Spending by teenagers — commonly known as "Generation Z," defined by most as being born roughly between between 1995 and 2014 — is up 6% from this past fall and up 2% from a year ago, dominated by purchases of food, beauty and video games, according to investment bank and asset management firm Piper Jaffray's latest Taking Stock With Teens report.
In apparel, athletic wear still dominates, though streetwear had the largest incremental gains, led by Vans (teens' number one footwear brand) and Supreme (which landed seventh in apparel). Overall, Nike continues to decline with the teen cohort (though it's important to note they remain the number 1 brand, with 23% share of the clothing market), while Adidas remains firmly at number 3, with 14% of mindshare in footwear and 6% in apparel, according to the report. Ralph Lauren, once a top 10 brand among young men since 2002, has lost that place.
Gen Zers are even more interested in Apple products than in the past, with the intent to buy an iPhone reaching a new high — 84% will choose an iPhone next time they get a phone, up from 82% last fall. Department stores and other legacy channels continued to shed share as teens' online spending hit new highs, although eBay's mindshare declined to its lowest level — down to 1.8% from 3% in fall 2017.
Generation Z contributes some $830 billion to U.S. retail sales annually, according to Piper Jaffray, making its members an influential consumer group. Most marketers have heard how huge the millennial generation is — bigger than the baby boomers — but Gen Z is poised to be even larger, by most measures, coming in at about 2.6 billion members globally.
About 60 million members of Gen Z reside in the U.S., a million more than millennials, according to demographic data firm Social Explorer researcher Susan Weber, and their ranks are diverse: 55% of Gen Z members nationwide are non-Hispanic Caucasians, 24% are Hispanic, 14% are African-American, 4% are Asian, and 4% are multiracial or other, according to marketing consultancy Magid.
The group also has a technology fix: they convert twice as much on mobile as any other generation, 80% of them are influenced by social media and they care twice as much about social as they do about deals. Despite living in a world that has always had the internet and mobile phones, though, Gen Z continues to favor brick and mortar, as they did at the holidays last year. And their spending power is at a profound level, especially considering that most of them have yet to start working. That may explain their influence on luxury spending — a category in which they're even more likely than millennials to make a purchase.
"Within a teen's wallet, food is the top priority but video games (for males) and beauty (for females) are gaining share," Piper Jaffray senior research analyst Erinn Murphy said in a statement. "We are seeing strong signs of a brand cycle led by 1990s and streetwear styles with Adidas, Vans, Supreme and Tommy Hilfiger as the most notable positive brand movers."
Food returned to its 24% peak as the top spending category for teens at large, boys' spending on video games reached a new peak at 13% and beauty spending among girls hit a new high at $368 per year, up 18% year over year, according to the report.