The New Frugality

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For my money, spontaneous focus groups are the best, and I found myself in the middle of one the other afternoon at a beauty salon in my suburban N.J. home-town. The place was packed with teen girls getting ready for a year-end event at the local high school that night.

After listening in on their chatter for a while, I plunged into the conversation. I was curious to find out their favorite stores, what they were spending their money on—things like that. They were happy to oblige. After one hour, I excused myself (my colorist was waiting).

“If you want us to wait for you so we can talk more, we will,” said one eager girl (teen girls are the most willing interview subjects you will ever find anywhere). I thanked her, but said I was all set. “How did we do?” asked another. “You all passed with flying colors,” I replied.

The truth is, I was astounded by how much things have changed with regard to teen spending. The small-picture insights were interesting—Forever 21, H&M and Steve & Barry’s topped the “fave” stores list, Gap is for older people, J.C. Penney is OK for some things, CVS is best for cosmetics and having the most upto-date cell phone is a must). The big-picture takeaway was even more so. Simply put: These days, it’s cool to be frugal when it comes to apparel.

“When I see someone at school wearing an expensive brand, I feel like they’re showing off,” said 17-year-old Amy, as the other girls nodded in agreement. “I have two Coach pocketbooks—I got them last year when they were really hot—but now I only use them when I go to church or out with my parents. The trendiest brand is no brand.”

While these girls are by no means shopping at the Goodwill store (although several mentioned they loved thrift shops), they are actively seeking out bargains and aren’t embarrassed to admit it.

“Whenever I had extra money, I used to go to Abercrombie,” said one gal. “But I haven’t bought anything there in a long time. I can get five tops at Forever 21 for what one costs at Abercrombie. I’m over Abercrombie, unless there’s a sale.”

They all were aware of the impact the sluggish economy is having on their families. More than anything, they lamented the high price of gasoline.

“It forces you to make choices,” one teen said. “Having gas in my tank is more important than going shopping. I used to go to the mall every Saturday, but now it’s once a month.”

A few days after my informal focus group, I attended a teen panel at the Piper Jaffrey 28th Annual Consumer Conference in New York City. The kids (from Oceanside High School, in Oceanside, N.Y.) echoed many of the same sentiments as the N.J. teens. Of the panel’s 14 boys and girls, 12 said gas prices had affected their apparel and entertainment spending and that they were going to the mall less often, and 13 said their overall discretionary spending had decreased.

“My friends and I love to shop,” one girl said, “but with gas prices so high, we look for sales and cheaper stores, like Forever 21 and H&M.”

As to brands, it was mostly thumbs down.

“The status thing is not to wear name brands,” said one 17-year-old. “The really cool girls go into New York City and shop the thrift stores downtown.”

Retailers can take some encouragement in that there are some areas where teens aren’t willing to settle for less. Half of the group had purchased a new cell phone within the last year, and a good number had also replaced their iPods with new models.

“Cell phones and iPods are essentials,” one boy said. “I can’t imagine my life without them—that and Starbucks.”

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