Piper Jaffray 23rd Semi-Annual “Taking Stock With Teens” Survey Confirms Discretionary Spending Recovery
April 04 2012 - 9:20AM
Business Wire
Piper Jaffray (NYSE: PJC) has completed its 23rd semi-annual
“Taking Stock With Teens” survey, which indicates improving
discretionary spending across multiple categories for both upper-
and average- income teens.
"Our Spring 2012 survey results provide confirmation that we are
in the early stages of a clearly defined discretionary spending
cycle,” said Jeff Klinefelter, director of research and senior
research analyst at Piper Jaffray. “Double-digit increases in
spending on a sequential and year-over-year basis for both upper-
and average-income teens and similar strength in spending
intentions, signal improved confidence in the overall environment
and a willingness to spend more broadly on key categories of
interest.”
Key findings from the survey in fashion, beauty and personal
care, restaurants, digital media and video game categories include
the following:
- Teens cited improvements in both
current fashion spending and intention to spend, across income
levels and genders. Of teen budgets, the fashion category accounted
for 39%, up from 38% in the fall of 2011 and 37% a year ago.
Upper-income teens indicated that spending on fashion increased 17%
on a sequential basis and 21% year-over-year. Average-income teens
indicated their spending on fashion increased 18% on a sequential
basis and 15% year-over-year. These double-digit increases in
fashion spending represent the first recorded since the 2003/2004
surveys, when teens across income levels indicated a similar
meaningful propensity to spend on the fashion category. While
strength in spending was broad-based across categories, spending by
male teens in fashion was the highest, a trend which has
historically been indicative of a multi-year, dual-gender fashion
spending recovery.
- Beauty spending by upper-income teens
increased 8% sequentially and 6% year-over-year. For average-income
teens, beauty spending increased 21% sequentially and 18%
year-over-year. Skin care and cosmetics represented a larger share
of overall beauty spending, and the beauty spending gap between
upper- and average-income teens continues to narrow. Teens are
demanding greater diversity of cosmetics offerings, evidenced by a
notable reduction in brand preference concentration. This trend
supports our view that young and emerging cosmetics brands, many of
which are coming to the market with new or superior innovations,
are gaining traction with teen consumers. We believe this bodes
well for specialty retailers of beauty products, such as Ulta and
Sephora. MAC remained the No. 1 cosmetics brand for upper-income
teens while Cover Girl was once again the No. 1 brand for
average-income teens. Victoria's Secret remains the preferred
fragrance for teens across both income segments, consistent with
the past eight surveys.
- Teen spending on food and restaurants
is at or near the highest level since early-2000. Upper-income and
average-income survey respondents increased their weekly restaurant
spending by approximately 10% and 3%, respectively, compared to the
fall of last year. Taste remained the strongest influence on food
and restaurant dining decisions. Value also continued to be an
important influence on dining decisions and has gained in
importance over time, ranking number two in the current survey
compared to number five in the spring of 2007. As it relates to
individual brand preferences, survey results appear to support our
Fine-Tuned Dog Bone Thesis, whereby a strong connection exists
between a company’s value proposition and its relative position as
a most-preferred brand.
- Teen spending on portable devices
continues to accelerate with 86% of teens reporting that they are
likely to purchase a smartphone for their next device, up from 83%
last fall and 81% one year ago. Apple’s iOS gained market share as
the most desired operating system, with 51% of teens reporting that
they are likely to buy an iOS device (compared to 22% for Android).
Approximately 34% of teen respondants owned an iPhone, up from 17%
last spring, driven by the availability of a $49 iPhone 3GS at the
launch of the iPhone 4S. Also, 40% of teens expect to purchase
an iPhone in the next six months, up from 37% last year. In
tablet market, 34% of teens owned a tablet computer, up from 22%
last spring. Of those teen tablet owners, 70% owned an iPad,
19% owned an Android-based tablet, and 11% owned a Kindle Fire.
Furthermore, 19% of teens expected to purchase a tablet in the next
six months, with 80% of those teens intending to purchase an iPad,
which we believe should help Apple sustain its lead in the tablet
space.
- Teens represent 33% of video game
players, with games representing 7% of teen spending. Teens are
increasingly receptive to downloading games, accessing social
networks and playing games on smartphones and tablets. Pre-owned
games remain popular among teens, but digital rights management
(DRM) risks with next generation consoles represent an overhang for
game retailers. Social networks, tablets and smartphones are taking
increasing eyeball share away from console-based video games. We
favor interactive media companies including Zynga and Electronic
Arts (EA) with exposure to these growing platforms.
The “Taking Stock With Teens” survey is a research project
comprised of gathering input from approximately 5,600 teens with an
average age of 16.3 years. Teen spending patterns, fashion trends,
and brand and media preferences were assessed through visits to
geographically diverse high schools in 11 states, and through an
online survey of a wider group of teens from 34 states. The survey
is conducted in partnership with DECA (an international association
of high school students).
About Piper Jaffray
Piper Jaffray is a leading investment bank and asset management
firm serving clients in the U.S. and internationally. Proven
advisory teams combine deep product and sector expertise with ready
access to global capital. Founded in 1895, the firm is
headquartered in Minneapolis and has offices across the United
States and in Hong Kong, London and Zurich.
www.piperjaffray.com
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