Retailers are scrambling to get a piece of the lucrative back-to-school market, and J.C. Penney Co. is making a multimedia push to lure teens and tweens away from specialty retailers and into its department stores.
After more than a year of rocketing sales growth, industry watchers fear that teen-oriented retailers won't be able to sustain their momentum, and the focus on this fickle market has heated up.
Getting young shoppers into its stores was a key part of Penney's five-year turnaround plan -- which included selling off its money-losing Eckerd drug store unit to focus on its department stores and related Internet and catalog businesses.
Penney recently debuted a back-to-school Web site aimed at teens and tweens. The site features instructions on dance moves, commercials, dance-related games, information on its mall tour and the Teen Choice Awards, of which Penney was a primary sponsor.
The company also sponsored a "rock your prom" sweepstakes this year in conjunction with Seventeen and Cosmo Girl magazines, hosting events throughout the United States.
"Aside from the marketing, you need to have on-trend product -- otherwise you're just going to turn them off and end up wasting a lot of money," said Mike Boylson, chief marketing officer of J.C. Penney.
Every eight to 12 weeks is a new fashion cycle, Boylson said, and the company looks to "fast fashion" retailers like H&M and Zara, who quickly translate fashion trends into affordable mass merchandise.
Teens can be counted on to spend money on discretionary purchases since they do not have set expenses such as mortgages, car payments, and medical bills like their parents.
So there is a lot of competition for teen dollars. In addition to apparel, they spend money on movies, DVDs, music, cell phones and electronic gadgets like Apple Computer Inc.'s iPods.
Penney said its back-to-school sales have been "encouraging" so far, but the season is far from over.
The retailer's shares have been on the rise since 2004. Its shares now trade at about 15 times the average estimate of analysts surveyed by Reuters Estimate of earnings in 2005. Competitors like Kohl's Corp trade at almost 23 times earnings; Saks Inc. trades at about 40 times earnings; and Nordstrom Inc. trades at about 18 times earnings.
Wait for the leaves to change
Retailers may stock shelves with fall merchandise in early July, but shoppers often are not ready to buy cold weather gear like sweaters, blazers and jeans while they are still sweltering in 90-degree summer heat.
Also, teens and tweens want to see what the hot brands and styles are going to be for the new year before stocking up.
"Kids are not interested in taking their summer vacation to start thinking about back-to-school wardrobes, supplies and book bags," said Marshal Cohen, senior industry analyst at retail research company NPD Group. Many schools aren't back in session until September, and teenagers want to wait to see what their peers are wearing before they buy new items, he said.
"I'm not worried about the ones that get a bad start," Cohen said. "I would be worried about the ones that get a bad finish," he said, adding that those are the retailers that will likely have a difficult holiday selling season.
Penney said popular items for fall include shrunken jackets, corduroy blazers, shrug and cable knit sweaters, in colors like brown, orange, leaf green and red.
Denim is still a top item, Boylson said, and teens have indicated a willingness to pay more for higher-end jeans.
"We're seeing teens want a high-end look at an aspirational price. They are less price sensitive than their parents," Boylson said. There is also "incredible peer pressure" on brands and styles, he said, but there is also an effort to reinterpret the looks with layering and accessories.
Looking ahead, Penney plans to combine traditional television and magazine advertising with Internet, contests, celebrity events, word-of-mouth campaigns and movie theaters.