[22 December 2008]
When I cast about for a possible silver lining to the recession, I continually return to the idea that it could at least destroy ephemeral trendy fashion outlets as consumers retrench, hold on to things longer, and focus on spending for necessary goods. The NYT article suggests I can’t even hope for that.
In one of the darkest holiday shopping seasons in decades, perhaps it is fitting that a retailer has been given new life by vampires.
While sales at most stores plummeted last month, the teenage retailer Hot Topic enjoyed a 6.5 percent gain, thanks mostly to brisk sales of gear inspired by “Twilight,” the teenage vampire movie.
As the nation’s retailing landscape has deteriorated, Hot Topic is one of a handful of chains that seem to be coming out ahead. The most obvious winners are discounters like Wal-Mart Stores and BJ’s Wholesale Club, which are helping American families trade down to cheaper merchandise. But another, more surprising group of beneficiaries has emerged: niche chains that cater to teenagers and young adults.
Because the crisis has mainly impoverished those with tangible assets and the former ability to rack up debt, it has left teenagers largely unaffected for the time being. With the deflation currently coursing through the economy, they may even felt relatively enriched.
Youth-lifestyle marketer extraordinaire American Apparel, for example has continued to thrive:
Marsha Brady, creative director for American Apparel — which in November had a 6 percent increase in sales at stores open at least a year — said the key to its continued success in this economy is its demographic: young, single, urban creative-types accustomed to living on a shoestring.
“They hear about the stock market but stocks are something their parents worry about,” Ms. Brady said. “They don’t own anything. They rent. They’re not really facing foreclosure or falling property values. If anything they’ll just get another roommate or move into a cheaper rental. It’s not utter devastation to their cores.”
In other words, teenagers and “kidults” are too stupid to see how the economic trouble affects them and are most likely to continue wasting their money as they always have. It’s only when the kids’ allowances or trust funds are affected that American Apparel might see some red ink.
But it’s not as though it’s irrational for youth-culture consumers to behave this way.The largest worry in the lives of these “creative types” is not retirement savings or anything so banal; it’s being cool in the eyes of one another. Often. coolness is actually their only asset, which is sad, since that is one of the few things that remains more volatile than the current stock market. For companies like Hot Topic, which trade on that volatility and thrive on it, that paucity of assets is the essence of their business model. They can harness the inevitability of aging, or the uncertainty of nascent friendships in a dog-eat-dog social environment, to forge an engine of profitable insecurity that leads consumers to overvalue the significance of coolness. Such companies have every incentive to undermine the possibilities of consumers escaping from the youth ghetto and developing other kinds of value, more productive forms of human capital.