Who’s Schooling Millennial Retailers?
May 7, 2014
By Matt Schifrin
If ever there was an industry suffering gut-wrenching disruption it is
traditional retailing. JC Penney JCP +1.63% (JCP) and Sears (SHLD) are the
Walking Dead of retailers, Target TGT -0.65%’s (TGT) chief executive just got
booted (and it wasn’t just because of the security breach) and even venerable
Nordstrom JWN +0.1% (JWN) is struggling with sales growth. As an investor,
Millennial or teen retailing is an especially difficult sector to value, in part
because it is highly susceptible to fads. Once red-hot retailers, Abercrombie &
Fitch and Aeropostale, have hit hard times. Abercrombie has been under attack
by an activist investor and recently revamped its board. Likewise struggling
Aeropostale is closing stores and cutting costs.
The guest article below comes from a public relations executive who is friend of
mine and has been immersed in retailing and fashion business for more than
20 years. I count on her as a trend spotter in retailing and I trust her insights.
We both have teens going off to college this fall and have spent many hours on
various campuses. After lunch in downtown NYC recently, we took a walk
through the NYU campus bookstore on lower Broadway. She astutely pointed
out to me that many campus retailers really “get it” when it comes to
connecting with their millennial audience. In fact at NYU’s “book” store much
more space was devoted to apparel and NYU swag than textbooks. Investors
and retail executives would do wise to go online, as well as visit university
retailers. The Millennial market is larger than the Boomer audience, which you
may remember, gave rise to malls which were once a gold mine for retailers.
By Stacy Berns
The teen retail sector is one of the most talked about categories among retail and fashion execs. Not a surprise
when teens (often funded by their parents) spend an estimated $200-300 billion annually, with 40% of that going
for fashion.1 Teens make up a large component of the 80 million-strong Millennial demographic, which is
expected to outspend Baby Boomers within the next five years.2
Ironically, this rich vein of consumer buying power is one of the toughest markets to crack successfully. The onetime teen retail darlings known as the “three A’s” – Abercrombie & Fitch Co. (ANF), American Eagle Outfitters
AEO +0.86%, Inc. (AEO) and Aeropostale (ARO) – saw their top-lines shrink by 5-12% comparing fiscal 2013 to
2012, with their shares down by double-digits in the past 12 months.
Gone are the days when loud music, strong branding fragrance and lines around the block captured the hearts of
the fickle teenager and their tolerant parents. Teen retailers can’t seem to figure out how to reinvent themselves
and by that I mean connect with, market and sell to this powerful new generation of consumers. Millennials –
and teens especially – are digital natives. Their buying habits are highly influenced by the social, mobile and ecommerce technology. And they want a shopping experience that is individualized, digitally infused and cool.
Teen retailers need to go back to school – literally – and take a lesson from the one segment of retailing that is
successfully winning over teen consumers: college and university stores. There are more than 3,000 stores
serving US colleges, universities and schools, according to the National Association of College Stores, selling
everything from textbooks to college-themed clothing, accessories and gift items – even skateboards.
My growing regard for the business “smarts” of college retailers comes in part from my day job as a corporate
communications and PR professional to companies in the retail/fashion sector – and my role as a mom whose
daughter spent the last year or so applying to and visiting colleges (she’ll be starting at NYU in the fall).
College stores are major trend setters in teen retailing this week as newly admitted college freshmen strut their
new identities in college-branded sweat shirts, tee shirts and crop tops. Across the country, high school seniors
have decorated their bedrooms and cars with university colors and team mascots.
The best college retailers deserve high marks for doing three key things really well: they relate directly to their
customer’s identity and personality, engage consumers via social media, and offer a unique digitally-infused
shopping experience that allows customers to shop wherever, whenever and however they want.
College stores create an individualized shopping experience that is unique to the university’s culture and brand –
and to the kinds of students they attract. At sports-crazed schools like Duke or Miami, for example, a large share
of the retail square footage at campus stores goes to team-related and mascot-themed merchandise. The NYU
store, on the other hand, devotes a lot of space to a West Village-type cafe where students can enjoy a vegan
muffin and latte while they shop.
University retailers do a great job of socially engaging their customers. Barnes & Noble College (BKS) , which runs
700 campus stores, has a strong presence on Facebook, Twitter, Instagram, Pinterest and other social media.
Beyond delivering information on store sales and promotions, they keep their consumers engaged with specialized
content. Each year, the college retail buying group Connect2One names a group of “Facebook All-Stars” –
recognizing schools such as University of Wisconsin-Madison and Cal Poly Pomona whose campus stores have
made innovative use of social media.
To provide the online shopping experience that their customers demand, many college stores partner with outside
e-commerce providers. For example, Fanatics, Inc. is the brainchild of e-commerce pioneer Michael Rubin,
whose former company GSI Commerce helped many top fashion brands set up their e-commerce sites (and was
later sold to eBay for $2.4 billion). Fanatics, Inc. operates e-commerce sites for many collegiate and professional
sports teams.
One reason campus stores are so digitally savvy may be because the universities themselves are so engaged with
their “customers” on social media. When my daughter committed to NYU, I posted a picture of the NYU flag on
Instagram. The university was one of the first to “like” my post. In fact, when newly admitted students posted
their acceptance letters online, NYU enthusiastically reposted them to Facebook, Twitter and other social media
sites.
If fashion retailers want to “make the grade” in selling and marketing to teens, they need to study three
fundamental strategies of college and university stores: (1) Make sure your brand speaks directly to the unique
identity and personality of your customers; (2) Connect socially via content that is relevant and engaging; (3)
provide a shopping experience that is highly e-commerce enabled for a generation that was born with a digital
spoon in their mouth.
Stacy Berns is president and founder of public relations firm Berns Communications Group, LLC., which focuses
on the business of retail and fashion.
SOURCES:
1 Piper Jaffrey, April 2013
2 WWD and Berglass + Associates, October 2013