Teens are turning their backs on Nike

Dive Brief:

The styles and icons of the 1990s are capturing the attention of U.S. teenagers, and that’s just one of the factors influencing their preferences and purchases, according to investment bank and asset management firm Piper Jaffray’s 34rd semi-annual "Taking Stock With Teens" research survey. Overall, teen spending is down 4.4% year-over-year, while their parents’ contribution is 67%, just below the long-term average of 68%, the research found.
Teen priorities have shifted: Piper Jaffray found a "slight downtick" in video game spending, a "moderate downtick" in food spending and a "slight uptick" in apparel spending. While food’s share of spending dropped from 24% in the spring to 22% in the autumn, it’s still more than teens’ spending on clothing, which is at 20%.
Nearly a quarter (23%) of teens prefer to shop at specialty retailers, (down 3% year-over-year), while pure-play e-commerce tied its spring 2017 peak at 17%, (up 2% year-over-year).

Dive Insight:

Consumers are fickle, especially when it comes to apparel trends, and teen loyalty is likely the most tenuous of all, so Piper Jaffray’s research tracks movement that could change on a whim. Still, Nike is suffering from teens’ changing attitudes. In fact, Nike, Ralph Lauren, Steve Madden, UGG (Deckers), Fossil and Michael Kors saw the largest declines among major brands, according to the survey.

Since 2001, Piper Jaffray has surveyed more than 155,000 teens and collected nearly 40 million data points on teen spending in fashion; beauty and personal care; digital media; food; gaming and entertainment. This year’s research surveyed 6,100 teens across 44 states.

"For the first time in years, we’ve seen Nike share moderate as a preferred brand," Piper Jaffray senior research analyst Erinn Murphy said in a statement. "Offsetting this weakness, we’ve seen an unexpected rise in trends like streetwear with Vans and Supreme gaining momentum. In addition, other brands such as adidas, Puma and New Balance has been capturing more mindshare as teens gravitate towards that 1990s retro look."

The emphasis on streetwear is emerging as an important differentiator for the athletic brands, and adidas is ahead of the game. Adidas’ second quarter sales growth of nearly 20% led Cowen & Co. analyst John Kernan to note last month that the German athletic retailer is "outgrowing Nike meaningfully in all major geographical regions and placing greater pressure on [Under Armour]," adding that the company’s 66% e-commerce growth "continues to highlight the massive opportunity in [direct-to-consumer sales]." (Nike has already taken that note, evident in its decision to sell directly to customers via Amazon in addition to its own stores and website.)

Adidas has staked much of its growth on street styles and that is partly why Jane Hali & Associates analysts remain keen on the brand. "They continuously release new colorways for some of their key products like the NMD," according to a Jane Hali note emailed to Retail Dive. "Adidas Originals is always successful as the product resonates with a fashion upscale customer. The product continues to be design led with minimalistic silhouettes."

Adidas marketers also seem to have their finger on the teen pulse, considering the brand's recent pullback on television advertising to reach Gen Z (which includes the teens surveyed in this study) on mobile. Streaming continues to gain teen video share as preference for linear TV declined 2% since last fall, and Snapchat is the preferred social media platform for 47% of teens using the platform, up 12% year-over-year, Piper Jaffray found.

This story is part of our ongoing coverage of the 2017 holiday shopping season. You can browse our holiday page and sign up for our holiday newsletter for more stories.