Skip to main content

Why Teen Retailers Are Failing

The outlook isn't great right now for so-called "teen" retailers. We polled teenagers from across the country -- and a Wall Street analyst, too -- about why they think the Abercrombies, Aeropostales and American Eagles of the world aren't doing so well.

The outlook isn't great right now for so-called "teen" retailers. American Eagle recently announced that its third-quarter profits were down a whopping 68 percent from 2012. Abercrombie & Fitch has lost 30 percent of its value over the past year, and shareholders and customers alike are demanding the resignation of Abecrombie CEO Mike Jeffries (to little avail). And while Aéropostale's biggest problem might be that no teenager actually knows how to properly pronounce Aéropostale, its third-quarter sales are also down 15 percent from 2012.

It's easy to say that these three teen retailers are in decline because they just aren't cool anymore. And that's certainly part of it. (Retail, especially apparel retail, is inherently cyclical. You're never going to win every quarter.) But it's more than that. The three As have been a massive part of teen fashion for decades. Why is it only now that they're facing such harsh judgment from consumers and Wall Street alike?

For one, there are simply more sartorial options today than there were 10 or 15 years ago, when these brands dominated. "Kids nowadays don’t want to be boxed into one look -- they want to mix, match and stand out," says Brian Sozzi, CEO of Belus Capital Advisors. "In 1999 it was about wearing Abercrombie to fit in, but today it’s about expressing yourself through a unique t-shirt from H&M with a pair of $8 leggings from Forever 21."

Ali Gold, a 15-year-old based in St. Louis, Mo., agrees: "People don’t like to look like they only shop at one store. They want to craft their own look." Gold, for one, still buys jeans at Abercrombie because they fit her incredibly petite, 5'1" frame. While she likes Kate Spade New York and her local boutique for special occasion pieces, she mostly shops at ASOS, Forever 21 and H&M.

And that brings us to teen retail's next killer: fast fashion. "Zara, H&M, and Forever 21 have much shorter lead times than traditional teen retailers," Sozzi says. "[Always changing product] entices teens each time they are in the mall and online." It's thus no surprise that Urban Outfitters, a teen retailer that has worked to adapt to the fast-fashion model, is performing pretty well right now. The company (which also owns Anthropologie and Free People) saw third-quarter profits increase by 18 percent from 2012, and record sales of $774 million. Net sales at Urban Outfitters alone were $342 million, up from $332 million in 2012. "I shop a lot at Urban, and for Free People at Bloomingdale's," says Leah Cunningham, a 19-year-old college student based in Washington, D.C. "I like clothes that are a little edgy."

Scroll to Continue

Recommended Articles

Another factor in the changing teen apparel landscape? Price. "We survey a good portion of teens for our research, and since 2010 the one theme has been this: 'We want to save Mom and Dad money,'" Sozzi says. "Households are working together like never before to save on discretionary purchases, and the reality is that fast fashion offers eye-catching prices, even if the quality isn't as good as traditional teen retailers."

Natalie Williams, an 18-year-old from Baltimore, Md., seconds that statement. "Abercrombie and [sister brand] Hollister are very, very expensive for what they are," she says. "If I asked my parents to buy one of those $40 tank tops, they wouldn't be pleased at all." Adds Gold, "H&M and Forever 21 are definitely popular because of the prices. The stuff you get there is very trendy, and I feel like if you go there and get something and only wear it a couple of times, you're not wasting much money."

Justina Sharp, a 16-year-old fashion blogger based in Sacramento, Calif., says that she believes the conscious consumerism often goes even further than being politically correct. "Kids my age are more aware of where our stuff comes from and how it's made: the originals vs. the knock offs," she says. "I think stores like Wet Seal [another struggling teen retailer] take advantage by using cheaper product." Of course, that could be said about many of the places where these teenagers frequently shop. Sharp, however, prefers thrifting.

Beyond pricing and the rise of fast fashion, the bad press the three As have gotten in recent months hasn't helped endear them to teens. "What you hear in the media is really bad," Gold says of Abercrombie. Adds Williams, "My friend worked there for a while, and they put restrictions on what she could wear. They wanted to her to look 'natural.' It doesn't seem worth it to shop there, when they're discriminating against people."

It's obvious that, as the retail climate has changed, teen retail has not changed with it. Could there be a turnaround? Given that these companies are still bringing in hundreds of millions of dollars each year, it's certainly possible. But they've got a big fight ahead of them, dealing with an exceedingly fickle crowd. "It's so weird, all that everyone wore in middle school was Abercrombie all the time," Gold says. "But the moment I went to high school it was just done."