy, smarts are the key to success," says Stark. "Marketers today need to challenge and explore those smarts."
One such marketer is New York City-based Delia's. Two years ago, the junior apparel and accessories company, which targets 10-to-24-year-olds, launched a catalog that has become a staple in the backpacks of kids down to first grade. Its mere existence acknowledged this group's buying power. The catalog, which features wholesome, ethnically diverse teens modeling a wide range of styles of apparel and accessories, is a vehicle for conversation and wish-listing. Late last year, Delia's debuted an online store (dELiA's.com) that, like the catalog, encourages consumers to mix-and-match their own looks and express their own identities. Even something as seemingly minor as Delia's accurate-sizing chart shows respect for the consumer's savviness. Says Stark: "Marketers like Delia's invite kids to participate. They like that."
As teens earn more money, their power over purchases grows, too. U.S. teenagers spent $94 billion of their own money last year - $10 billion more than in 1997, according to Teenage Research Unlimited. But teens and children aren't only making up their own minds about what to buy: They're exerting influence over family purchases. A study by David Michaelson & Associates for Channel One, the network that broadcasts news and education shows to secondary schools, found that $20 out of every $100 spent each week by teen households is at the specific direction of teens; they influence at least $20 billion a year in grocery purchases alone.
Kids under 12 spent almost $27 billion of their own money last year, according to Texas A&M professor James U. McNeal. By age 8, they've made their first independent purchase, often at a convenience store. McNeal predicts their total spending will grow to more than $35 billion next year. And their influence is anything but child's play: McNeal estimates children may influence asmuch as $485 billion in parental spending, on items as diverse as orange juice and personal computers.
The accelerated maturity of today's teens is mirrored by their changing values. "We see a resurgence of traditional values - family, relationships, home, a more traditional definition of work success," says Walker Smith, a managing partner of Yankelovich Partners, a market research firm based in Norwalk, Connecticut.
In the 1999 Nickelodeon/Yankelovich Youth Monitor survey, 86 percent of 12-to-17-year-olds said "getting a good education" was very important; 66 percent of 9-to-17-year-olds ranked "saving money for the future" as very important - compared to 60 percent in 1995. And 69 percent of the same group said "always telling the truth to everybody" was very important, up from 61 percent in 1995. Meanwhile, "being part of the popular crowd" dipped slightly.
Wired From Birth
Last year, 14 percent of kids and teens - or 8.5 million people - were online, according to Simmons Market Research. This year it doubled to 16 million and, by 2002, it is expected to double again. Considering the exponential growth rate of online commerce, not to mention kids' comfort with the medium, the implications for BTS online commerce are pretty blatant.
"Teens have significant buying power off-line and are champing at the bit to transfer it online," says Michael May, a digital commerce analyst for Jupiter Communications who researches online purchasing trends.
"We call it `connexity,'" says Saatchi's Stark. "This generation is using technology as a way to stay connected, as a way to grow." Online teens visit an average of 3.2 sites before making a purchasing decision, according to new research from Jupiter. "Teens are much more likely to comparison shop than adults," says May. "And they cite price as a driver of online shopping activity." They're also heeding their friends' advice about where to shop online. Word-of-mouth, he adds, is "a greatly under-exploited online marketing tactic now, especially for teens." And very few manufacturers and marketers are addressing the teenage online shopper.
The lack of a credit card, obviously, is a major barrier to online commerce for kids and teens. San Francisco-based iCanBuy.com hopes to clear that hurdle. Targeting consumers ages 10 to 16 - old enough to spend but not use a credit card - iCanBuy.com allows parents to set up online accounts with specified retailers. These "electronic wallets" are debited each time the child makes an online purchase. Parents monitor the spending, and users can craft a "wish list" for family and friends to consult when holidays and birthdays roll around. Co-founder Paul Herman says his plans include an "electronic allowance" feature and a job-search engine.
I'll Do It My Way
Some researchers call this trend the "democratization of creativity," but in the Sputnik survey, teens said their most valued traits are individuality and uniqueness. "But they don't think of individuality as being loud or crazy or wildly different," says Janine Lopiano-Misdom, a partner in Sputnik. "They think of it as being truly, uniquely themselves."
Children, teens, young adults - all want to customize and personalize their image, dip into different streams of history, iconography, and symbolism, and craft an individual message that communicates uniqueness even as it confirms membership in a group. Or groups.
Part of this trend is a rediscovery of the past. Swing dancing, VW bugs, Star Wars, Yoohoo drinks. "But it's not just a matter of looking back. It's taking stuff from the past and creating new trends for the '90s and the new millennium," says David Morrison, president of Twentysomething, a research firm in Radnor, Pennsylvania. The past is not a place to long for, but a huge catalog of raw material to cut-and-paste into personal statements of identity.
"Children and teens are growing up saturated in a variety of styles and images, all made instantly accessible through their various media," says Yankelovich's Smith. "There's the ability day-to-day to reinvent yourself." So expect an inconsistent, mix-and-match BTS season in which khakis and colorful accessories are equally popular. (Indeed, the return of color is one of the dominant trends of the coming season.) Where VW bugs are accessorized with leopard seat covers and oversized wheels. Where elaborate hairstyles inspired by Star Wars coexist with artless drawstring peasant blouses.
So the ability to customize a product may be key to its success. "This consumer wants to take what you've made and redefine it," says Smith. Successful marketers, he says, will make "modular" products that can be infinitely customized by the consumer.
This preoccupation with personalization is reflected in the waning appeal of celebrities. In the Cassandra Report, a study of teen attitudes by Youth Intelligence, a New York City-based market research and trend forecasting firm, parents, siblings, and friends - not celebrities - are most often cited as "the person I most look up to." Witness the growing use of "real teens" as models in magazines like Teen People and ad campaigns for products like Levi's jeans and Skechers shoes.
"Teen girls respond well to brands created for and by them," says Nick Shore, cofounder of nickandpaul inc., a New York City-based brand consultancy. Hence products like "You Make It Up," a create-your-own lipstick or nail polish item from Bonne Bell.
"Whether you're selling blue jeans or a beverage, the key is to tell kids to have fun and experience things for themselves, rather than trying to sell them on an image or an icon or a brand," says Michael Racz of RDA International. Sometimes called "viral marketing," the approach relies on pass-along knowledge and word-of-mouth for its power. RDA's campaign for Todd Oldham jeans, for example, encourages buyers to personalize the brand's imagery and share their creations with friends. Magazine ads come with peel-off stickers; a Web site allows teens to create their own postcard and e-mail it to friends. "The force-feeding of images and specific role models is very alien to this set," says Racz.
In this do-it-my-own-way culture, the retail store is becoming a place to sample and experiment with looks. Old Navy, Gap, and Abercrombie & Fitch continue to dominate apparel trends for this group, but they are being joined by edgier retailers, like Wet Seal and Gadzooks, that espouse a "skater" image. Although the merchandise could hardly be more different, these stores share a retailing philosophy: "They're creating store environments that teens want to be part of," says Michael Wood, vice president of Teenage Research Unlimited in Northbrook, Illinois. "They're not selling clothes. They're selling a lifestyle, a club that teens want to be in."
Who You Gonna Trust?
The growing incidence of school violence has intensified concerns about safety. "After [the killings at] Columbine High, one of the questions we ask has to be, `What does your survival kit look like if you attend an American school?'" says nickandpaul's Shore.
In the 1999 Youth Monitor study, 69 percent of 9-to-17-year-olds ranked "knowing how to defend yourself" as very important, compared to 63 percent the year before. And for the first time, in the most recent Cassandra Report from Youth Intelligence, teens listed violence, not drugs, as the biggest issue facing their generation today. Last January, 17 percent of males and 19 percent of females listed violence as the biggest issue; in May, following the April 20 incident in Littleton, 51 percent of males and 56 percent of females ranked it first.
No surprise, then, that personal safety items will be on more BTS shopping lists this fall, driven by new school policies as well as fear. "Some school districts are beginning to mandate see-through or mesh backpacks, so we're starting to see more of those," says SHOPA president Steve Jacober. "And we're seeing some gradual change to the adoption of school uniforms. When that happens, consumers are forced to find expression through the products that they use and carry, like pencils and notebooks."
Pagers and cell phones are hot items, too. "Parents want them for safety reasons, but kids want them for status and fun," says Morrison of Twentysomething. Manufacturers like Nokia are responding to their desires by creating colorful snap-on plates, allowing users to coordinate their pager with their apparel.
Meeting On Campus
Overall, enrollment in higher education institutions increased by 14 percent between 1986 and 1996, from 12.5 million to 14.3 million, according to the latest data from the National Center for Education Statistics. Meanwhile, minority enrollments grew from 22.5 percent in 1992 to 26.1 percent in 1996. Much of the change has been in the number of Hispanic (8 percent) and Asian (6 percent) students. In 1996, African-American students accounted for 11 percent of higher education enrollment.
Growing college enrollment is sparking new competition for the back-to-campus shopper. "Often what's overlooked in the BTS season is the college housewares market," says TRU's Wood. Students need towels, sheets, posters, desk accessories, bulletin boards, wastebaskets. Wood says he sees marketers beginning to shift from a kids-and-teens-only focus for BTS to one that encompasses college students as well.
In particular, stores like Bed, Bath & Beyond and Linens `n' Things are addressing the college-bound. "We're seeing housewares stores begin to develop products and ad campaigns aimed at the returning college student," says Wood. These retailers are selling themselves as a one-stop-shopping place for back-to-college needs. Delia's recently expanded into home furnishings for teens and college students, who are showing as much initiative in furnishing and accessorizing their rooms and apartments as they are in selecting their own wardrobes.
Color My World
Close to one-third of the U.S. population is non-white today. By 2025, that percentage will grow to 48 percent, according to the Census Bureau. Today's 15-to-24-year-olds, the most racially mixed group America has ever spawned, are 60 percent more likely to be non-white than their grandparents.
Still not convinced that diversity matters? Some 14 percent of U.S. residents age 5 and older speak a language other than English at home. Several major American cities and about 200 U.S. counties already have a "minority majority" - their combined non-white and Hispanic populations exceed their non-Hispanic white population.
But the influence goes beyond sheer numbers. "We're seeing increasing cultural crossover," says Gary Colen, president of Boston-based Triple Dot Communications, a young adult marketing and research agency that has built a database of teens with whom it communicates directly. "Take the area of music. It used to be if you were Hispanic, you went and found a Spanish band. Now, the attitude is, `I like this music, and I happen to be Hispanic.'" Similarly, white teens are increasingly identifying with ethnic music or culture. "This group's sense of identity goes beyond being Hispanic or white," says Colen. "The message for marketers is: Be inclusive."
Ethnic diversity at home is reinforced by active communication with youth around the world. "Once you can e-mail someone in Katmandu or Kosovo, you begin thinking of yourself not in the context of your hometown or even your country, but in the world," says WSL's Liebmann. "Young people aren't parochial anymore. They have a global perspective that earlier generations did not."