Last Week In Review: Waiting for Youth Spending to Recover
Posted by dan on 07-19-2010
Like an attention deficient child in the back seat, the mainstream media is fixated on the fledgling recovery, nervously scanning for any indication as to whether we’re headed in the right direction and how long it will take to get there. We’ve previously and emphatically stated that youth have been disproportionately impacted by the economic downturn. At the depths of the recession, youth were jobless, penniless and losing hope fast. It’s therefore somewhat ironic that many pundits are predicting that youth will ‘lead the recovery’.
Let’s start with youth spending. While we’re not seeing any surge in youth spending, that’s not stopping people from prognosticating. A recent report, “The New Consumer Behavior Paradigm” by PricewaterhouseCoopers and Kantar Retail, is putting the burden of recovery on younger Americans: “Up-market Gen X and Gen Y shoppers will take the lead in the recovery. Gen X is in the middle of a high-spending life stage and Gen Y has a greater willingness to spend, especially on new technologies.” Add to this forward-looking spending intent recently issued from Alloy / Harris in their annual College Explorer study and it would appear that the retail world is looking forward to affluent youth to return to the retail behavior that they exhibited before the wheels fell off the car.
Marketers are taking note. Retailers such as Aeropostale and American Eagle are placing bets on youth, focusing more on Millennial Moms rather than Millennials themselves. Last week we had a glimpse into the plans that JC Penney is preparing for the back to school season and it’s pretty good. An integrated campaign with plenty of digital, mobile and social networking hooks and feeds will garner the interest of Millennials, as long as they have the dollars to spend.
So the central question is, when will youth have discretionary income to spend? Mom and Dad are beginning to breathe, but we’re a long way away from the parental largesse that preceded the recession. Meanwhile, the bleak employment picture isn’t improving fast enough to shift the fortunes of Millennials. While post-secondary students are uncovering unpaid internships, paid gigs were few and far between this summer.
One bright spot on the youth employment front comes from the rise of social media. I’ve personally met with more than a few twentysomethings that have been recently hired to manage social media machinations on behalf of major corporations. Social media marketing requires an understanding of the subtle dynamics of trust and many CMOs have smartly realized that the best way to be authentic among youth is to have their marketing messages managed and filtered by members of their target market.
While we all expectantly await the return of youth spending, we have to realize that, barring a dramatic rise in debt, youth spending is inevitably constrained by current household austerity measures as well as the abysmal youth employment market. Until what flows into the wallets of youth returns to normal, we’re going to be disappointed with the pace at which youth spending bounces back.
Ed. note: Dan Coates is president of Ypulse. See more here.
Categorized under: Lifestyle
July 19th, 2010 at 12:00 pm
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July 20th, 2010 at 6:07 am
Good points Dan. Prognostication is one thing, but having actual dollars to spend is another. It’ll be interesting to see if old spending habits return when money does come more easily, or if the last couple of years will permanently alter the mindset of this generation towards personal finance. Add to this the enormous educational costs they are trying to manage, and it’s a complicated picture.