TEENAGE SPENDING POWER HITS $179B IN 2006 Jeffrey Yorke – Radio and Records The spending power of teenagers reached a stunning $179 billion in 2006 as the 13-19-year-old crowd lead the way on trends in fashion and cutting-edge technology, according to a report by TRU -- a subsidiary of Research International -- released as a part of An Industry White Paper by the RAB.
The TRU study found that nearly all of teens’ income from jobs, allowances, gifts, etc., is disposable since they don’t have the obligations of mortgages, rent, medical or vet bills, and sometimes not even auto, gas or insurance payments.
The average teen has about $180 a month in disposable income, says the report. A study by BizRate Research finds that the top five categories to spend money on among teen girls are apparel and accessories, music, books, DVDs/videos and health and beauty products. Teen boys spend their money on video games, music, DVDs/videos, apparel and accessories and computer software. A similar 2007 study by the Harrison Group found that the top spending categories for teens of both genders are clothes, eating out, cars, movies and cellphones.
“Teens are spending an enormous amount of money on food,” said Rob Callender, TRU trends director. “When they just want to get out of the house, they have a fairly limited number of places they can go where they feel welcome, where they can hang out, and where they don’t feel like they’re being harassed. They can’t go to a nightclub, because they’re too young. So they go to a restaurant, eat a meal and socialize.”
In a semiannual 2007 survey by Piper Jaffray and Co., teens listed their three favorite restaurants as Starbucks, Olive Garden and Applebee’s. Meanwhile, in another study by Decision Analyst and the Hypothesis Group, the teen participants chose Subway, McDonald’s, Taco Bell, Olive Garden and Pizza Hut as their top five restaurant chains.
And brand names are important. Most teens say they “stick with a few of the brands they really like,” particularly when it comes to computer equipment, shoes, MP3 players, cellphone service and clothes. “Individual brands earning high marks among the teen consumers included Apple’s iPod, American Eagle Outfitters, Axe, Baby Phat, Facebook, Google, Hollister, MTV, MySpace, Vans and YouTube,” the survey reports. Asked for their preferences in clothing brands, researchers heard names such as Wal-Mart, Target, Tommy Hilfiger, Nautica, Levi’s, Gucci, Armani and Tiffany’s.
And there was one clear winner.
“Nike has been an absolute phenomenon in our research,” reported Callender. “For as long as we’ve measured our ‘coolest brands,’ Nike has never failed to finish first. It’s been a juggernaut in an otherwise fairly dynamic set of data. But Nike’s success can actually paint kind of a false picture of how teens deal with brands. You can’t necessarily assume that once you’ve put out a good product that it’s always going to be on top. Nike is the exception to the rule.”
Callender continued, “Teens actually tend to cycle through brands in a way that isn’t representative of what Nike has been able to achieve. One of the main reasons behind their success is that the brand offers consistency as well as constant innovation; they’re always delivering something new for their customers, but they maintain their consistency.” |