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Piper Sandler Survey: Teen spending hits two-decade low

A recent Piper Sandler survey shows that teen spending has reached a two-decade low during the coronavirus pandemic, with teens buying fewer clothes and less food. The Final Round panel breaks down the recent survey, in addition to showing where teens are putting their money.

Video Transcript

MYLES UDLAND: All right, welcome back to "The Final Round" here on Yahoo Finance. Time now for our call of the day. Today, we are talking about Piper Sandler's latest semi-annual survey of American teenagers.

This latest one took place late August to mid-September, 9,800 survey respondents, average age, 15.8, covering 48 states. Average household income of respondents, $67,500, so a bit above the national average there.

But a few key takeaways stood out to us, going through this report, which is always fun, because it is fun to speculate on what the youths are doing these days, especially as we all get older. And I think the headline here is that 48% of teens think the economy is getting worse, the second highest reading that Piper has in its survey, which goes back 20 years, and the highest reading that we've seen in some nine years.

And now we can get into some of the spending data as well. Spending is at a record low, which I think makes some sense, given all the stuff that teens would do that was mandated to be closed.

But Melody Hahm, if we look at teen sentiment, I guess, which we do here at Yahoo Finance when these surveys come up each spring and each fall, we've seen a little air coming out of the teenage consumer for some time. Obviously, the pandemic accelerated some of those trends, but it's been kind of a downbeat period for young American consumers now for really a couple of years.

MELODY HAHM: Yeah, I would say so. And I do have to say, as much as, Myles, we try to pass out the Gen Z generation versus millennials versus Gen X, a lot of this survey actually reflects behavior that we see across the board, right?

Whether it is a decrease in makeup purchases, it's less money spent on handbags, less money spent on apparel, except for athleisure, right? There are the bright spots that sort of echo what we see in the larger population.

And I do have to say, you know, looking at social media in particular, that sort of section of the survey always interests me because we know just the geopolitical drama that we've been covering about TikTok, teens don't care, right? And we talked about this about the monetization side of things yesterday.

But TikTok did reach number two after Snapchat, and Instagram was bumped down to number three. And I actually just got off the phone with two influencers on TikTok who say the deals that they're getting from TikTok are so much more lucrative at this point and less effort to actually create content, that they are not willing to invest that extra time in Instagram.

So just thinking through how a lot of the anecdata does kind of reiterate some of the findings here, I also think it's fascinating to see the celebrities that teenagers-- like, Kevin Hart is number one. So an older dad figure is still the number one celebrity that people love.

Donald Trump is also on that list, although he did move lower in ranking. And then David Dobrik, who's a 24-year-old YouTube, still remains kind of hot for the teens. So it just shows as much as we can say older folks are irrelevant to a certain extent, teens are still looking to them, right, for some sort of inspiration, creator guidance, and whatnot.

And I do have to note that a lot of the influencers that I've been speaking with when we ask what their-- who their motivation is or who their inspiration ultimately is, the two names that kept coming up-- Will Smith and the Rock.

So there are some sort of elements there that you can say are regardless of age. You want to be able to be your own boss, right, and sort of do everything. And I think that theme still remains constant with this teen generation.

MYLES UDLAND: Well, and you mentioned Kevin Hart, I guess, as the dad figure for teens. Number four is Adam Sandler. I mean, I was like, what is this, 1998?

It is kind of amazing when you look at that list, just to talk about the celebrities that teens care about, there's this huge gulf of millennials. There's no millennials. It's either Gen X, or it's teenagers like them. OK.

MELODY HAHM: Yeah, precisely. I mean, I just want to pull up the social media personalities, right, because that just shows there is a total chasm, right? Social media personalities are not seen as celebrities yet.

Or perhaps that's Piper's own phrasing, right, when they ask the question. Because when you look at Addison Rae, you look at Charli D'Amelio, they also have been able to branch outside of social media, whether it's through podcast deals on Spotify, being able to develop their own reality TV shows, becoming the next Kardashian clan, right, to a certain extent.

I guess, the question is, Myles, when do they reach the celebrity status? When do we not separate them as two different categories, and they would end up being on a list with Kevin Hart? I don't know. My question is, in a decade, will that actually be the case? I'm curious to see if teens actually are able to meld those two worlds together.

MYLES UDLAND: Yeah, I think the nature of celebrities is such that I guess the endurance of Kevin Hart or the Rock or someone gets more impressive obviously over time. I guess, I just felt like there's no one who's, like, 30 or 35, right? It's you're either 45 and up, or you're, like, under 22. And so just an interesting kind of another K shape, perhaps, out there in our economy.

We are going to talk to Erin Murphy, an analyst over at Piper, in the next hour a little bit more about the survey now. Erin covers more of the apparel name, so Seana, I quickly want to talk about some of the trends we're seeing there, particularly two that stood out to me, which is really dragging down overall spending and I think is a real challenge for some of these retailers that have marketed towards teenagers in a specific way for a long time.

Spending on handbags, $87 a year, that's down from $190 back in 2006. And then also, cosmetics are cut in half, basically, since 2017. And I'm thinking about how we've told teens that it's about experience-- young people, it's about experiences, ways to make yourself feel good. And now people can't do anything because it's a pandemic.

SEANA SMITH: Yeah, indeed, that's obviously having a big impact on how they are spending, like you were saying, just in terms of where they are allocating their money. But in terms of what continues to lead the charts, you brought up some of those apparel names. Nike has been now the number one spot for 10 years in a row.

And it still goes along with what we've been seeing over the past six months, is this, I guess, shift towards athleisure. More and more people-- I know it's teens, but now they're doing school from their home. They're at home schooling. A lot of them are not going into the classroom.

So they're opting for leggings, for sweatpants, for sweatshirts, for that more comfortable attire than maybe they would if they were going back to school. So that, of course, playing into what we've seen in previous years.

But what was interesting to me was the spot that Lululemon had on this list and jumping to number six, up from-- up one spot from a year ago. And why this is interesting is just in terms of the price point. We're seeing teens scale back on how much money that they're spending in retail. Yet, they're still willing to dish out $100, $120, for a pair of leggings.

So it even shows that even in these times at least, I guess people are still justifying, still finding reason to spend so much money on certain pairs of clothes. So Lululemon was a little bit of a surprising spot, or a little bit surprising, I guess, finding to me in this survey.

And then also on the cosmetics side of things, Elf was the number two preferred makeup brand. And what was interesting to me about this was when Piper Sandler mentioned how TikTok is helping fuel some of the brand success, so we're seeing that bridge between retail and social media and how retail is really trying to connect with Gen Z and trying to connect with their younger customers through these social media channels.

So Elf obviously a company that has been doing that and doing that well, so something that maybe some of these other brands who are struggling a little bit to resonate with the younger generation, what they can do in order to boost their sales.

But I think overall, the first [INAUDIBLE] with the fact that the record number of teens are concerned about the economy right now, concerned about the COVID-19 pandemic, really just speaks to, one, I guess, how personal this pandemic has been to so many people, the fact that teens actually reported the fact that it's impacted more people in their homes than the national average. That, of course, is something to take away.

[INAUDIBLE] also just I think a lot of the feeling out there is maybe the younger generation is out of touch. When we see something like the pandemic, obviously, it impacts all generations. And we're clearly seeing that through the Piper Sandler survey.

MELODY HAHM: And then the same with that-- you know, the millennial generation used to decry the fact that we were told we don't want to form households. We were told that we don't want to own a home.

I think that's resonating with this next generation, right, where kind of, as I mentioned earlier, all of those brands-- Seana, you mentioned Elf, which is not a DTC startup, right? Revlon is one of the brands that actually spends a lot of money on marketing campaigns. And 16, 17, 18-year-olds are choosing to work with them.

So Myles, to your point, it's almost like our generation is completely cut out of the picture. And a lot of these legacy names from 20, 30 years ago that were popular then seem to have staying power. There seems to be this kind of impetus for young folks to choose the legacy brands that even perhaps their parents used to be fond of.

And then one other note I want to bring up, Netflix is still king, right? Teens spend 34% of their daily video consumption on the platform, of course, followed by YouTube, number two, just proving, time and time again, that it's going to be harder and harder for these upstarts and for the new incumbents. You know, Paramount is launching a platform next year to really try to get any market share from Netflix.

MYLES UDLAND: And you mentioned kind of the old brands. I guess, we're parents now. But I never heard of Shein, but I guess it's now the number two website for teens to shop on, even though it only has 5% market share. So we could go down that rabbit hole, too, I guess, Mel.

MELODY HAHM: Yeah, and that is a Chinese brand. So I just want to point out that TikTok, of course, a Chinese company, Shein, a Chinese company, fast fashion, sort of like an H&M, UNIQLO, Urban Outfitters amalgamation, if you will.

And it just proves that as much as we obsess over this idea of ethical clothing, sustainable clothing, we've had so many entrepreneurs coming on to talk about how that's the future, and that's what young people care about, that's clearly not the case, right? Amazon is number one. Shein is number two.

Let's just think about that in the context of, maybe if we get more purchasing power in the future, they'll want to spend more money on better quality clothes. But I'm not so sure, based on the current survey.

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