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Total US teen spending on fashion-related items increased by 2% on a year-over-year basis and 6% sequentially, according to the fall 2009 “Taking Stock With Teens” survey from Piper Jaffray, which was conducted both in American schools and online. This increase represents a notable improvement from the 14% decline reported this spring.

Results from the 18th semi-annual study, which provides insight into the purchasing behavior and brand preferences among teens, indicate that young women’s spending in the junior apparel category has increased 7%, though it has decreased 1% for footwear and 10% for accessories.

Spending by young men on apparel has increased 1% while spending on footwear increased 7%, the study found.

“We believe the fashion industry is in the early stages of a new cycle with traffic and conversion gradually improving as teenage consumers look to replenish key items in their wardrobes after under-spending on the category over the past three years,” said Jeff Klinefelter, the senior research analyst who headed up the study.

Other findings from the survey, broken out by spending category:

  • West Coast Brands (e.g. Pacific Sunwear (PSUN), Volcom (VLCM), Quicksilver, Zumiez(ZUMZ)) took the #1 spot in clothing brand preferences among teens, followed by Forever 21, Hollister (ANF), Nike (NKE), and American Eagle (AEO). Specifically among brands ranked by young women, Forever 21 took the “most preferred” position, while West Coast Brands continued as a favorite among young men.
  • Beauty spending is down from last year for teens, but parents indicate an 11% year-over-year increase in spending on the category. When purchasing cosmetics, department stores are preferred while discounters are favored for skin-care items.
  • Video-game spending is 7% of teen budgets, up from 3% five years ago. Some 88% of teens own at least one video game console, while 58% own two consoles. Approximately 78% of teens own or intend to own a next generation console. GameStop (GME) remains the retail destination of choice with a 38% share, as teens use the company’s trade-in model for used games.
  • In digital music, 87% of students who own an MP3 player indicated that they own an iPod - up from 86% last spring. iTunes share was 97%, consistent with the prior season. In addition, 15% of students say they own an Apple (AAPL) iPhone while 22% of students expect to buy an iPhone in the next 6 months.
  • In the restaurant category, Starbucks (SBUX) has once again nabbed the #1 spot, and is preferred by teens in both the school and online survey samples. For the first time since the fall of 2007, teens indicate an increase in restaurant spending. Taste is the leading influence dictating where teens dine, but value continues to be a critical factor in the challenging consumer environment.

Klinefelter also noted that, in addition to year-over-year and sequential increases in fashion budgets, other spending trends such as shopping frequency improved vs. spring and fall of 2008.

Parent Spending Increases

As part of the study, Piper Jaffray also surveyed parents, and found that parent spending on themselves and their teen increased sequentially and year-over-year. Apparel spending by parents for teens was $1,141 compared with $915 in spring 2009 and $1,085 in fall 2008.

Parents indicated that annual spending on their own apparel increased 66% sequentially and 33% year-over-year, shifting toward specialty and value retailing. When shopping for themselves, parents say they prefer retailers Macy’s (M), Kohl’s (KSS), and Nordstrom (JWN). When shopping for their teen, parents choose American Eagle Outfitters, Kohl’s, Nordstrom, and Hollister, the study found.

About the survey: The survey is conducted for PiperJaffray by Klinefelter and a collaborative team of research analysts. This spring, the team visited 12 cities across the US, surveying approximately 1,200 students who were, on average, 16.3 years old. In partnership with DECA (an international association of high school students), Piper Jaffray captured online survey responses from an additional 10,000 students with an average age of 16.2 years.

Source: Piper Jaffray: Teen Retail Spending Shows Slight Rebound